Unit 9: Brokerage Support Services Flashcards
_______ Department – sends proxy material to customers who have securities held in the broker-dealer’s name (street name).
Proxy
_______ are used in interdealer trades for which one party to the transaction does not recognize the trade or, if it does, disagrees with the terms of the trade as submitted by the other party. The term can also be used within a broker/dealer when an order or wire room does not recognize the account number or other information on an order ticket.
Don’t Know (DK)
The flow of an order through a brokerage firm
OPMC (Order Dept, P&S Dept, Margin Dept and finally Cashiering Dept)
The account name or number must be on the order ticket before order execution. If a mistake is made (e.g. wrong account number), no change to the order can be made without the approval of the principal or the branch manager. All of the facts surrounding the change must be put in writing and retained for ______ years.
three
The firm can act in one of two capacities in a customer transaction: _____ or _____
agency or dealer
If the firm acts as an ______, it is the broker between the buying and selling parties._______ receive commissions for transactions they perform, and commissions must be disclosed on confirmation.
agent;
Agents
If the firm acts as a ______ and transacts business for or from its inventory, it acts in a principal capacity and is compensated by a markup or markdown. Additionally, confirmations must disclose markups or markdowns for Nasdaq securities.
dealer
A firm can _______ act as both agent and principal in the same transaction.
never
If there is activity in an account or if penny stocks are held in the account, statements are sent monthly. If neither of these conditions exists, there are no activity, and penny stocks are not being held, then statements may be sent________.
quarterly
True or False? If a customer of a broker/dealer requests of copy of the firm’s most recent income statement in writing, the broker/dealer must comply.
FALSE: Upon request, the customer is entitled to the most recent balance sheet, not income statement.
_______ Date is the date on which ownership changes between buyer and seller.
Settlement
_________ Code standardizes the dates and times for each type of settlement.
Uniform Practice Code (UPC)
_______ settlement – for most securities transactions is the second business day following the trade date – T+2
Regular way
______ fee is one that is not excessive, compared with the fees charged by other broker/dealers or investment advisers charge for similar services.
Reasonable fee
A printed document that confirms a trade, its settlement date, and the amount of money due from or owed to the customer.
Trade confirmation
______ settlement requires delivery of securities from the seller and payment from the buyer on the same day a trade is executed.
Cash settlement
________ option contract – lets a customer lock in a selling price for securities without having to make delivery on the second business day. Instead the seller can settle the trade as specified in the contract. Buyer just needs one days written notice.
Seller’s
A ________ option contract works the same way as a seller’s option contract, with the buyer specifying when settlement will take place.
buyer’s
______ - _______transaction confirmation must include a description of the security with contract price (yield) and a trade date.
When-issued
*When-issued for municipal bonds cannot include accrued interest because settlement date is unknown.
A limited power of attorney that a stockholder gives to another person, transferring the right to vote on the stockholder’s behalf. (like an absentee ballot).
Proxy
The ______ department transmits orders to the proper markets for execution.
order department
The ________ department records all transactions and handles all billing. Mails out trade confirmations.
The purchases and sales (P&S) department
The ______, or credit department – handles activities involving credit for cash and margin accounts.
margin
The ______ department is responsible for receiving and delivering securities and money.
cashiering (cage)
