Question

A customer who has routinely traded securities through your firm has placed an order to buy a security that is only listed on the Malaysian Stock Exchange. To effect the transaction, your firm must use a correspondent broker-dealer located in Malaysia that charges large special handling fees to cover Malaysian securities transfer taxes. Which statement is TRUE

Answer 1

the broker-dealer must notify the customer of the additional charges prior to executing the transaction

Step-by-step explanation:

In such a scenario, the statement that would be completely true is that the broker-dealer must notify the customer of the additional charges prior to executing the transaction. Since the broker is acting on behalf of the customer, then the customer needs to be notified beforehand in order for him/her to be able to analyze and decide whether or not they still want to go ahead with the transaction.