Registered representatives must create an order ticket for each order they place, which leaves a paper trail in case something goes wrong. The order ticket includes the customer’s account number, type of order, the number of shares specified, and other order specifications. Before an order can be placed, an order ticket must be filled out and submitted to the firm’s recordkeeping system.
After the order is placed, each registered representative’s supervisor is required to review their work “promptly,” which usually means by the end of the day. When you place orders for customers, your boss should check to ensure they’re placed properly. Sometimes referred to as the principal, your supervisor has the ability to update the order if there’s a mistake. Even if you notice the mistake first, your principal must approve changes made to the ticket.
If you place orders for customers in your career, you’re likely to encounter a customer placing an unsuitable order. For example, a retired customer with limited resources may want to place a trade for a very risky stock. It’s your responsibility to inform them of the risk they’re encountering. However, if they refuse to listen to you and insist on placing the order, you must place the order. Ultimately, the customer is in charge of their finances and decides what actually occurs in their account.
In this situation, it’s best to document your discussion with the client. Your firm will have a file on every customer that includes transaction history and notes on previous interactions. The investor’s expectations may be wrong and could result in losing significant amounts of money. Conversation notes could help cover the firm’s liability. If the trade resulted from a recommendation, the firm could be held liable if the trade was unsuitable.
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