On Thursday, August 6, a retail customer places an order with a broker-dealer to buy shares of common stock. The firm fills the order by executing it on an exchange on behalf of the customer rather than filling it from its own trading inventory. Under SEC and FINRA rules, which of the following correctly identifies the required regular-way settlement date and the firm capacity disclosure on the customer's trade confirmation?
- Settlement occurs on Friday, August 7 (T+1), and the confirmation must state that the firm acted as an agent and disclose the commission.Cevap
- BSettlement occurs on Monday, August 10 (T+2), and the confirmation must state that the firm acted as an agent and disclose the commission.
- CSettlement occurs on Friday, August 7 (T+1), and the confirmation must state that the firm acted as a principal and disclose a mark-up.
- DSettlement occurs on Monday, August 10 (T+2), and the confirmation must state that the firm acted as a principal and disclose a mark-up.
Cevap
Settlement occurs on Friday, August 7 (T+1), and the confirmation must state that the firm acted as an agent and disclose the commission.
Regular-way settlement for US equity securities occurs on T+1, which is one business day following the trade date (Friday, August 7 for a Thursday trade). Furthermore, because the firm executed the order on behalf of the customer on an exchange rather than trading from its proprietary account, the broker-dealer operated in an agency capacity and is required to disclose its capacity as an agent along with the commission charged on the customer trade confirmation.
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Anahtar Kavram
T+1 regular-way settlement cycle and trade confirmation capacity disclosures for broker-dealers.