A retail investor executes an order to purchase shares of common stock through a registered broker-dealer. The trade confirmation provided to the customer indicates that the firm executed the transaction in an agency capacity. Which of the following disclosures is required on the trade confirmation regarding the firm's capacity and compensation?
- The firm acted as a broker (agent) and must explicitly disclose the amount of commission charged on the transaction.Cevap
- BThe firm acted as a dealer (principal) and must disclose a net price that incorporates a markup or markdown without showing a separate fee.
- CThe trade confirmation must specify that regular-way settlement takes place on the second business day following the trade date ().
- DThe trade confirmation is generated and delivered directly to the retail customer by the Depository Trust & Clearing Corporation (DTCC).
Cevap
The firm acted as a broker (agent) and must explicitly disclose the amount of commission charged on the transaction.
When a broker-dealer acts in an agency capacity, it functions as an agent (broker) connecting a buyer and a seller. Under SEC Rule 10b-10 and FINRA rules, a firm acting in an agency capacity must state its capacity on the trade confirmation and explicitly disclose the amount of commission received for executing the trade.
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Trade Confirmation Capacity and Remuneration Disclosures