Customer Trade Confirmations and Completing a Transaction
SEC Rule 10b-10 dictates that a trade confirmation must be given to a customer at or before the completion of a transaction. The SEC defines the conditions for when a transaction is complete.
A purchase is judged to be complete when the securities are paid for on the settlement date, which must occur no later than two business days after the trade date (T+2). Likewise, a sale is judged to be complete when the securities are delivered on the settlement date. The sale can be judged to be complete before the settlement date if the securities were both delivered and paid for before the settlement date.
You can remember these dates with the acronym PPSS: completion of Purchase is when Payment is complete; completion of a Sale is when Securities are delivered.
The following information must be disclosed on the required trade confirmation:
- • Date and time of the transaction
- • Name of the security
- • Price of the security
- • Number of shares purchased or sold
- • Whether the broker-dealer was acting in an agency capacity for the customer
- • If the broker-dealer was acting in an agency capacity for another person, then the name of the person and the compensation the broker-dealer will receive from the other party for the transaction.
- • Whether the broker-dealer was acting in a principal capacity for its own account
- » If acting as a principal, whether the broker-dealer is a market maker in the security
- » If a principal transaction, the reported trade price and any difference between the trade price and the price to the customer
- • Whether th