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Question 1 of 10
1. Question
Which of the following refer to the member firm that has been identified in the ADF as principal for clearing and settling a trade, whether for its own account or for a correspondent firm?
Correct
FINRA Rule 7110.
The term “Clearing Broker-Dealer” or “Clearing Broker” shall mean the member firm that has been identified in the ADF as principal for clearing and settling a trade, whether for its own account or for a correspondent firm.
Incorrect
FINRA Rule 7110.
The term “Clearing Broker-Dealer” or “Clearing Broker” shall mean the member firm that has been identified in the ADF as principal for clearing and settling a trade, whether for its own account or for a correspondent firm.
Question 2 of 10
2. Question
All transactions in securities, except “cash” transactions, shall be in which of the following?
I. “ex-dividend”
II. “ex-rights”
III. “ex-shares”
IV. “ex-warrants
Correct
FINRA/Nasdaq Uniform Practice Codes
Rule 11140. Transactions in Securities “Ex-Dividend,” “Ex-Rights” or “Ex-Warrants”
(a) Designation of Ex-Date
All transactions in securities, except “cash” transactions, shall be “ex-dividend,” “ex-rights” or “ex-warrants”:
Incorrect
FINRA/Nasdaq Uniform Practice Codes
Rule 11140. Transactions in Securities “Ex-Dividend,” “Ex-Rights” or “Ex-Warrants”
(a) Designation of Ex-Date
All transactions in securities, except “cash” transactions, shall be “ex-dividend,” “ex-rights” or “ex-warrants”:
Question 3 of 10
3. Question
Which of the following refers a member of FINRA that is not an OTC Market Maker with respect to a particular OTC Equity Security?
Correct
FINRA Rule 6420
“Non-Market Maker” means a member of FINRA that is not an OTC Market Maker with respect to a particular OTC Equity Security.
Incorrect
FINRA Rule 6420
“Non-Market Maker” means a member of FINRA that is not an OTC Market Maker with respect to a particular OTC Equity Security.
Question 4 of 10
4. Question
Proposed Rule 15g-1 would exempt which of the following selected transactions from the proposed disclosure obligations to customers?
1. Transactions in penny stocks by a broker-dealer that does less than 5 percent of its securities business in penny stocks and that has not been a market maker, during the past year, in the penny stock that is the subject of the transactions
II. Transactions in securities the issuer of which has net tangible assets exceeding $1 million, if that issuer has been in continuous operation for at least three years, or $4 million, if the issuer has been in continuous operation for less than three years
III. Transactions in securities where the customer is an institutional accredited investor
IV. Transactions that are not recommended by the broker-dealer
Correct
Proposed SEC Rule 15g-1 (Exemptions)
Proposed Rule 15g-1 would exempt selected transactions from the proposed disclosure obligations to customers as follows: (1) transactions in penny stocks by a broker-dealer that does less than 5 percent of its securities business in penny stocks and that has not been a market maker, during the past year, in the penny stock that is the subject of the transactions; (2) transactions in securities the issuer of which has net tangible assets exceeding $2 million, if that issuer has been in continuous operation for at least three years, or $5 million, if the issuer has been in continuous operation for less than three years; (3) transactions in securities where the customer is an institutional accredited investor; (4) transactions that are not recommended by the broker-dealer; and (5) transactions in which the purchaser is the issuer of the penny stock that is the subject of the transaction.
Incorrect
Proposed SEC Rule 15g-1 (Exemptions)
Proposed Rule 15g-1 would exempt selected transactions from the proposed disclosure obligations to customers as follows: (1) transactions in penny stocks by a broker-dealer that does less than 5 percent of its securities business in penny stocks and that has not been a market maker, during the past year, in the penny stock that is the subject of the transactions; (2) transactions in securities the issuer of which has net tangible assets exceeding $2 million, if that issuer has been in continuous operation for at least three years, or $5 million, if the issuer has been in continuous operation for less than three years; (3) transactions in securities where the customer is an institutional accredited investor; (4) transactions that are not recommended by the broker-dealer; and (5) transactions in which the purchaser is the issuer of the penny stock that is the subject of the transaction.
