BD Rules on Callable Securities


Securities with an early call option raise two significant customer protection issues. First, when a customer purchases a security, it is important that the customer understand that there can be no assurance that the issuer will not redeem before maturity, and that such early redemption is particularly likely where the instrument pays a high interest rate relative to the market. Therefore, the confirmation for a callable security must disclose its "yield to call" as well as its "yield to maturity." In addition, when a security is called, a broker-dealer must allocate the call between its customers who hold the relevant securities by a fair procedure.'s picture
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Rules on Confirmations

Rule on Calls

FINRA Rule 4340 (Callable securities) 



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