Chapter 3 - Net Transactions with Customers ( FINRA RULE 2124)

Question 1

Net Transaction

Answer 1

A net transaction is a principal transaction in which a market maker, after having received an order to buy an equity security, purchases the equity security at one price (from another broker-dealer or another customer) and then sells to the customer at a different price.

Question 2

For noninstitutional customers, a member must

Answer 2

obtain the customer’s written consent on an order-by-order basis, and such consent must evidence the customer’s understanding of the terms and conditions of the transaction.

Question 3

For institutional customers, a member may

Answer 3

For institutional customers (as defined earlier in this Unit), a member may obtain consent on an order-by-order basis, using one of three methods.

written

negative consent

oral