The term "selling away" refers to when a broker sells securities products that are not offered by their firm. This can be a violation of FINRA Rule 3230, which requires firms to supervise the activities of their registered representatives. Selling away can also be a form of fraud if the products are not properly registered with the SEC. What are step out trades? A step out trade is a trade that is executed away from the current market price, typically to avoid slippage. Step out trades are usually placed with limit orders.
Does FINRA Rule 3210 apply to banks? Yes, FINRA Rule 3210 applies to banks. The Rule governs the process by which firms must register with FINRA in order to conduct business as broker-dealers. Among other things, the Rule requires firms to provide FINRA with information about their business activities, financial condition, and compliance with regulatory requirements. Banks that engage in the business of broker-dealers must register with FINRA in order to comply with the Rule. What is an execution broker? An execution broker is a firm that provides a service to its clients by executing trades on their behalf. The broker may be compensated for its services through commissions, fees, or a combination of both.
Execution brokers typically offer their services to institutional investors, such as banks, hedge funds, and pension funds, as well as to individual investors who trade through them. In some cases, an execution broker may act as a principal in a transaction, taking on the role of buyer or seller in order to provide liquidity to the market.
The term "execution broker" is used in different ways by different people. For some, it refers to any broker that provides execution services, while for others it specifically refers to a broker that does not also provide investment advice.
What is FINRA statutory disqualification?
FINRA Rule 2265 imposes a "statutory disqualification" on any broker-dealer firm or individual who is convicted of, or enters a plea of guilty or nolo contendere to, certain felonies or misdemeanors. The rule provides that a broker-dealer firm may not employ an individual who is statutorily disqualified, and that an individual who is statutorily disqualified may not engage in the business of a broker-dealer.
The types of convictions that trigger statutory disqualification include:
-Certain felonies involving securities, commodities, or banking, or any felony that is a "catalyst" for the commission of such a felony
-Certain felonies that are similar to the felonies listed above, even if they are not specifically enumerated in the rule
-Certain felonies involving fraud, theft, bribery, money laundering, or perjury
-Misdemeanors involving securities, commodities, or banking, or any misdemeanor that is a "catalyst" for the commission of such a misdemeanor
-Misdemeanors that are similar to the misdemeanors listed above, even if they are not specifically enumerated in the rule
-Certain state law equivalents to the offenses enumerated above. What is Interpositioning in finance? Interpositioning is a financial term that refers to the act of a broker placing themselves between a buyer and a seller in order to facilitate a transaction. This can be done for a variety of reasons, such as to help two parties who are unable to directly communicate with each other, or to provide additional services such as market analysis or advice. In some cases, interpositioning can also be used to exploit information asymmetries, whereby the broker is able to take advantage of their knowledge of both parties in order to extract a higher commission or fee.