How should a dealer handle unsolicited orders for municipal securities?

• A. Confirm terms, ensure fair treatment of the customer, and document the order and rationale.
• B. Cancel the order immediately to avoid conflicts.
• C. Reassess the order only after settlement.
• D. Share client information with other dealers to obtain best price.

Answer: (A)

When a customer initiates an order, the dealer should treat it as the customer’s instruction and proceed by clearly confirming the exact terms and ensuring fair treatment throughout the process. This means restating the key details of the order (the security, quantity, price or yield, settlement date) back to the customer to confirm accuracy, and then executing or documenting the decision with a clear written record of the rationale for the action taken. Keeping a detailed record helps demonstrate that the order was handled properly, without pressure or favoritism, and provides an audit trail for compliance.

Canceling the order immediately would ignore the customer’s instruction and the opportunity to honor their request. Reassessing only after settlement delays the process and contradicts the customer’s initiated instruction. Sharing client information with other dealers to chase a better price would breach confidentiality and misalign with fair-dealing obligations.