General Securities Sales Supervisor (Series10) Practice Exam

What must a dealer in a competitive bid offering disclose upon customer request?

1. The spread

2. The takedown

3. The order priority provisions

4. The names of the syndicate members

The correct answer is: The order priority provisions

In a competitive bid offering, a dealer is required to disclose the order priority provisions upon customer request. This information is critical because order priority determines the sequence in which orders are filled during the bidding process. Clients who are participating in a competitive bidding situation need to understand how their orders will be handled in relation to other orders. This transparency helps clients make informed decisions about their participation in a competitive environment. The provisions can reveal how the interests of different bidders will be managed, ensuring fairness and clarity in the competitive process. The other choices are also valuable pieces of information but are not mandated for disclosure upon customer request in this specific context. The spread reflects the difference between the bid and ask price, the takedown refers to the portion of the underwriting discount that goes to the selling group for a new issue, and the names of the syndicate members pertain to those involved in the underwriting process. While all these elements contribute to an understanding of the bid offering, they are not specifically required disclosures in response to inquiries from customers in the same way that order priority provisions are.