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SEC Grants FIF Exemption from Issuing Confirmations of Orphaned Fractional Share Trades

The SEC Division of Trading and Markets (the "Division") granted the Financial Information Forum, acting on behalf of its registered broker-dealer members (and similarly situated broker-dealers), an exemption from the requirement to issue trade-by-trade confirmations for certain orphaned fractional share trades contained in Exchange Act Rule 10b-10(a).

The Division noted that its decision is based on representations that firms will:

  • not charge a transaction-based fee for orphaned fractional share liquidations;
  • disclose in customers' monthly account statements all transaction details and information that Rule 10b-10(a) would otherwise require to be disclosed in the confirmations;
  • supply general disclosures on, among other things, how orphaned fractional shares will be liquidated; and
  • continue to send confirmations for any transaction other than orphaned fractional share trades, as per Exchange Act Rule 10b-10.

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