A retail investor purchases shares of common stock through a registered broker-dealer, which executes the order on an exchange in an agency capacity. Under SEC Rule 10b-10, which of the following pieces of information must be disclosed on the written trade confirmation delivered to the customer at or before settlement?
- AThe markup or markdown added to the transaction price, reflecting the firm's inventory profit as an agent
- The capacity in which the firm acted and the specific commission charged on the transactionCevap
- CA statement confirming that the securities purchase has been reviewed and endorsed by the Securities and Exchange Commission
- DA regular-way settlement date specified as two business days following the trade date (T+2)
Cevap
The capacity in which the firm acted and the specific commission charged on the transaction.
Under SEC Rule 10b-10, trade confirmations sent to customers at or before completion of a transaction (settlement) must disclose key transaction details. When a firm acts as an agent, it must explicitly disclose the capacity in which it acted and the commission charged for executing the trade.
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Trade Confirmation Disclosures and Broker-Dealer Capacity
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