why “if fully discloses its agreement with members to boost transactions over some initial launch period” is not a violation of CFA standards? here it refer to an aggreement with its client to commit to a substantial minimum trading volume to the new stock over a certain period in exchange for substantial reductions on their regular commissions. I think it is against the code. how do you think? Thanks.
That is not boosting the price. The dealer is just agreeing to up the liquidity of the security. You get in trouble when you do it to mislead someone.
but it is still a violation of CFA code, is it? Thanks. mwvt9 Wrote: ------------------------------------------------------- > That is not boosting the price. The dealer is > just agreeing to up the liquidity of the security. > > > You get in trouble when you do it to mislead > someone.
no violation.
I think you are getting confused with the violation: buying/selling a security with intent to boost volume so it SEEMS like there is greater volume/liquidity than there is. you can promote liquidity by buying/selling a security during a launch - this is actually fine as you are helping clients whereas in my previous example you are misleading them.