FINRA Rule 2124 Net Orders
BTIG, LLC (“BTIG” or “the Firm”) has sent you a letter to confirm our understanding of handling “net” orders you may decide to place with us.
“Net” orders will be accepted only when mutually agreed upon at the time of the placement of the order. BTIG will generally not take a “net” order on a “held” basis. Further, under the SEC Order Handling Rules, “held” orders often require the Firm to purchase or sell shares at the same price at which the Firm bought or sold the same security. In those cases, the Firm would add a commission, commission equivalent or other fee, which would be inconsistent with a “net” order. Therefore, the Firm does not take “net” orders on a “held” basis. “Not Held” orders give the Firm the flexibility and discretion to act in your best interest by working your orders to obtain the best possible price. “Not held” orders are not subject to the SEC Order Handling Rules.
It is our understanding that you place “net” orders1 with BTIG as an institutional customer2 or a registered broker-dealer. These transactions are executed by BTIG on a principal basis at a price that may be different than the price reported to you on your confirmation. “Net” orders result in executions which exclude disclosed markups, markdowns, commission equivalents, or other fees; the reported price includes any imputed remuneration charged to you by BTIG.
If you no longer wish to have your orders handled on a “net basis”, please inform your BTIG salesperson. If we do not hear from you within two weeks of the date upon which the letter is dated, we will continue to accept net orders when agreed upon at the time you place your order.
1 FINRA Rule 2124 defines a “net” transaction as a principal transaction in which a market maker, after receiving an order to buy (sell) an equity security, purchases (sells) the equity security at one price (from (to) another broker/dealer or customer) and then sell to (buys from) the customer at a different price. 2 FINRA Rule 4512© defines the term “institutional account” as; (A) a bank, savings and loan association, insurance company, or registered investment company; (B) an investment advisor registered either with the Securities and Exchange Commission under Section 203 of the Investment Advisors Act of 1940 or with a state securities commission (or any agency or office performing like functions), or; (C) any other entity (whether a natural person, partnership, trust, otherwise) with total assets of at least $50 million.