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Question 1 of 10
1. Question
A member seeking registration as an ADF Market Participant shall file an application with FINRA in which the member:
I. Specifies whether the member is seeking registration in Nasdaq and/or CQS securities
II. Certifies the member’s good standing with FINRA
III. Demonstrates compliance with the net capital and other financial responsibility provisions of the Exchange Act
IV. Agrees that failing to submit 70% of the ADF Market Participant’s quoting and trading volume to the ADF will result in the forfeiture of some or all of the ADF Deposit Amount pursuant to the ADF Deposit Terms
Correct
FINRA Rule 6271
6271. Registration as an ADF Market Maker or ADF ECN
Incorrect
FINRA Rule 6271
6271. Registration as an ADF Market Maker or ADF ECN
Question 2 of 10
2. Question
No member or person associated with a member shall accept any payment or other consideration, directly or indirectly, from an issuer of a security, or any affiliate or promoter thereof, for publishing a quotation, acting as market maker in a security, or submitting an application in connection therewith. However, a member will not be precluded from accepting which of the following?
I. Payment for bona fide services, including, but not limited to, investment banking services (including underwriting compensation and fees)
II. Public offerings
III. Reimbursement of any payment for registration imposed by the SEC or state regulatory authorities and for listing of an issue of securities imposed by a self-regulatory organization
IV. Any payment expressly provided for under the rules of a national securities exchange that are effective after being filed with, or filed with and approved by, the SEC pursuant to the requirements of the Exchange Act
Correct
FINRA Rule 5250. Payments for Market Making
(a) No member or person associated with a member shall accept any payment or other consideration, directly or indirectly, from an issuer of a security, or any affiliate or promoter thereof, for publishing a quotation, acting as market maker in a security, or submitting an application in connection therewith.
(b) The provisions of paragraph (a) shall not preclude a member from accepting:
(1) payment for bona fide services, including, but not limited to, investment banking services (including underwriting compensation and fees);
(2) reimbursement of any payment for registration imposed by the SEC or state regulatory authorities and for listing of an issue of securities imposed by a self-regulatory organization; and
(3) any payment expressly provided for under the rules of a national securities exchange that are effective after being filed with, or filed with and approved by, the SEC pursuant to the requirements of the Exchange Act.
Incorrect
FINRA Rule 5250. Payments for Market Making
(a) No member or person associated with a member shall accept any payment or other consideration, directly or indirectly, from an issuer of a security, or any affiliate or promoter thereof, for publishing a quotation, acting as market maker in a security, or submitting an application in connection therewith.
(b) The provisions of paragraph (a) shall not preclude a member from accepting:
(1) payment for bona fide services, including, but not limited to, investment banking services (including underwriting compensation and fees);
(2) reimbursement of any payment for registration imposed by the SEC or state regulatory authorities and for listing of an issue of securities imposed by a self-regulatory organization; and
(3) any payment expressly provided for under the rules of a national securities exchange that are effective after being filed with, or filed with and approved by, the SEC pursuant to the requirements of the Exchange Act.
Question 3 of 10
3. Question
Which of the following refers to all rules and regulations adopted by the Commission pursuant to the act, including the forms for registration and reports and the accompanying instructions thereto?
Correct
Subpart A—Rules and Regulations Under the Securities Exchange Act of 1934
Rules of General Application: Definitions
The term rules and regulations
Incorrect
Subpart A—Rules and Regulations Under the Securities Exchange Act of 1934
Rules of General Application: Definitions
The term rules and regulations
Question 4 of 10
4. Question
Which of the following refer to the amount, expressed as a percentage of the warrant’s exercise value, by which the sum of the price at issuance and the exercise price of a warrant exceeds its exercise value?
Correct
Securities Act Rule 144A — Private Resales of Securities to Institutions:
(7) For purposes of this section, effective exercise premium means the amount, expressed as a percentage of the warrant’s exercise value, by which the sum of the price at issuance and the exercise price of a warrant exceeds its exercise value.
Incorrect
Securities Act Rule 144A — Private Resales of Securities to Institutions:
(7) For purposes of this section, effective exercise premium means the amount, expressed as a percentage of the warrant’s exercise value, by which the sum of the price at issuance and the exercise price of a warrant exceeds its exercise value.
Question 5 of 10
5. Question
A transfer of assets of such corporation or other person, to another person in consideration of the issuance of securities of such other person or any of its affiliates, if:
I. They are not securities of an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under section 8 of the Investment Company Act
II. Such plan or agreement provides for dissolution of the corporation or other person whose security holders are voting or consenting
III. Such plan or agreement provides for a pro rata or similar distribution of such securities to the security holders voting or consenting
IV. The board of directors or similar representatives of such corporation or other person, adopts resolutions relative to paragraph (a)(3) (i) or (ii) of this section within 1 year after the taking of such vote or consent
Correct
Securities Act Rule 145 — Reclassification of Securities, Mergers, Consolidations and Acquisitions of Assets
(3) Transfers of assets. A transfer of assets of such corporation or other person, to another person in consideration of the issuance of securities of such other person or any of its affiliates, if:
(i) Such plan or agreement provides for dissolution of the corporation or other person whose security holders are voting or consenting; or
(ii) Such plan or agreement provides for a pro rata or similar distribution of such securities to the security holders voting or consenting; or
(iii) The board of directors or similar representatives of such corporation or other person, adopts resolutions relative to paragraph (a)(3) (i) or (ii) of this section within 1 year after the taking of such vote or consent; or
(iv) The transfer of assets is a part of a preexisting plan for distribution of such securities, notwithstanding paragraph (a)(3) (i), (ii), or (iii) of this section.