Question 5 of 10
5. Question
Which of the following refer to any equity security that meets the definition of “restricted security” as contained in Securities Act Rule 144(a)(3)?
Correct
FINRA Rule 6420. Definitions
“Restricted Equity Security” means any equity security that meets the definition of “restricted security” as contained in Securities Act Rule 144(a)(3).
Incorrect
FINRA Rule 6420. Definitions
“Restricted Equity Security” means any equity security that meets the definition of “restricted security” as contained in Securities Act Rule 144(a)(3).
Question 6 of 10
6. Question
Which of the following refer to directly or indirectly providing more than 25% of a person’s income in the prior calendar year. Persons living in the same household are deemed to be providing each other with material support?
Correct
FINRA Rule 5131. New Issue Allocations and Distributions
“Material support” means directly or indirectly providing more than 25% of a person’s income in the prior calendar year. Persons living in the same household are deemed to be providing each other with material support.
Incorrect
FINRA Rule 5131. New Issue Allocations and Distributions
“Material support” means directly or indirectly providing more than 25% of a person’s income in the prior calendar year. Persons living in the same household are deemed to be providing each other with material support.
Question 7 of 10
7. Question
The ATS demonstrates that:
I. The member subscribers are fully disclosed to one another at all times on the ATS
II. The system does not permit automatic execution, and a member subscriber must take affirmative steps beyond the submission of an order to agree to a trade with another member subscriber
III. The trade does not pass through any ATS account, and the ATS does not in any way hold itself out to be a party to the trade
IV. The ATS does not exchange shares or funds on behalf of the member subscribers, take either side of the trade for clearing or settlement purposes, including, but not limited to, at DTC or otherwise, or in any other way insert itself into the trade
Correct
The ATS demonstrates that:
I. The member subscribers are fully disclosed to one another at all times on the ATS
II. The system does not permit automatic execution, and a member subscriber must take affirmative steps beyond the submission of an order to agree to a trade with another member subscriber
III. The trade does not pass through any ATS account, and the ATS does not in any way hold itself out to be a party to the trade
IV. The ATS does not exchange shares or funds on behalf of the member subscribers, take either side of the trade for clearing or settlement purposes, including, but not limited to, at DTC or otherwise, or in any other way insert itself into the trade
Incorrect
The ATS demonstrates that:
I. The member subscribers are fully disclosed to one another at all times on the ATS
II. The system does not permit automatic execution, and a member subscriber must take affirmative steps beyond the submission of an order to agree to a trade with another member subscriber
III. The trade does not pass through any ATS account, and the ATS does not in any way hold itself out to be a party to the trade
IV. The ATS does not exchange shares or funds on behalf of the member subscribers, take either side of the trade for clearing or settlement purposes, including, but not limited to, at DTC or otherwise, or in any other way insert itself into the trade
Question 8 of 10
8. Question
Which of the following correctly define “ATS Trading Information”?
I. The number of shares of each NMS stock executed within the ATS or executed by the ATS’s member subscribers using the ATS’s system
II. The number of trades in each NMS stock executed within the ATS or executed by the ATS’s member subscribers using the ATS’s system
III. ATS Trading Information regarding NMS stocks in Tier 1 of the NMS Plan to Address Extraordinary Market Volatility
(B) ATS Trading Information regarding NMS stocks that are subject to FINRA trade reporting requirements and are not in Tier 1 of the NMS Plan to Address Extraordinary Market Volatility
Correct
FINRA Rule 6183. Exemption from Trade Reporting Obligation for Certain Alternative Trading Systems
“ATS Trading Information” means:
(A) the number of shares of each NMS stock executed within the ATS or executed by the ATS’s member subscribers using the ATS’s system; and
(B) the number of trades in each NMS stock executed within the ATS or executed by the ATS’s member subscribers using the ATS’s system.
