Rule 10b-10 under the Securities Exchange Act of 1934 ("Exchange Act") requires broker-dealers to disclose basic trade information to customers regarding their securities transactions. The information required by Rule 10b-10 includes: the date and time of the transaction, the identity and number of shares bought or sold, and the trading capacity of the broker-dealer. In addition, depending on the trading capacity of the broker-dealer, the Rule requires the disclosure of commissions and, under specified circumstances, mark-up and mark-down information. For transactions in debt securities (other than U.S. savings bonds and municipal securities) the Rule requires the disclosure of redemption and yield information. For transactions in securities futures products in a futures account, the Rule permits alternative information disclosure requirements. This alternative information includes, the date the transaction was executed; the identity and number of shares bought or sold; the price, the delivery month, and the exchange on which the transaction was executed; the source and amount of broker remuneration; whether the broker received payment for order flow; and, the fact that other specified information about the execution of the transaction will be available upon written request.
Rule 10b-10 also requires broker-dealers to inform their customers if they are not members of the Securities Investor Protection Corporation ("SIPC"). The purpose of this disclosure is to ensure that customers are not led to believe that their accounts are subject to SIPC protection when they are not. In addition, the Rule requires broker-dealers to state on confirmations whether they receive payment for order flow.
The confirmation has become a customary tool in the industry, and it serves several functions: firms use it as a billing statement; it serves as a customer invoice; it informs investors of the details of a transaction allowing the customer to check for errors or misunderstandings; it provides consumer information, allowing investors to evaluate the cost and quality of the services provided by broker-dealers; it discloses possible conflict of interest that may arise between the investor and broker-dealer; and it safeguards against fraud, by permitting the customer to detect problems associated with a transaction.
US Code:
15 USC 78a
Name of Law: Securities and Exchange Act of 1934
On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).
The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control number;
If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.
DGL REVISED 2013 10b-10 SS.pdf
Electronic Confirmation of Securities Transactions (17 C.F.R. 240.10b-10)