The Charles Schwab Corporation and Includable Subsidiaries - Page 17

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          respondent, all the actions that remain to be performed by                         
          petitioner after the trade date are of a ministerial nature to                     
          effectuate the mechanics of the transfer and are merely in                         
          confirmation of the trade executed.  We agree with respondent.                     
                Petitioner is a member of all major U.S. securities                          
          exchanges.  The essential service that petitioner provides to its                  
          customers is the execution of trades through its access to the                     
          securities exchanges.  It is through this access that the                          
          customer acquires the ability to make a trade.  Indeed,                            
          petitioner’s statement of Terms and Conditions, which states the                   
          agreement between petitioner and the customer, provides that                       
          petitioner "executes orders for securities only and does not give                  
          investment advice."  There is no mention of posttrade services,                    
          such as recording, confirmation, or booking.                                       
                Moreover, the price of the securities that a customer                        
          purchases or sells and the amount of commission due to petitioner                  
          are determined as of the trade date.  If petitioner does not                       
          receive payment on a purchase or sale order executed for the                       
          customer, it liquidates the customer’s account to collect the                      
          amount, including the commission, determined on the trade date.                    
          Upon execution of a customer order, a written confirmation is                      
          generated automatically and is sent to the customer on the next                    
          business day following the trade date.  The written confirmation                   
          serves as an invoice and as written notification to the customer                   
          of the trade.  The confirmation statement itemizes the total cost                  




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Last modified: May 25, 2011