Trade Confirmations and the Series 7 Exam - dummies

Trade Confirmations and the Series 7 Exam

By Steven M. Rice

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)