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Zorluk: Çok zorSettlement Dates, Trade Confirmations, and Corporate Actions

On Thursday, October 15, a retail investor purchases 200 shares of a corporate equity security in a cash account. The executing broker-dealer fills the customer's order directly from its existing proprietary inventory, adding a mark-up to the execution price. Assuming all listed days are business days, which of the following correctly identifies the regular-way settlement date for this transaction and the firm's capacity disclosure required on the trade confirmation?

  1. The trade settles on Friday, October 16 (T+1T+1), and the trade confirmation must disclose that the broker-dealer acted in a principal capacity.Cevap
  2. B
    The trade settles on Monday, October 19 (T+2T+2), and the trade confirmation must disclose that the broker-dealer acted in a principal capacity.
  3. C
    The trade settles on Friday, October 16 (T+1T+1), and the trade confirmation must disclose that the broker-dealer acted in an agency capacity charging a commission.
  4. D
    The trade settles on Monday, October 19 (T+2T+2), and the trade confirmation must state that clearance and custody were executed by the NSCC depository.

Cevap

The trade settles on Friday, October 16 (T+1T+1), and the trade confirmation must disclose that the broker-dealer acted in a principal capacity.
Under current SEC rules, regular-way settlement for corporate securities (stocks and bonds) occurs on T+1T+1 (one business day following the trade date). Since the trade took place on Thursday, October 15, settlement occurs on Friday, October 16. Furthermore, because the executing broker-dealer filled the customer's order out of its own inventory and added a mark-up, the firm acted in a principal (dealer) capacity. SEC and FINRA rules require that the capacity (principal vs. agent) be explicitly disclosed to the customer on the trade confirmation.

Adım Adım Çözüm

1
Determine the regular-way settlement date
Trade Date TT = Thursday, October 15. Regular-way equity settlement is T+1T+1, which falls on Friday, October 16.
SEC Rule 15c6-1 mandates a standard T+1T+1 regular-way settlement cycle for corporate stock, corporate bond, and municipal security transactions.
2
Identify the broker-dealer's execution capacity
The firm traded from its own inventory, making its capacity Principal (Dealer).
When a firm buys for or sells from its own proprietary account, it acts as a dealer/principal and compensates itself via a mark-up or mark-down.
3
Determine trade confirmation disclosure requirements
The confirmation must indicate that the firm acted as a principal.
Under FINRA Rule 2232 and SEC Rule 10b-10, broker-dealers must explicitly state whether they acted as an agent (broker) or principal (dealer) in the transaction.

Anahtar Kavram

Regular-Way Settlement Timelines and Broker-Dealer Capacity Disclosures
Tahmini Süre:2m 0s
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Konular

Settlement Dates, Trade Confirmations, and Corporate Actions