Which of the following is NOT a requirement when dealing with Agency Cross Transactions?

When dealing with Agency Cross Transactions, it is essential to understand the regulatory framework that governs these types of trades. Correctly identifying the requirement that is not typically mandated is crucial for compliance.

The necessity for written consent obtained from clients stems from the need to ensure that clients are fully aware of and agree to the risks and mechanics of agency cross trades. This consent confirms that clients understand how their trades will be executed and who will be executing them.

Annual disclosures regarding agency cross trades are required to promote transparency. This allows clients to be informed about the frequency and volume of such transactions, helping them understand the adviser’s trading practices and potential conflicts of interest.

Written confirmations detailing trades sent to clients is also a critical requirement, as it serves to provide clients with accurate information about their transactions, ensuring they can review and verify the trades conducted on their behalf. This enhances accountability and reinforces trust between the adviser and the client.

In contrast, pre-trade approval from a regulatory body is not a general requirement for agency cross transactions. While certain regulations may impose specific conditions regarding trading practices, obtaining individual trade approvals from regulatory bodies is not standard practice for agency cross trades. This differentiates it from the other requirements, which focus on client communication and consent.