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Petitioner's strategy is to serve self-directed customers,
focusing on those who do not need or want to pay, through
commissions, for research, investment advice, or portfolio
management. As a result, a customer could save up to 76 percent
compared to rates charged by full-commission brokers. By
concentrating on unsolicited transactions on an agency basis,
petitioner substantially avoids the risk of losses and
liabilities faced by full-commission firms that engage in
investment banking, underwriting, market-making, arbitrage, and
other advisory and principal activities. Moreover, petitioner's
customers are not assigned to a particular representative but,
instead, may trade with any available representative. As a
result, the departure of a registered representative from
petitioner does not typically result in a loss of customers.
The "trade date" is the day a trade occurs. On this day, a
customer’s order is executed by locating a seller or purchaser
for securities on terms acceptable to the customer. The date on
which petitioner settles the accounts of a customer whose order
to buy or sell securities has been executed is termed the
"settlement date". Settlement is the process of transferring
payment from buyer to seller and certificates from seller to
buyer. When customers buy securities, petitioner must receive
the full confirmed amount due no later than the settlement date.
When customers sell securities, petitioner must receive the stock
certificates, properly endorsed, by the settlement date.
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Last modified: May 25, 2011