Incorrect
Securities Act Rule 145 — Reclassification of Securities, Mergers, Consolidations and Acquisitions of Assets
(3) Transfers of assets. A transfer of assets of such corporation or other person, to another person in consideration of the issuance of securities of such other person or any of its affiliates, if:
(i) Such plan or agreement provides for dissolution of the corporation or other person whose security holders are voting or consenting; or
(ii) Such plan or agreement provides for a pro rata or similar distribution of such securities to the security holders voting or consenting; or
(iii) The board of directors or similar representatives of such corporation or other person, adopts resolutions relative to paragraph (a)(3) (i) or (ii) of this section within 1 year after the taking of such vote or consent; or
(iv) The transfer of assets is a part of a preexisting plan for distribution of such securities, notwithstanding paragraph (a)(3) (i), (ii), or (iii) of this section.
Question 6 of 10
6. Question
Which of the following refer to the service provided by FINRA that accommodates reporting for trades in OTC Equity Securities executed other than on or through an exchange and for trades in Restricted Equity Securities effected under Securities Act Rule 144A and dissemination of last sale reports?
Correct
FINRA Rule 6400 Series — Quoting and Trading in OTC Equity Securities
6420. Definitions
(n) “OTC Reporting Facility” means the service provided by FINRA that accommodates reporting for trades in OTC Equity Securities executed other than on or through an exchange and for trades in Restricted Equity Securities effected under Securities Act Rule 144A and dissemination of last sale reports. Regarding those OTC Equity Securities and Restricted Equity Securities that are not eligible for clearance and settlement through the facilities of the National Securities Clearing Corporation, the OTC Reporting Facility comparison function will not be available. However, the OTC Reporting Facility will support the entry and dissemination, as applicable, of last sale data on such securities.
Incorrect
FINRA Rule 6400 Series — Quoting and Trading in OTC Equity Securities
6420. Definitions
(n) “OTC Reporting Facility” means the service provided by FINRA that accommodates reporting for trades in OTC Equity Securities executed other than on or through an exchange and for trades in Restricted Equity Securities effected under Securities Act Rule 144A and dissemination of last sale reports. Regarding those OTC Equity Securities and Restricted Equity Securities that are not eligible for clearance and settlement through the facilities of the National Securities Clearing Corporation, the OTC Reporting Facility comparison function will not be available. However, the OTC Reporting Facility will support the entry and dissemination, as applicable, of last sale data on such securities.
Question 7 of 10
7. Question
Any member initiating or resuming quotations in reliance on the exception provided by SEA Rule 15c2-11(f)(2) must be able to demonstrate eligibility for the exception by making a contemporaneous record of:
I. The identification of each associated person who receives the unsolicited customer order or indication of interest directly from the customer, if applicable
II. The identity of the customer
III. The date and time the unsolicited customer order or indication of interest was received
IV. The terms of the unsolicited customer order or indication of interest that is the subject of the quotation
Correct
Rule 6432 — Compliance with the Information Requirements of SEC Rule 15c2-11
01. Any member initiating or resuming quotations in reliance on the exception provided by SEA Rule 15c2-11(f)(2) must be able to demonstrate eligibility for the exception by making a contemporaneous record of:
(a) the identification of each associated person who receives the unsolicited customer order or indication of interest directly from the customer, if applicable;
(b) the identity of the customer;
(c) the date and time the unsolicited customer order or indication of interest was received; and
(d) the terms of the unsolicited customer order or indication of interest that is the subject of the quotation (e.g., security name and symbol, size, side of the market, duration (if specified) and, if priced, the price).
Incorrect
Rule 6432 — Compliance with the Information Requirements of SEC Rule 15c2-11
01. Any member initiating or resuming quotations in reliance on the exception provided by SEA Rule 15c2-11(f)(2) must be able to demonstrate eligibility for the exception by making a contemporaneous record of:
(a) the identification of each associated person who receives the unsolicited customer order or indication of interest directly from the customer, if applicable;
(b) the identity of the customer;
(c) the date and time the unsolicited customer order or indication of interest was received; and
(d) the terms of the unsolicited customer order or indication of interest that is the subject of the quotation (e.g., security name and symbol, size, side of the market, duration (if specified) and, if priced, the price).
