Investment Company and. Variable Contracts Products Principals (Series 26) Practice Exam

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Prepare for the Investment Company and Variable Contracts Products Principals Exam. Utilize flashcards and multiple-choice questions with detailed explanations. Excel in your Series 26 Exam!

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If a customer fails to deliver sold securities, how many days does the broker-dealer have to take action?

5 days
7 days
10 days
12 days

The correct answer is: 10 days

When a customer fails to deliver sold securities, broker-dealers are typically required to take action within a specific timeframe to protect the integrity of the market and adhere to regulatory guidelines. The standard period allowed for broker-dealers to address situations involving the failure to deliver is 10 days. During this time, the broker-dealer can initiate a buy-in process, which involves purchasing the securities in the open market to cover the short position. The 10-day window allows broker-dealers to manage any risks associated with unsettled trades, maintain liquidity, and ensure that the market remains orderly. Understanding this timeframe is crucial for managing compliance and operational risks for broker-dealers and maintaining proper functioning within securities transactions.