Q8. Select the most appropriate policy statement for Preston regarding Standard III(B) concerning Fair Dealing for allocation of block trades.

A)   "Preston shall not discriminate against any client account, and all clients will receive the same price for order execution and will be charged the same commission, if applicable. Block trades will be allocated pro rata before or immediately after the execution of the block trade."

B)   "Preston shall not discriminate against any client account, and all clients will receive the same price for order execution and will be charged the same commission, if applicable. However, larger clients, who are more profitable, can be allocated trades on a preferential basis consistent with general business practice in many industries."

C)   "Preston shall not discriminate against any client account, and all clients will receive the same price, adjusted for quantity discounts, for order execution and will be charged commissions based on number of shares allocated. Block trades will be allocated pro rata before or immediately after the execution of the block trade."

答案和详解如下：

Q8. Select the most appropriate policy statement for Preston regarding Standard III(B) concerning Fair Dealing for allocation of block trades.

A)   "Preston shall not discriminate against any client account, and all clients will receive the same price for order execution and will be charged the same commission, if applicable. Block trades will be allocated pro rata before or immediately after the execution of the block trade."

B)   "Preston shall not discriminate against any client account, and all clients will receive the same price for order execution and will be charged the same commission, if applicable. However, larger clients, who are more profitable, can be allocated trades on a preferential basis consistent with general business practice in many industries."

C)   "Preston shall not discriminate against any client account, and all clients will receive the same price, adjusted for quantity discounts, for order execution and will be charged commissions based on number of shares allocated. Block trades will be allocated pro rata before or immediately after the execution of the block trade."

Correct answer is A)

Standard III(B) addresses fair dealing when it comes to clients. Block trades, if executed at different prices, must be allocated in such a way that all client accounts are charged the same average price and commission. One way to achieve this fair allocation is to allocate them pro rata across all accounts, with no preferential treatment. The suitability of investments for a particular client is covered by Standard III(C).