A customer expects the right investment in the right account. The order ticket records the required information for customer purchase and sale instructions, including orders never executed.
Under Securities and Exchange Commission (SEC) Rule 17a-3, record the security name or symbol, account number, purchase or sale, quantity or dollar amount, and price instructions. Include order conditions, receipt and transmission times, responsible representative, and whoever accepted or entered it. Identify customer electronic entry and discretionary orders. Preserve modifications, cancellations, execution price, and execution or cancellation time when feasible.
Confirm the fund and share class before processing. A symbol identifies the investment; the account number identifies whose money and securities are involved. For certain direct issuer subscriptions or redemptions, retained subscription agreements or issuer-required documents can replace a separate memorandum.
If an account could be named after the fill, a profitable execution could be steered to a favored customer once the price is known. The Financial Industry Regulatory Authority (FINRA) Rule 4515 generally requires account designation before execution.
Common mistakes
- Calling Thursday the settlement date in Example 2 confuses T+3 payment with Tuesday's T+1 settlement.
- Increasing a “Do Not Increase” order to 225 shares ignores its quantity restriction; it stays 150.
- Treating a reverse split like a 3-for-2 split misses the cancellation requirement.
Bottom line
- Order records identify the account, security, terms, timing, responsible persons, and changes.
- Forward pricing uses the next calculated NAV; POP includes applicable front-end sales charges.
- Customer confirmations generally must be sent at or before transaction completion.
- Covered regular-way trades settle T+1; Regulation T's ordinary payment period is T+3.
Exam shortcut
Identify what the question is timing: execution, settlement, customer payment, dealer transmission, or redemption. Then choose the clock and cross out nonbusiness days only where required. For an order adjustment, check order type, corporate action, and special instructions before calculating. A reverse split ends the calculation immediately. For fund pricing, identify whether the charge is based on POP before using the percentage.
The full lesson (about 2,939 words, 21 min read) adds 2 worked examples, all 5 common mistakes, a self-check, free in the app.
Learning objectives
- D12
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