Registered representatives must create an order ticket for every order they enter. The order ticket creates a paper trail in case a problem comes up later. It typically includes the customer’s account number, the type of order, the number of shares, and any other order instructions. You must complete the order ticket and submit it to the firm’s recordkeeping system before the order is entered.
After the order is entered, a supervisor must review the registered representative’s work promptly (usually by the end of the day). When you enter customer orders, your supervisor checks that the order was entered correctly and follows firm procedures. This supervisor is often called the principal. If there’s an error, the principal can correct the order ticket. Even if you spot the mistake first, any change to the ticket must be approved by the principal.
In practice, you may also run into a customer who wants to place an unsuitable order. For example, a retired customer with limited resources might want to buy a very risky stock. Your responsibility is to explain the risks and why the trade may not be appropriate for their situation. If the customer still insists on placing the order, you must enter it. The customer ultimately controls what happens in their account.
When a customer insists on an unsuitable trade, document the discussion. Firms maintain a file for each customer that includes transaction history and notes from prior interactions. If the customer’s expectations are unrealistic, the trade could lead to significant losses. Clear notes can help address questions about what was discussed and may help limit the firm’s liability. If the trade resulted from a recommendation and was unsuitable, the firm could be held liable.
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