Rule 408T Discretionary Power in Customers' Accounts
/01 Automatic Money Market Fund Redemptions
Member organizations that establish an automatic money market fund redemption program for customers having both a securities and money fund account, wherein the customer may elect to have securities purchases paid for via an automatic liquidation of fund shares, will not be required to obtain a customer's written authorization provided that:
1) written notice is sent to applicable customers which informs them of the existence of such programs and sets forth the procedures to be followed in order to participate in the program or to elect not to do so, and
2) such written notice outlines the specific procedures followed by the member organization in effecting automatic redemptions including the steps a customer must take to override the automatic redemption procedure in any specific purchase transaction.
It should be noted that this interpretation applies only to an established money market fund redemption program and should not be construed to permit member organizations or their associated persons to execute transactions in other types of securities without specified authorization from a customer.
/02 Identification of Discretionary Orders
A member organization will be deemed in compliance with the Rule 408T(b) requirement that every order entered on a discretionary basis must be identified as discretionary on the order at the time of entry, if it assigns a specific series of numbers or symbols to its discretionary accounts. All orders entered for such accounts will be considered "identified as discretionary" by the account numbers or symbols unless "DNE" (Discretion Not Exercised) is marked on the order tickets.
A member organization's written statement of supervisory procedures and compliance manual should reflect such allocation of specific series of numbers or symbols as being assigned to discretionary accounts if such a system is used.
|Amended by SR-FINRA-2019-009 eff. May 8, 2019.|