series 24 Exam

Here is some great information for the series 24 exam relating to net transactions with customers:


Net Transactions With Customers:




A broker dealer when acting as principal may execute a transaction for a customer as a “net transaction”. In a net transaction the broker dealer will purchase the security in the market place at one price and sell it to the customer at a higher price for a profit instead of charging the customer a markup. The profit received by the broker dealer is not reported on the customer’s confirmation, which only shows the net price. Because the trades take place at two different prices both trades must reported to the tape though the NASDAQ TRF. Individual customers must give the broker dealer written permission for each trade to be executed on a net basis. Institutional customers may approve net transactions orally, in writing or may give blanket consent by not replying to a negative consent letter which would allow the institution to opt out of net transactions by replying to the letter.

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