General Securities Sales Supervisor (Series10) Practice Exam

Under MSRB rules, which statement regarding Group orders is correct?

1. The dealer must disclose the identity of the person for whom the order is submitted

2. The manager must disclose to other syndicate members the identity of the person only after allocation

3. Allocations must cover the entire amount of the order

4. Group orders have priority over Pre-Sale orders

The correct answer is: The dealer must disclose the identity of the person for whom the order is submitted

The statement that the dealer must disclose the identity of the person for whom the order is submitted is correct because it aligns with the Municipal Securities Rulemaking Board (MSRB) regulations regarding transparency and fairness in the distribution of securities. MSRB rules require that when a member of a syndicate submits a Group order to a syndicate manager, that member must disclose the identity of the person for whom the order is being submitted at the time the order is placed. This provision is designed to ensure that every syndicate member can make informed decisions about their participation in the order and understand who the ultimate buyers are. Transparency is a cornerstone of MSRB regulations, which aim to maintain fair practices in the municipal securities market. The other options do not accurately reflect MSRB rules as they pertain to Group orders. For instance, the requirement for managers to disclose identities to other members only after allocation does not promote the transparency that the MSRB aims for. Additionally, while allocations should be fair and equitable, there is no strict rule that mandates they cover the entire amount of a group order, as portions may go unallocated based on market conditions or other factors. Lastly, it is not true that Group orders have inherent priority over Pre-Sale orders; priority is determined based