Series 55

The Securities Marketplace - Affirmative Determination

All firms and agents are required to make an affirmative determination for all sell orders entered on behalf of the firm or a customer. All sell orders must be marked either long or short. A person is considered long the security if the investor:

  • Has possession of the security
  • Has purchased the security but the trade has not settled
  • Has issued conversion or exercise instructions for a right, warrant, option, convertible bond or preferred stock
  • If the investor owns rights, warrants, options, or a convertible security but has not issued exercise or conversion instructions the investor is not considered long the security.
The firm must make a determination if the customer is long the security or if they are selling short. If the customer is selling short, the firm must determine if the security can be borrowed for delivery.

An investor is only considered long the security to the extent of their net long position in the security. If an investor is long 1000 shares of ABC and is short 600 shares of ABC in another account, the investor may only mark a sell ticket for 400 shares of ABC long.



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