Incorrect
FINRA Rule 6183. Exemption from Trade Reporting Obligation for Certain Alternative Trading Systems
“ATS Trading Information” means:
(A) the number of shares of each NMS stock executed within the ATS or executed by the ATS’s member subscribers using the ATS’s system; and
(B) the number of trades in each NMS stock executed within the ATS or executed by the ATS’s member subscribers using the ATS’s system.
Question 9 of 10
9. Question
A member’s registration as an ADF Market Participant shall not become effective until:
I. The member has received a notice of approval from FINRA in the designated security types specified in the member’s application pursuant to specifies whether the member is seeking registration in Nasdaq and/or CQS securities
II. The member has executed the Certification Record pursuant to execute the Certification Record, as defined in Rule 6220
III. FINRA and the member have executed execute a Participant Agreement with FINRA at least six months (or such other shorter time period as may be designated by FINRA) prior to quoting or reporting trades on the ADF
IV. Certifies the member’s good standing with FINRA
Correct
FINRA Alternative Display Facility (ADF) Rule 6200 Series
6271. Registration as an ADF Market Maker or ADF ECN
(b) A member’s registration as an ADF Market Participant shall not become effective until:
(1) the member has received a notice of approval from FINRA in the designated security types specified in the member’s application pursuant to paragraph (a)(1)(A);
(2) the member has executed the Certification Record pursuant to paragraph (a)(2); and
(3) FINRA and the member have executed:
(A) the application pursuant to paragraph (a)(1); and
(B) the Participant Agreement pursuant to paragraph (a)(3).
Incorrect
FINRA Alternative Display Facility (ADF) Rule 6200 Series
6271. Registration as an ADF Market Maker or ADF ECN
(b) A member’s registration as an ADF Market Participant shall not become effective until:
(1) the member has received a notice of approval from FINRA in the designated security types specified in the member’s application pursuant to paragraph (a)(1)(A);
(2) the member has executed the Certification Record pursuant to paragraph (a)(2); and
(3) FINRA and the member have executed:
(A) the application pursuant to paragraph (a)(1); and
(B) the Participant Agreement pursuant to paragraph (a)(3).
Question 10 of 10
10. Question
Which of the following refers to the display of a bid for an NMS stock at any time between 8:00 a.m. and 6:30 p.m. Eastern Time at a price that is higher than the price of an offer for such NMS stock previously disseminated pursuant to an effective NMS Plan, or the display of an offer for an NMS stock at any time between 8:00 a.m. and 6:30 p.m. Eastern Time at a price that is lower than the price of a bid for such NMS stock previously disseminated pursuant to an effective NMS Plan?
Correct
FINRA Rule 6240. Prohibition from Locking or Crossing Quotations in NMS Stocks
The term crossing quotation shall mean the display of a bid for an NMS stock at any time between 8:00 a.m. and 6:30 p.m. Eastern Time at a price that is higher than the price of an offer for such NMS stock previously disseminated pursuant to an effective NMS Plan, or the display of an offer for an NMS stock at any time between 8:00 a.m. and 6:30 p.m. Eastern Time at a price that is lower than the price of a bid for such NMS stock previously disseminated pursuant to an effective NMS Plan.
Incorrect
FINRA Rule 6240. Prohibition from Locking or Crossing Quotations in NMS Stocks
The term crossing quotation shall mean the display of a bid for an NMS stock at any time between 8:00 a.m. and 6:30 p.m. Eastern Time at a price that is higher than the price of an offer for such NMS stock previously disseminated pursuant to an effective NMS Plan, or the display of an offer for an NMS stock at any time between 8:00 a.m. and 6:30 p.m. Eastern Time at a price that is lower than the price of a bid for such NMS stock previously disseminated pursuant to an effective NMS Plan.
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