What is a net trade?
A304.1: A net trade is a principal trade in which a broker-dealer, after having received an order to buy (sell) an equity security, purchases (sells) the security at one price and satisfies the original order by selling (buying) the security at a different price. The difference between the price of the initial transaction and the price of the offsetting transaction generally is considered the broker-dealer’s compensation. For net trades by a market maker, the market maker’s compensation generally is not separately disclosed on a customer confirmation; however NASD Rule 2441 imposes certain disclosure and consent obligations on the market maker. See NTMs 00-79 (November 2000), 01-85 (December 2001) and 06-47 (September 2006). See also NASD Rule 2441(e), which is discussed in FAQ 304.3. Because a non-market maker’s compensation would be separately disclosed on a customer confirmation under SEC Rule 10b-10(a), Rule 2441 does not impose disclosure and consent obligations on non-market make
