A client phones in a buy order Monday afternoon. Before it leaves your desk, the ticket must carry the right fields, the confirmation must promise the right settlement date, and the payment clock must start ticking. Miss any one and the trade is non-compliant before it executes.
You first verify the customer's instructions: which security, buy or sell, how many shares, and any price condition (market, limit, stop). The order ticket records all of it. Required fields include the security symbol, the account number, the price, the quantity, the order type, the time of entry, and whether the trade was solicited or unsolicited. The ticket is the audit trail, so it is time-stamped before routing.
Most equity orders route through automated execution systems that match and execute small marketable orders instantly, returning an execution report that feeds the confirmation.
The confirmation discloses trade date, settlement date, price, quantity, capacity (agent or principal), and commission or markup. It must reach the customer at or before completion of the transaction, which means by settlement.
Common mistakes
- Confusing settlement with payment. Settlement is T+1; the customer's Reg T payment deadline is S+2, not the same day.
- Using the old T+2 cycle. Rule 15c6-1 regular-way settlement is T+1 for equities and corporate bonds.
- Reducing the wrong open orders. Only buy limits and sell stops drop on the ex-date; sell limits and buy stops do not.
Bottom line
- An order ticket must capture the security symbol, account number, price, buy or sell, quantity, time stamp, and solicited or unsolicited.
- SEC Rule 15c6-1 sets regular-way settlement at T+1 (one business day after trade date) for most securities.
- A confirmation must be sent at or before completion of the transaction, meaning by settlement date.
- Regulation T requires customer payment promptly, and in any case within two business days after settlement (S+2).
Exam shortcut
Two clocks: settlement T+1, Reg T payment S+2. If the question asks "pay by when," count to S+2. Open-order rule: only orders below the market (buy limits, sell stops) drop on the ex-date; DNR blocks it. Municipal uniform practice is G-12; corporate uniform practice is the 11000 Series. Match the code to the product.
The full lesson (about 1,082 words, 7 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- D12
Browse all free Series 6 lessons or jump into free Series 6 practice questions.