Trading, Accounts & Prohibited ActsQuestion 210 of 398
A customer's trade confirmation shows a commission charge rather than a markup. This indicates the firm executed the trade in what capacity?
a.As a principal from inventory
b.As a dealer making a market
c.As an underwriter in a new issue
d.As an agent for the customer
Explanation
A commission is charged only when a firm acts as an agent (broker), arranging a trade between the customer and a third party. When a firm acts as a principal (dealer) trading from its own inventory, it charges a markup or markdown instead.
Law Reference: Securities Exchange Act of 1934Practice all 398 questions free — no signup required.
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