Question 8 of 10
8. Question
Shall halt trading otherwise than on an exchange in any NMS stock, as defined in Rule 600(b)(47) of SEC Regulation NMS, whenever any market that has the authority to call a regulatory halt in the security imposes a trading halt, or suspends the listing, to:
I. Permit dissemination of material news
II. Obtain information from the issuer relating to material news
III. Obtain information relating to the issuer’s ability to meet listing qualification requirements
IV. Execute a series of transactions for a significant dollar value at prices substantially unrelated to the current market for the security
Correct
FINRA Rule 6120 — Trading Halts
(a) Authority to Initiate Halts In Trading Otherwise Than on an Exchange in NMS Stocks
FINRA, pursuant to the procedures set forth in paragraph (b):
(1) shall halt trading otherwise than on an exchange in any NMS stock, as defined in Rule 600(b)(47) of SEC Regulation NMS, whenever any market that has the authority to call a regulatory halt in the security imposes a trading halt, or suspends the listing, to:
(A) permit dissemination of material news;
(B) obtain information from the issuer relating to material news;
(C) obtain information relating to the issuer’s ability to meet listing qualification requirements; or
(D) obtain any other information that is necessary to protect investors and the public interest.
Incorrect
FINRA Rule 6120 — Trading Halts
(a) Authority to Initiate Halts In Trading Otherwise Than on an Exchange in NMS Stocks
FINRA, pursuant to the procedures set forth in paragraph (b):
(1) shall halt trading otherwise than on an exchange in any NMS stock, as defined in Rule 600(b)(47) of SEC Regulation NMS, whenever any market that has the authority to call a regulatory halt in the security imposes a trading halt, or suspends the listing, to:
(A) permit dissemination of material news;
(B) obtain information from the issuer relating to material news;
(C) obtain information relating to the issuer’s ability to meet listing qualification requirements; or
(D) obtain any other information that is necessary to protect investors and the public interest.
Question 9 of 10
9. Question
What are the Transaction Reporting Outside Normal Market Hours like?
I. Last sale reports of transactions in ADF-eligible securities executed between 8:00 a.m. and 9:30 a.m. Eastern Time shall be reported as soon as practicable but no later than 15 seconds after execution and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours
II. Last sale reports of transactions in ADF-eligible securities executed between 4:00 p.m. and 6:30 p.m. Eastern Time shall be reported as soon as practicable but no later than 10 seconds after execution and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours
III. Last sale reports of transactions in ADF-eligible securities executed between midnight and 8:00 a.m. Eastern Time shall be reported by 8:15 a.m. Eastern Time on trade date and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours
IV. Last sale reports of transactions in ADF-eligible securities executed (i) between 6:30 p.m. and midnight Eastern Time or (ii) on any non-business day (i.e., weekend or holiday) shall be reported the following business day by 8:15 a.m. Eastern Time, be designated “as/of” trades to denote their execution on a prior day and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours
Correct
FINRA Rule 6282. Transactions Reported by Members to the ADF
(2) Transaction Reporting Outside Normal Market Hours
(A) Last sale reports of transactions in ADF-eligible securities executed between 8:00 a.m. and 9:30 a.m. Eastern Time shall be reported as soon as practicable but no later than 10 seconds after execution and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours.
(B) Last sale reports of transactions in ADF-eligible securities executed between 4:00 p.m. and 6:30 p.m. Eastern Time shall be reported as soon as practicable but no later than 10 seconds after execution and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours.
(C) Last sale reports of transactions in ADF-eligible securities executed between midnight and 8:00 a.m. Eastern Time shall be reported by 8:15 a.m. Eastern Time on trade date and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours.
(D) Last sale reports of transactions in ADF-eligible securities executed (i) between 6:30 p.m. and midnight Eastern Time or (ii) on any non-business day (i.e., weekend or holiday) shall be reported the following business day by 8:15 a.m. Eastern Time, be designated “as/of” trades to denote their execution on a prior day and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours.
Incorrect
FINRA Rule 6282. Transactions Reported by Members to the ADF
(2) Transaction Reporting Outside Normal Market Hours
(A) Last sale reports of transactions in ADF-eligible securities executed between 8:00 a.m. and 9:30 a.m. Eastern Time shall be reported as soon as practicable but no later than 10 seconds after execution and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours.
(B) Last sale reports of transactions in ADF-eligible securities executed between 4:00 p.m. and 6:30 p.m. Eastern Time shall be reported as soon as practicable but no later than 10 seconds after execution and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours.
(C) Last sale reports of transactions in ADF-eligible securities executed between midnight and 8:00 a.m. Eastern Time shall be reported by 8:15 a.m. Eastern Time on trade date and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours.
(D) Last sale reports of transactions in ADF-eligible securities executed (i) between 6:30 p.m. and midnight Eastern Time or (ii) on any non-business day (i.e., weekend or holiday) shall be reported the following business day by 8:15 a.m. Eastern Time, be designated “as/of” trades to denote their execution on a prior day and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours.
Question 10 of 10
10. Question
Which of the following refer to the Participant that is required to input the trade information, according to the requirements in the Rule 6280 Series?
Correct
The term “Reporting Party” or “Reporting Member” shall mean the Participant that is required to input the trade information, according to the requirements in the Rule 6280 Series
Incorrect
The term “Reporting Party” or “Reporting Member” shall mean the Participant that is required to input the trade information, according to the requirements in the Rule 6280 Series
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