Quick Answer
Every order needs a ticket at entry recording the account, security, side, quantity, price, timing, whether it was solicited, and the rep ID. Every trade needs a confirmation sent at or before settlement disclosing the trade date, security identity, quantity, price, and whether the firm acted as agent or principal.
Every trade requires proper documentation: at the time of entry (order ticket) and after execution (customer confirmation). These records protect both the customer and the firm.
What Are the Order Ticket Requirements?
Every order must be recorded on an order ticket at the time of entry. Required information includes:
| Field | Details |
|---|---|
| Account number | Customer's account identifier |
| Security symbol/description | Ticker or name of the security |
| Buy or sell | Direction of the order |
| Quantity | Number of shares or bonds |
| Price/order type | Market, limit, stop, etc. |
| Time of entry | When the order was received |
| Time of execution | When the order was filled |
| Solicited or unsolicited | Whether the rep recommended the trade |
| Registered rep ID | The representative handling the order |
Solicited vs. unsolicited: This distinction matters for suitability and supervisory purposes. A solicited trade (recommended by the rep) triggers Reg BI or the FINRA suitability rule; an unsolicited trade (initiated by the customer) triggers neither, though the firm must still accept it in good faith and flag activity that is clearly unsuitable or indicative of manipulation.
Exam Tip: Gotchas
- The order ticket must note whether the trade was solicited or unsolicited. This is a required field, not optional, and directly affects suitability review.
What Governs Customer Confirmations?
Customer confirmations are governed by FINRA's customer-confirmation rule and the SEC trade-confirmation rule.
When Must a Confirmation Be Delivered?
- Must be sent at or before the completion of the transaction (settlement date)
What Disclosures Are Required?
A confirmation discloses the following; the notes show which items are required only for certain securities or are standard practice:
- Trade date, and the settlement date for National Market System (NMS) stock, over-the-counter (OTC) equity, and municipal trades
- Security identity (name; the Committee on Uniform Securities Identification Procedures (CUSIP) number is customary and required on municipal confirmations)
- Quantity (shares or par value)
- Price per share or bond
- Capacity: whether the firm acted as agent (broker) or principal (dealer)
- Commission (if agent); a markup/markdown (if principal) only in the cases the confirmation rules specify, such as most principal trades in NMS stock and same-day offsetting corporate, agency or municipal debt trades with a non-institutional customer
- Net amount due from or to the customer (standard practice)
- Accrued interest (for debt securities, as standard practice; the Municipal Securities Rulemaking Board (MSRB) generally requires it on municipal confirmations)
How Do Agent and Principal Differ on Confirmations?
- Agent (broker): Charges a commission, shown as a separate line item on the confirmation
- Principal (dealer): Charges a markup or markdown, built into the price; itemized on the confirmation only in the cases the confirmation rules specify
Exam Tip: Gotchas
- Confirmations must disclose whether the firm acted as agent or principal. The fee structure differs: commissions are itemized separately, while markups are built into the price.
- Accrued interest appears on debt security confirmations (MSRB rules require it for municipal securities). The buyer pays accrued interest to the seller in addition to the purchase price.
- Confirmations must be sent by settlement date, not trade date. The rule says "at or before completion of the transaction" (settlement).
- This page covers the confirmation a customer receives. The document two broker-dealers exchange to match a trade is a comparison, covered with Don't Know (DK) notices in the Settlement Failures and Close-Out Procedures lesson.
What Should You Check on Exam Day?
- Confirm the order ticket's required fields, especially the solicited-versus-unsolicited flag, since it drives the suitability review.
- Match the confirmation's timing rule ("at or before completion of the transaction," meaning settlement date) rather than trade date.
- Distinguish agent compensation (itemized commission) from principal compensation (markup or markdown built into price), and remember accrued interest applies only to debt securities.