About This Chapter
Customer Transactions & Confirmations - Chapter Summary
Regulations for customer transactions and confirmations can seem like an alphabet soup, but this chapter breaks them down into easily digestible chunks of information. You'll study FINRA rules, SEC regulations, NYSE rules, and CBOE rules. Lessons cover the basics of investment orders, securities lending, and various regulatory overseers. By the end of this chapter you will be able to:
- Describe types of investment offerings
- Explain best execution obligations
- List types of securities quotes
- Understand short sale requirements and strategies
- Detail disclosure of compensation to brokers or dealers
- Share FINRA rules related to transactions, order entry, equity securities, trading and COD orders
- Describe CBOE rules related to investment orders
- Point out SEC regulations related to customer quotations
Each lesson in this information-packed chapter was created by our professional instructors to help you recall pertinent details related to transactions and confirmations. Key terms are highlighted in the lessons, and you can get additional practice with the quizzes and worksheets. Since these lessons are self-paced, you are encouraged to go over each segment as much as you need in order to truly master the material.
1. Investment Orders, Offerings & Transactions in Customer Accounts
This lesson covers requirements for fulfilling customer orders and related rules including the Uniform Practice Code and Best Execution. A scenario is also included that provides additional context and guidance for complicated situations.
2. Types of Securities Quotes: Firm & Subject
This lesson deals with two different types of quotes for securities. Learn the difference between the types of quotes and their usage in trading on a daily basis.
3. What are the Types of Investment Orders?
You've been watching your favorite stock, waiting for the price to drop. It dips to $21.50, so you place a buy order. When you check your account, it says you paid $22.50. In this lesson, we explore how this can happen and how you can prevent it.
4. Short Sale Requirements & Strategies
In this lesson, we explore short sale requirements and strategies. You'll learn about order marking, margin requirements, investor types, FINRA Rule 4320, SEC Regulation SHO and other aspects of short sales.
5. Securities Lending: Hard to Borrow & Failure to Deliver
This lesson defines and provides an overview of securities lending. Hard to borrow securities and failure to deliver by the settlement date are discussed and examples of both are provided.
6. Disclosure of Compensation to Brokers or Dealers
This lesson deals with the disclosure of compensation to brokers or dealers as per SEC Rules and Regulation 15g-4 related to the penny stocks. Learn about characteristics of penny stocks, the disclosures regarding compensation and the timing of disclosure.
7. FINRA Rules Related to Transactions & Quotations
This lesson provides an overview of FINRA Rules related to transactions and quotations. You'll learn about FINRA Rule 5210, FINRA Rule 5220, and FINRA Rule 5260.
8. FINRA Rules Related to Order Entry & Execution Practices
There are many methods by which an investment order can be processed by a broker receiving an order. FINRA has requirements as to how market orders and limit orders are to be recorded and processed by the broker receiving the order.
9. FINRA Rules Related to OTC Equity Securities
This lesson summarizes FINRA Series 6400, 6500, and 6600, which are rules that regulate quotations, trades, and reports for over-the-counter equity securities.
10. FINRA Rules Related to Quoting & Trading in NMS Stocks
This lesson deals with FINRA Rule 6100 Series (Quoting and Trading in NMS Stocks), Rule 6110 (Trading Otherwise than on an Exchange), 6120 (Trading Halts), 6121 (Trading Halts Due to Extraordinary Market Volatility), and 6130 (Transactions Related to Initial Public Offerings).
11. FINRA Rule 11860 & COD Orders
This lesson discusses the process and requirement for buying a selling a security under FINRA Rule 11860. Key terms and concepts are explained for each step of the process.
12. CBOE Rules Related to Investment Orders
This lesson provides a quick overview of basic options concepts before discussing standardized order information and the two main types of orders for trading options as defined by the Chicago Board Options Exchange.
13. SEC Regulations Related to Customer Quotations
This lesson discusses SEC Rules and regulations related to quotations. Learn about SEC Rules that relate to the identification of quotations, initiation or resumption of quotations, and penny stock disclosures.
14. NYSE Rules Related to Customer Quotes & Orders
This lesson provides a high level overview of the NYSE rules as they apply to customer quotes and orders. Examples are used throughout the lesson for further understanding and context.
15. NYSE General Exchange Rules for Brokers & Dealers
This lesson provides an overview of rules that apply to investment professionals working on or with the NYSE for securities trading. These professionals include floor traders, dealers, brokers, and market makers.
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Other chapters within the Series 7 Exam: Study Guide & Practice course
- Advertising & Public Communication in the Securities Industry
- The New Issues Market
- New Issue Regulations in the Securities Industry
- Brokerage Account Types & Restrictions
- Retirement Plans & Tax-Advantaged Accounts
- Handling Customer Investment Information & Discretionary Accounts
- Obtaining Supervisory Approvals for Investment Accounts
- Analyzing Customer Investment Profiles
- Analyzing Customer Financial Statements
- Understanding Equity Securities
- Tax Treatment of Equity Securities Transactions
- Packaged Investment Products
- Variable Life Insurance & Annuities
- Real Estate Investment Trusts
- Direct Participation Programs
- Understanding Options in Investing
- Debt Securities
- Investing in Corporate Bonds
- Municipal Securities
- Municipal Securities Analysis & Regulations
- Registered Hedge Funds
- Asset-Backed Securities
- U.S. Government Agency Securities
- Investment Product Disclosures
- Customer Updates & Record Retention
- Transactional Delivery Obligations & Settlement Procedures
- Investment Disputes & Customer Complaints
- Addressing Margin Issues