May an executing broker-dealer re-apply a locate for intra-day buy-to-cover trades?
A locate for a security may be re-applied for an intra-day buy-to-cover trade in the following scenario: Prior to a customer’s short sale of 100 shares of XYZ stock, the executing broker-dealer obtains an appropriate locate for the securities. The short sale is then executed. Subsequently that day, the broker-dealer purchases 100 shares of XYZ stock for the customer, and the customer’s net trading position is flat. If the customer wants to then sell short another 100 shares of XYZ stock in the same trading day, the executing broker-dealer may apply the original locate to that sale, provided that such subsequent short sale is for an amount of securities that is no greater than the amount of securities obtained in the original locate, and provided further that the source of the located shares indicates that the original locate is good for the entire trading day. For a “hard to borrow” security or a threshold security, a broker-dealer may not re-apply a locate for intra-day buy-to cover t
Related Questions
- I obtain the client’s permission before executing trades, but the brokerage firm will accept my instructions when trading on client accounts. Would I be considered to have discretionary authority?
- How should trades executed with a broker-dealer that is not a FINRA member be reported to FINRA?
- May an executing broker-dealer re-apply a locate for intra-day buy-to-cover trades?
