Office Of Compliance Inspections And Examinations: Examinations Of Broker-Dealers Offering Online Trading

Topics:
Strategic Planning and Analysis
Tags:
Compliance,
E-business/E-Commerce,
Examination,
Internet,
Microsoft Office,
Online Trading,
Staff
Source:
U.S. Securities and Exchange Commission

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Overview: This study defines about the research or examinations of broker-dealers offering online trading that revealed examples of sound practices as well as areas where some broker-dealers can enhance their practices. It provides some basic measures include providing help screens on web sites with explanations of key investing terms and concepts; taking steps to prevent executions of unintended duplicate orders; providing enhanced margin disclosure, including a list of securities with higher margin requirements and the actual interest rate that will be charged on margin balances; describing the IPO allocation process; and informing customers with cash accounts of their trading liabilities. Firms should evaluate their advertising to ensure that they do not inflate investor expectations. Firms should also scrutinize their order routing practices to ensure they are meeting their legal obligation to seek the best execution of their customers' orders. As technology plays an increasing role in broker-dealer operations, firms should constantly monitor the adequacy of their systems. Firms should evaluate their operational capability to accept and to process appropriately customers' securities transactions. The Staff recommends that broker-dealers evaluate their own online trading programs in light of the issues described in the report.

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Format: HTML | Date: Jan 2001 | Pages: 1

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