Examkin

Soru

Zorluk: ZorBroker-Dealers, Investment Advisers, and Intermediaries

Apex Securities, a registered broker-dealer, purchases 10,00010,000 shares of an equity security directly from a retail investor to fill the order out of its own inventory. The investor receives a trade confirmation following the execution. In what capacity did Apex Securities act, and how must its trade compensation be disclosed on the trade confirmation?

  1. Apex Securities acted as a principal (dealer) and must disclose the transaction price along with the mark-down charged.Cevap
  2. B
    Apex Securities acted as an agent (broker) and must disclose the transaction price along with the commission charged.
  3. C
    Apex Securities acted as an investment adviser and must charge a fee based on a percentage of assets under management rather than transaction compensation.
  4. D
    Apex Securities acted in an underwriting capacity in the primary market and is prohibited from disclosing mark-downs on secondary executions.

Cevap

The firm acted as a principal (dealer) and must disclose the transaction price along with the mark-down charged on the trade confirmation.
When a firm buys securities from or sells securities to a client using its own inventory, it acts as a principal (dealer). For a purchase from a customer, the firm buys at a net price that reflects a mark-down from the prevailing market price. The trade confirmation must clearly state that the firm acted as principal and disclose the mark-down.

Adım Adım Çözüm

1
Determine the capacity in which the broker-dealer executed the trade.
Because Apex Securities purchased the shares directly into its own inventory from the customer, it acted as a dealer (principal capacity).
Trading from inventory or taking proprietary risk defines principal transaction capacity.
2
Identify the compensation type associated with principal transactions.
When purchasing from a customer in a principal capacity, the firm adjusts the purchase price lower by applying a mark-down.
Broker-dealers charge mark-ups when selling to customers from inventory and mark-downs when buying from customers into inventory.
3
Apply trade confirmation disclosure rules.
FINRA rules require disclosing the capacity (principal) and the mark-up or mark-down on the customer's trade confirmation.
Proper trade confirmation disclosure ensures transparency regarding capacity and transaction costs.

Anahtar Kavram

Broker vs. Dealer Capacity and Compensation Disclosures
Tahmini Süre:1m 30s
Bu soruyu puanla

Konular

Broker-Dealers, Investment Advisers, and Intermediaries

Bu konudan daha fazla soru