Obtains and Verifies Customers' Purchase and Sales Instructions; Processes, Completes and Confirms Transactions
Taking and executing the order
Verify the instruction: buy or sell, security, quantity, order type (market, limit, stop), time-in-force (day, GTC), and the account. Note any discretion - without written authorization and principal approval you may not choose the security, the amount, or the timing. Limited time-and-price discretion on an unsolicited order is different and must still be documented.
Mutual fund and variable contract orders are forward priced: an order received before the fund's pricing time (generally 4:00 p.m. ET) receives that day's NAV; an order received later receives the next business day's NAV. Settlement for most securities is T+1; money market funds settle same day. The customer must have cash or securities in the account, or an arrangement to pay, by settlement.
Confirmations (SEC Rule 10b-10) must be sent at or before completion and show the security and CUSIP, whether the firm acted as agent (commission) or principal (markup or markdown on a trade with the firm), the price, trade and settlement dates, capacity, and the amount. For a fund purchase, deliver the prospectus with or before the confirmation.
Traps: backdating a trade to capture a better NAV (prohibited); marking an unsolicited order as solicited or vice versa; omitting capacity; accepting a verbal order without documenting the time and details.
Worked example: At 3:45 p.m. ET Tuesday a client says buy $10,000 of Fund X. The order is timely for Tuesday's 4:00 p.m. NAV. At 4:10 p.m., it prices at Wednesday's NAV. Record the time of receipt, send the confirmation, and deliver the prospectus.