Study Series 14 trading-practice controls, including confirmations, short-sale delivery and close-outs, trade reporting, clearly erroneous trades, order handling, capacity coding, reconciliations, and trade-error controls.
This section covers the operating rules that shape how trading actually occurs. Series 14 expects the compliance officer to understand order handling, modifiers, routing, auctions, and the market-structure rules that govern execution behavior. The purpose is not to turn the compliance officer into a trader. It is to make sure compliance can recognize when market activity violates a rule or breaks the firm’s controls.
Questions here often point to a trade fact pattern that looks technical on the surface but is really a compliance problem. A routing choice, modifier, or auction process may implicate best execution, order-handling discipline, or misuse of market structure. The safest answer usually reflects the rule that preserves fair execution and reviewable order handling.
The broader lesson is that market mechanics are part of compliance. If the compliance officer cannot interpret the trading process, the firm will miss problems until after regulators or customers identify them first.