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Question 1 of 10
1. Question
From the statements below regarding Rule 2-29 and related rules, which one seems to be inappropriate to you?
Correct
Rule 2-29 and related rules
National Futures Association (NFA) Rule 2-29 regarding promotional materials is one of a number of such rules intended to codify the Commodity Exchange Act (CEA) requirement to “establish minimum standards governing the sales practices of its members” and other associated persons. It is intended to augment other related compliance rules. These other related rules are as follows:
• Rule 2-14 regulates the advertising of commodity pool operators (CPOs) and commodity trading advisors (CTAs).
• Rule 2-2 applies to all members and associated persons (AP). It is concerned with fraud and deceit, and essentially requires that high ethical standards related to customer relationships be met.
• Rule 2-4 also applies to all members and associated persons (AP). It is concerned with just and equitable principles of trade, and requires that high commercial honor standards be met.Incorrect
Rule 2-29 and related rules
National Futures Association (NFA) Rule 2-29 regarding promotional materials is one of a number of such rules intended to codify the Commodity Exchange Act (CEA) requirement to “establish minimum standards governing the sales practices of its members” and other associated persons. It is intended to augment other related compliance rules. These other related rules are as follows:
• Rule 2-14 regulates the advertising of commodity pool operators (CPOs) and commodity trading advisors (CTAs).
• Rule 2-2 applies to all members and associated persons (AP). It is concerned with fraud and deceit, and essentially requires that high ethical standards related to customer relationships be met.
• Rule 2-4 also applies to all members and associated persons (AP). It is concerned with just and equitable principles of trade, and requires that high commercial honor standards be met. -
Question 2 of 10
2. Question
Which of the following statements is true regarding Arbitrable disputes?
Correct
Arbitrable disputes
In general, arbitration procedures are mandatory in situations where there is a dispute between a National Futures Association (NFA) member and a customer. In order for a dispute brought forth by a customer against a member or member associate to be arbitrable, the following three conditions must be met:
• The customer cannot be a futures commission merchant (FCM), a floor broker (FB), an NFA member, or an associated person (AP).
• The nexus of the dispute cannot involve cash market transactions that do not have a direct relationship to a futures transaction.
• The respondent NFA member or associate must be a futures commission merchant (FCM), a retail foreign exchange dealer (RFED), an introducing broker (IB), a commodity pool operator (CPO), a commodity trading advisor (CTA), or a leverage transaction merchant (LTM).Incorrect
Arbitrable disputes
In general, arbitration procedures are mandatory in situations where there is a dispute between a National Futures Association (NFA) member and a customer. In order for a dispute brought forth by a customer against a member or member associate to be arbitrable, the following three conditions must be met:
• The customer cannot be a futures commission merchant (FCM), a floor broker (FB), an NFA member, or an associated person (AP).
• The nexus of the dispute cannot involve cash market transactions that do not have a direct relationship to a futures transaction.
• The respondent NFA member or associate must be a futures commission merchant (FCM), a retail foreign exchange dealer (RFED), an introducing broker (IB), a commodity pool operator (CPO), a commodity trading advisor (CTA), or a leverage transaction merchant (LTM). -
Question 3 of 10
3. Question
Regarding Arbitrable disputes, which of the following statements is false?
Correct
Arbitrable disputes
In general, arbitration procedures are mandatory in situations where there is a dispute between a National Futures Association (NFA) member and a customer. In order for a dispute brought forth by a customer against a member or member associate to be arbitrable, the following three conditions must be met:
• The customer cannot be a futures commission merchant (FCM), a floor broker (FB), an NFA member, or an associated person (AP).
• The nexus of the dispute cannot involve cash market transactions that do not have a direct relationship to a futures transaction.
• The respondent NFA member or associate must be a futures commission merchant (FCM), a retail foreign exchange dealer (RFED), an introducing broker (IB), a commodity pool operator (CPO), a commodity trading advisor (CTA), or a leverage transaction merchant (LTM).Incorrect
Arbitrable disputes
In general, arbitration procedures are mandatory in situations where there is a dispute between a National Futures Association (NFA) member and a customer. In order for a dispute brought forth by a customer against a member or member associate to be arbitrable, the following three conditions must be met:
• The customer cannot be a futures commission merchant (FCM), a floor broker (FB), an NFA member, or an associated person (AP).
• The nexus of the dispute cannot involve cash market transactions that do not have a direct relationship to a futures transaction.
• The respondent NFA member or associate must be a futures commission merchant (FCM), a retail foreign exchange dealer (RFED), an introducing broker (IB), a commodity pool operator (CPO), a commodity trading advisor (CTA), or a leverage transaction merchant (LTM). -
Question 4 of 10
4. Question
From the statements below regarding third party claim, which one seems to be the most appropriate to you?
Correct
Third party claim
A third party claim (filed by a respondent against a party not subject to the proceedings) may be filed if the claim has arisen out of an act or a transaction that is the subject of the arbitration claim.Incorrect
Third party claim
A third party claim (filed by a respondent against a party not subject to the proceedings) may be filed if the claim has arisen out of an act or a transaction that is the subject of the arbitration claim. -
Question 5 of 10
5. Question
Which of the following statements is true regarding Arbitration panel?
Correct
Arbitration panel
The secretary of the National Futures Association (NFA) is responsible for appointing an arbitration panel to adjudicate dispute proceedings. Arbitration panel members must be NFA members or individuals associated with NFA members. The criteria for determining the size of an arbitration panel are as follows:
• For claims not greater than $100,000, the panel consists of a single panel member.
