An adviser acting as principal for its own account in a trade with an advisory client must disclose in writing the capacity in which it is acting and obtain the client's consent before completion of each transaction. Blanket, advance consent does not satisfy the rule.
Principal Transactions by Advisers: a worked example
An adviser affiliated with a dealer wants to sell a client bonds from inventory; it needs consent for that specific trade.
What is the difference between Principal Transactions by Advisers and Agency Cross Transactions?
Principal = the adviser is the other side of the trade; consent per transaction. Agency cross = the adviser brokers between two parties, one an advisory client; prior written consent, and it cannot have recommended both sides.