SIPC Rules

Here is some good information for SIPC for the series 6, series 7, series 24, series 26, series 65, and series 66 exams

Customer Coverage

SIPC protects customers of a brokerage firm in much the same way that the FDIC protects customers of banks. SIPC covers customer losses that result from broker dealer failure, not for market losses. SIPC covers customers for up to $500,000 per separate customer. Of the $500,000, up to $100,000 may be in cash. Most broker dealers carry additional private insurance to cover larger accounts, but SIPC is the industry-funded insurance and is required by all broker dealers. The following are examples of separate customers:

Customer
Securities Market Value
Cash
SIPC Coverage

Mr. Jones
$320,000
$75,000
All
Mr. & Mrs. Jones
$290,000
$90,000
All
Mrs. Jones
$397,000
$82,000
All


All of the accounts shown would be considered separate customers and SIPC would cover the entire value of all of the accounts. If an account has in excess of $100,000 in cash, the individual would not be covered for any amount exceeding $100,000 in cash and would become a general creditor for the rest. SIPC does not consider a margin account and cash account as separate customers and the customer would be covered for the maximum of $ 500,000. SIPC does not offer coverage for commodities contracts and all member firms must display the SIPC sign in the lobby of the firm.

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Trade Executions

Here is some great information for trade exeuction for the Series 7 exam, Series 24 exam and series 62 exam.

Executing an Order

An important part of executing a customer’s order lies in the operational procedures that route the order to the markets and handle trade input functions for the order once it has been executed. The brokerage firm assigns specific departments to handle all of the important functions of trade execution and input. The departments are:

1. Order Room / Wire Room
2. Purchase and Sales Department
3. Margin Department
4. Cashiering Department
5. Order Room / Wire Room

Once a representative has received an order from a client, the representative must present the order for execution to the order room. The order room will promptly route the order to the appropriate market for execution. Once the order has been executed, the order room will forward a confirmation of the execution to the registered representative and to the purchase and sales department.

Purchase and Sales Department

Once the order has been executed the purchase and sales department inputs the transaction to the customer’s account. The purchase and sales department sometimes called “ P & S “ are also responsible for mailing confirmations to the customer and for all billing.

Margin Department

All transactions, regardless of the type of account, are sent through the margin department. The margin or credit department calculates the amount of money owed by the customer and the date when the money is due. The margin department will also calculate any amount due to a customer.

Cashiering Department

The cashiering department handles all receipts and distributions of cash and securities. All securities and payments delivered from clients to the firm are processed by the cashiering department. The cashiering department will also issue checks to customers and, at the request of the margin department, will forward certificates to the transfer agent.

take some free series 7 exam questions on our site at:
http://www.securitiesce.com/web/pages/series7/index.php

take some free series 24 exam questions on our site at:
http://www.securitiesce.com/web/pages/series24/index.php

take some free series 62 exam questions on our site at:
http://www.securitiesce.com/web/pages/series62/index.php