Brokerage Office Procedure - Customer Confirmations
All customers must be sent a confirmation at or before the completion of the transaction. Industry rules consider the completion of the transaction to be the settlement date. It is unlawful to settle a transaction without having sent a customer a confirmation of the transaction. If applicable all customer confirmations must include:
- Customer’s name and account number
- Account Executive number
- Description of the transaction i.e. buy or sell
- Trade date and settlement date
- Number of shares, bonds, or units
- Yield to the worst for bonds
- CUSIP Number
- Amount due or owed
- Type of account, cash or margin
- Option specifics (open, closing, covered, uncovered)
- Location of securities sold
- Price limits
- Whether the firm acted as an agent or principal
- Whether the firm acted as agent for the other side of the transaction “dual agency”
- Amount of commission or markup or markdown
- If the firm makes a market in the security
- If there is a control relationship between the firm and the issuer of the security
- Information regarding where the transaction was executed
- If the firm received payment for executing the order with another firm
- The time of execution or a statement that the time will be furnished upon request
- Settlement instructions
Clearly Erroneous Reports
If a registered representative reports the execution of a trade to a customer and that report is clearly an error, then that report is not binding on the agent or the firm. The customer must accept the trade as it actually occurred, not as it was erroneously reported so long as the transaction was in line with the terms of their order.
If a transaction gets executed away from a customer’s limit price or for too many shares of stock, the customer in not obligated to accept the transaction. A registered representative who is informed of an execution error should immediately inform their principal of the error. If a customer makes an error entering the terms of an order over an online trading platform the customer is obligated to accept the execution in line with the terms entered not as intended. The customer in this case should be advised to execute an order to reverse the trade over the online trading portalCorporate And Municipal Securities Settlement Options
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ProfessionalsFINRA/NASAA Series 26 Section 8 - Confirmation of Transactions and Account Statements. In this section information disclosure requirements, confirmations notifications disclosure and customer ...
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ProfessionalsRiskless Principal Transactions If a brokerage firm receives a customer order to buy or sell a security and the firm does not have an inventory position in the security, the firm may still elect ...
ProfessionalsFINRA Series 6 Exam Study Guide - Broker-Dealers. The section talks about the roles of security firms for executing customer transactions 1). Agent/Broker 2). Principal/Dealer.
ProfessionalsMost customer orders, which are market orders or executable limit orders, will be routed electronically to the trading post for automatic execution. The electronic system bypasses the firm’s ...
ProfessionalsOrder Tickets Prior to executing a customer’s order the representative must fill out the appropriate order ticket and present it to the trading department or wire room for execution. All ...
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