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Trade Confirmations and the Series 7 Exam

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2016-03-26 07:09:43
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Series 7 Exam: 1001 Practice Questions For Dummies
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For the Series 7 exam, you need to know some basic information about trade confirmations. A trade confirmation (receipt of trade) is the document you send to a customer after a trade has taken place. You have to send out trade confirmations after each trade, at or before the completion of the transaction (the settlement date). Here's a list of information included in the confirmation:

  • The customer's account number

  • The registered rep's ID number

  • The trade date

  • Whether the customer bought (BOT) or sold (SLD)

  • The number of shares of stock or the par value of bonds purchased or sold

  • The yield (if bonds)

  • The Committee on Uniform Security Identification Procedures (CUSIP) number, a security ID number

  • The price of the security

  • The total amount paid or received, not including commission

  • The commission, which is added on purchases and subtracted on sales (if the broker-dealer purchased for or sold from its own inventory, the markdown or markup doesn't have to be disclosed)

  • The net amount, or the amount the customer paid or received after adding or subtracting the commission (if the investor purchased or sold bonds, the accrued interest is added or subtracted during this calculation)

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Steven M. Rice is a partner in Empire Stockbroker Training Institute, one of the country’s leading schools for securities industry training. He is also an instructor at Empire, and his upbeat training style, entertaining sense of humor, and extensive knowledge are highly regarded by his students. Rice also is the author of Series 7 For Dummies.