Friday, July 24, 2009

Order or Trade Tickets

The Series 7 is not all about crunching numbers; in fact, you might be surprised how little you use the calculator provided at the testing center. So, if options and certain bond questions intimidate you, please know that you can make up for that by knowing your vocabulary terms inside-out and knowing a lot of rules and procedures for the industry. One term you might encounter on your exam is "order ticket" or "trade ticket." Whenever a registered representative enters a buy or sell order for securities, the broker-dealer wants him to record certain information. The regulators also require that certain information be recorded at a minimum. Most of this is intuitive. If a customer tells you to buy 1,000 shares of ORCL for $21 or better, certain information is going to be required on the order ticket. How about if we identify the customer's account on this ticket? Sounds prudent. How about if we identify ourselves as the registered rep responsible either for getting the commission or screwing up the order, perhaps both? Then, we should probably indicate whether the customer placed the order himself--unsolicited--after we talked about it--solicited--or (much scarier) if we're using our discretion. This is a rather specific order, so we need to indicate "the terms and conditions of the order," which are that the customer will take 1,000 shares ORCL as long as the price is $21 or lower. Don't fill this order at $21.01, in other words.
As at most businesses, we should probably put down the time the order was received by the customer, and the department that places the trade can then record the time the trade was executed and the price.
The firm would probably require some more information on the trade ticket, but this is a regulatory exam, so know the minimum that is required on a trade ticket. Know that a principal must review each one by the end of the day and approve/reject each order. And, finanally, know that trade tickets are kept for three years, two years in a readily accessible location.

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