• For claims greater than $100,000, the panel consists of three panel members.
• For claims between $50,000 and not more than $100,000, an additional two members may be appointed upon the request of all parties involved.Incorrect
Arbitration panel
The secretary of the National Futures Association (NFA) is responsible for appointing an arbitration panel to adjudicate dispute proceedings. Arbitration panel members must be NFA members or individuals associated with NFA members. The criteria for determining the size of an arbitration panel are as follows:
• For claims not greater than $100,000, the panel consists of a single panel member.
• For claims greater than $100,000, the panel consists of three panel members.
• For claims between $50,000 and not more than $100,000, an additional two members may be appointed upon the request of all parties involved. -
Question 6 of 10
6. Question
Regarding filing and answer to a claim, which of the following statements is false?
Correct
Filing and answer to a claim
Once an arbitration claim has been filed, the National Futures Association (NFA) will initiate the proceedings by notifying each person named on the claim as a respondent. Answers must be filed by the respondent within the time periods below:
• for claims not exceeding $50,000, 20 days from the date of service of the claim by the NFA
• for claims greater than $50,000 but not exceeding $100,000, 45 days from the date of service of the claim by the NFA
• for claims greater than $100,000, 45 days from the date of service of the claim by the NFAIncorrect
Filing and answer to a claim
Once an arbitration claim has been filed, the National Futures Association (NFA) will initiate the proceedings by notifying each person named on the claim as a respondent. Answers must be filed by the respondent within the time periods below:
• for claims not exceeding $50,000, 20 days from the date of service of the claim by the NFA
• for claims greater than $50,000 but not exceeding $100,000, 45 days from the date of service of the claim by the NFA
• for claims greater than $100,000, 45 days from the date of service of the claim by the NFA -
Question 7 of 10
7. Question
From the statements below regarding individuals authorized to act as counsel, which one seems to be the most appropriate to you?
Correct
Individuals authorized to act as counsel
Parties to an arbitration proceeding held before the National Futures Association (NFA) are entitled to be assisted by counsel. Any party to such a dispute may be represented by:
• an attorney
• a non-compensated family member who has no vested interest in the outcome of the dispute
• an officer, partner, or employee of the partyIncorrect
Individuals authorized to act as counsel
Parties to an arbitration proceeding held before the National Futures Association (NFA) are entitled to be assisted by counsel. Any party to such a dispute may be represented by:
• an attorney
• a non-compensated family member who has no vested interest in the outcome of the dispute
• an officer, partner, or employee of the party -
Question 8 of 10
8. Question
Which of the following statements is true regarding hearing plan?
Correct
Hearing plan
During the pre-hearing phase of an arbitration proceeding held before the National Futures Association (NFA), the parties are expected to cooperate by exchanging all relevant documents and jointly contributing to the preparation of a hearing plan. A hearing plan is a document that summarizes each claim, each answer to a claim, and each reply to an answer. The document also includes:
• the factual and legal issues pertaining to the dispute
• a list of witnesses and exhibits that will be presented at the hearingIncorrect
Hearing plan
During the pre-hearing phase of an arbitration proceeding held before the National Futures Association (NFA), the parties are expected to cooperate by exchanging all relevant documents and jointly contributing to the preparation of a hearing plan. A hearing plan is a document that summarizes each claim, each answer to a claim, and each reply to an answer. The document also includes:
• the factual and legal issues pertaining to the dispute
• a list of witnesses and exhibits that will be presented at the hearing -
Question 9 of 10
9. Question
Which of the following statements is true regarding dismissal of a claim?
Correct
Dismissal of a claim
A panel may dismiss a claim either of its own initiative or at the request of one or both of the parties if it determines that the claim is not a proper subject for NFA arbitration. This determination is made at the panel’s discretion.Incorrect
Dismissal of a claim
A panel may dismiss a claim either of its own initiative or at the request of one or both of the parties if it determines that the claim is not a proper subject for NFA arbitration. This determination is made at the panel’s discretion. -
Question 10 of 10
10. Question
Regarding summary hearing, which of the following statements is false?
Correct
Summary hearing
An arbitration panel hearing is scheduled by the secretary of the National Futures Association (NFA). At the designated time, the parties are afforded the opportunity to appear, testify, and present evidence before the panel. A hearing can be a summary hearing (conducted using written material only) in the following three circumstances. The secretary of the panel must also agree to conduct a summary hearing.
• The amount of the claims in aggregate does not exceed $25,000.
• The amount of the claims in aggregate is greater than $25,000, but does not exceed $50,000, and one of the parties requests an oral hearing.
• Both parties request a summary hearing and the panel agrees to waive an oral hearing.Incorrect
Summary hearing
An arbitration panel hearing is scheduled by the secretary of the National Futures Association (NFA). At the designated time, the parties are afforded the opportunity to appear, testify, and present evidence before the panel. A hearing can be a summary hearing (conducted using written material only) in the following three circumstances. The secretary of the panel must also agree to conduct a summary hearing.
• The amount of the claims in aggregate does not exceed $25,000.
• The amount of the claims in aggregate is greater than $25,000, but does not exceed $50,000, and one of the parties requests an oral hearing.
• Both parties request a summary hearing and the panel agrees to waive an oral hearing.