A broker-dealer executing a net basis transaction is required to?

In a net basis transaction, the broker-dealer is acting as a principal rather than an agent. This means they are purchasing the security and selling it to the customer at a mark-up, effectively taking on some of the risk associated with the trade. While the dealer does provide a confirmation of the transaction to the client, they are not required to disclose the specific amount of compensation they earn from this transaction. This is distinct from agency transactions where the broker must disclose their commission, as they are acting on behalf of the client.

By providing a confirmation, the broker-dealer ensures that the client has a record of the transaction details, which promotes transparency. However, the lack of a requirement to disclose the compensation in net basis transactions indicates that the broker-dealer's pricing strategy and profit structure remain proprietary, and they are not obligated to share the intricacies of their profit margins with clients. This reflects the nature of their role in such transactions and the regulatory framework surrounding these practices.