75. A customer calls his registered representative (RR) and asks her to buy shares of a company in his non-discretionary individual retirement account (IRA). The RR is permitted to:
Answer: B
The RR is permitted to decide when to purchase the shares that day.
In a non-discretionary account, the registered representative (RR) is allowed to execute trades based on the customer's instructions, including the timing of those trades. Therefore, the RR can decide when to purchase the shares requested by the customer within the same trading day.
A) Investment management services.
This option is incorrect because investment management services generally involve discretionary authority, where an RR makes investment decisions without needing explicit customer approval for each transaction. In this scenario, the customer has a non-discretionary account, which means the RR cannot provide such services without the client’s ongoing consent.
B) Decide when to purchase the shares that day.
This option is correct as it aligns with the nature of a non-discretionary account. The RR can take action to execute a trade during the trading day based on the customer's request, thus having the authority to determine when to make the purchase.
C) Hold the order until the following trading day.
This option is incorrect because, while an RR can choose to delay an order, this is not a standard practice for executing a customer's request for shares in a non-discretionary account. The RR should act on the order as soon as possible unless the customer specifies otherwise.
D) Purchase the shares in the customer's margin account.
This option is incorrect as it contradicts the scenario presented. The customer specifically requested a purchase in his non-discretionary IRA, and utilizing a margin account would not align with the request for an IRA transaction, which typically does not allow margin buying.
Conclusion
The correct answer, B, confirms that the RR can decide when to execute the trade as long as it is aligned with the customer's instructions in a non-discretionary account. Options A, C, and D fail because they either misinterpret the nature of the account or the authority of the RR, highlighting the importance of understanding the operational limits within different account types.