Erroneous Reports, Errors, Cancels, and Rebills
Chapters in this video
- 0:00 Trade error disasters: wrong security, quantity, price, account, and reversal
- 1:00 Who pays: the firm absorbs loss, the customer is protected
- 2:14 The golden rule: customer never disadvantaged, profits belong to the firm
- 3:58 Cancel and rebill mechanics: operations, approval, and blotter logging
- 5:22 Trade error versus erroneous report: execution versus communication
- 6:32 Rapid-fire exam recap
What this video covers
- The five classic trade error types: wrong security, wrong quantity, wrong price, wrong account, and buy/sell reversal
- Why the customer must never be disadvantaged by a trade error, and why the firm (not the rep personally) absorbs the financial loss
- Why accidental profits from trade errors belong to the firm, not the registered representative, unless the firm has a written policy stating otherwise
- The two-step cancel and rebill process, and why it requires operations department handling plus supervisory approval
- Why both the cancel and rebill must appear on the firm's daily blotter, and what frequent cancel/rebill activity signals to regulators
- The difference between a trade error (physically wrong execution, fixed with cancel/rebill) and an erroneous report (correct execution, wrong reported price)
- Why an erroneous report on an options exchange does not void the trade, and why the actual execution price is binding regardless of what was reported
Read the full lesson, free
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