Anti-Reciprocal Rule

DEFINITION of 'Anti-Reciprocal Rule'

A rule created by the Financial Industry Regulatory Authority (FINRA) to protect individual investors from conflicts of interest that may arise when brokerage firms and mutual funds collaborate.

BREAKING DOWN 'Anti-Reciprocal Rule'

The main violation the rule is designed to prevent is an arrangement between a brokerage firm and a mutual fund wherein the brokerage firm directs its clients to the mutual fund company (generating sales) and the mutual fund, in turn, sends its trades through the brokerage firm (generating commissions). Brokerage firms and mutual funds can be fined by FINRA (formerly the NASD) if there is proof that they have violated anti-reciprocal rules.

RELATED TERMS
  1. No Transaction Fee Mutual Fund

    A mutual fund that is offered to investors by a brokerage firm ...
  2. Fund Supermarkets

    An investment firm or brokerage that offers investors a wide ...
  3. Block House

    A brokerage firm with the primary focus of locating potential ...
  4. Selling Away

    When a broker solicits you to purchase securities not held or ...
  5. Mutual Fund Yield

    Dividend payments divided by the value of a mutual fund’s shares. ...
  6. Firm Order

    1. A market order to buy or sell a security for a brokerage's ...
Related Articles
  1. Investing Basics

    What's a Brokerage Account?

    A brokerage account is a contractual arrangement between an investor and a licensed securities broker or brokerage.
  2. Financial Advisors

    Mutual Funds: How Many is Too Many? (VTSMX, VBMFX)

    How many mutual funds are too many when it comes to a well diversified portfolio?
  3. Mutual Funds & ETFs

    How Mutual Funds Differ Around The World

    Learn which country has the strictest rules on mutual fund construction and why.
  4. Investing Basics

    How liquid are Fidelity mutual funds?

    Review the liquidity features of mutual fund shares and an overview of Fidelity mutual funds. Most investors look for convenient access to their investments.
  5. Mutual Funds & ETFs

    Mutual Fund Basics Tutorial

    Learn about the basics - and the pitfalls - of investing in mutual funds.
  6. Mutual Funds & ETFs

    Introduction To Money Market Mutual Funds

    Learn about the easiest way to benefit from money market securities.
  7. Mutual Funds & ETFs

    Mutual Funds: Introduction

    As you probably know, mutual funds have become extremely popular over the last 20 years. What was once just another obscure financial instrument is now a part of our daily lives. More than 8 ...
  8. Investing

    Advising FAs: Explaining Mutual Funds to a Client

    More than 80 million people, or half of the households in America, invest in mutual funds. No matter what type of investor you are, there is bound to be a mutual fund that fits your style.
  9. Career Education & Resources

    This Is How Much Mutual Fund Managers Make

    Learn about the high-paying salaries of mutual fund managers and the low level of transparency in income reporting by mutual fund companies.
  10. Mutual Funds & ETFs

    Trading Mutual Funds for a Living: Is It Possible?

    Find out why trading mutual funds for a living isn't your best bet, including how funds discourage short-term trading and which options may better serve you.
RELATED FAQS
  1. How much of a company's stock can a mutual fund own?

    There is no written rule that stipulates how much of a company a mutual fund can own. Instead, there are two major factors ... Read Answer >>
  2. Is it a good idea to buy mutual funds from banks?

    Mutual funds offer consumers a great way to access a professionally-managed group of assets at a relatively low cost, with ... Read Answer >>
  3. If I am American, can I buy a foreign mutual fund?

    That depends. It is possible for you to buy a mutual fund issued in a country other than the United States; however, the ... Read Answer >>
  4. How can an investor profit from the increase in popularity of discount brokerages?

    Find out how investors benefit when brokerages compete with each other, and how discount brokerages are changing the market ... Read Answer >>
  5. What is the difference between a modified duration and a Macaulay duration?

    Understand how investors and savers can use money market mutual funds and conventional savings accounts, and learn the differences ... Read Answer >>
  6. How do I calculate the loan-to-value ratio using Excel?

    Learn what a mutual fund and a money market fund are, and understand the differences between each and how they serve various ... Read Answer >>
Hot Definitions
  1. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  2. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  3. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  4. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  5. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  6. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
Trading Center