Which statement about MSRB notification for sharing arrangements is true?

• A. Notification to MSRB is required
• B. Notification to MSRB is not required
• C. Notification is required only for large accounts
• D. Notification is required only if prohibited by principal

Answer: (B)

Sharing arrangements create a potential conflict of interest because multiple parties may receive compensation from the same customer relationship. The MSRB requires firms to disclose these arrangements to the customer in writing, so the customer understands who is involved and how they are compensated. There is no requirement to notify the MSRB itself, and the disclosure isn’t limited to large accounts or dependent on a principal’s prohibition. In practice, you provide the disclosure to the client, typically in account documents or a firm brochure, and the client acknowledges it.