Series 55

Commissions And Trade Complaints - Net Transactions With Customers

FINRA sets forth specific guidelines for broker dealers who execute orders for customers on a net transaction basis. A broker dealer who, after receiving a customer’s order, executes that order on a principal basis with another broker dealer and subsequently fills the order at a net price to the customer must first obtain the customer’s consent. A broker dealer must obtain the customer’s written consent and acknowledgement prior to executing a net transaction for any non-institutional customer. Institutional customers may agree to the terms of net transactions in writing or orally on a trade-by-trade basis or may be sent a negative consent letter detailing the terms under which net transactions may be executed by the broker dealer. The negative consent letter must provide the institutional customer a reasonable opportunity to object to net transactions. If the customer does not object, the broker dealer may assume that the institutional customer has consented to the potential terms of any net transaction. All documentation relating to customer consent must be maintained under FINRA Rules.



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