Quiz-summary
0 of 10 questions completed
Questions:
- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10
Information
Certdemy Premium Access
You have already completed the quiz before. Hence you can not start it again.
Quiz is loading...
You must sign in or sign up to start the quiz.
You have to finish following quiz, to start this quiz:
Results
0 of 10 questions answered correctly
Your time:
Time has elapsed
You have reached 0 of 0 points, (0)
Categories
- Not categorized 0%
- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10
- Answered
- Review
-
Question 1 of 10
1. Question
Which of the following statements is true regarding floor broker vs. floor trader?
Correct
Floor broker vs. floor trader: A floor trader is an individual who conducts floor trading activities, but also acts on behalf of his or her own account. Although floor traders do not execute orders on behalf of customers, they are subject to the same registration requirements as floor brokers [National Futures Association (NFA) Registration Rule 205]. That is, they must be registered through the NFA, although they do not need to be actual members of the NFA.
Incorrect
Floor broker vs. floor trader: A floor trader is an individual who conducts floor trading activities, but also acts on behalf of his or her own account. Although floor traders do not execute orders on behalf of customers, they are subject to the same registration requirements as floor brokers [National Futures Association (NFA) Registration Rule 205]. That is, they must be registered through the NFA, although they do not need to be actual members of the NFA.
-
Question 2 of 10
2. Question
Regarding associated person, which of the following statements is true?
Correct
Associated person: An associated person is an individual who is employed by an FCM [or associated with an introducing broker (IB), a commodity trading advisor (CTA), or a commodity pool operator (CPO)] and involved in any capacity with the solicitation or acceptance of customer orders. An associated person (AP) must be sponsored for registration by an FCM or other registrant (such as an IB, a CTA, or a CPO). The AP must provide certification of such sponsorship to the National Futures Association (NFA). A prospective AP must also satisfy the proficiency requirements of the NFA by achieving a satisfactory score on the Series 3 exam. The registration of an AP will remain valid only while he or she is employed by the sponsor.
Incorrect
Associated person: An associated person is an individual who is employed by an FCM [or associated with an introducing broker (IB), a commodity trading advisor (CTA), or a commodity pool operator (CPO)] and involved in any capacity with the solicitation or acceptance of customer orders. An associated person (AP) must be sponsored for registration by an FCM or other registrant (such as an IB, a CTA, or a CPO). The AP must provide certification of such sponsorship to the National Futures Association (NFA). A prospective AP must also satisfy the proficiency requirements of the NFA by achieving a satisfactory score on the Series 3 exam. The registration of an AP will remain valid only while he or she is employed by the sponsor.
-
Question 3 of 10
3. Question
From the statements below regarding associated person, which one seems to be inappropriate to you?
Correct
Associated person: An associated person is an individual who is employed by an FCM [or associated with an introducing broker (IB), a commodity trading advisor (CTA), or a commodity pool operator (CPO)] and involved in any capacity with the solicitation or acceptance of customer orders. An associated person (AP) must be sponsored for registration by an FCM or other registrant (such as an IB, a CTA, or a CPO). The AP must provide certification of such sponsorship to the National Futures Association (NFA). A prospective AP must also satisfy the proficiency requirements of the NFA by achieving a satisfactory score on the Series 3 exam. The registration of an AP will remain valid only while he or she is employed by the sponsor.
Incorrect
Associated person: An associated person is an individual who is employed by an FCM [or associated with an introducing broker (IB), a commodity trading advisor (CTA), or a commodity pool operator (CPO)] and involved in any capacity with the solicitation or acceptance of customer orders. An associated person (AP) must be sponsored for registration by an FCM or other registrant (such as an IB, a CTA, or a CPO). The AP must provide certification of such sponsorship to the National Futures Association (NFA). A prospective AP must also satisfy the proficiency requirements of the NFA by achieving a satisfactory score on the Series 3 exam. The registration of an AP will remain valid only while he or she is employed by the sponsor.
-
Question 4 of 10
4. Question
Which of the following statements is false regarding associated person?
Correct
Associated person
Generally, all individuals who have contact with customers for the purpose of securing orders and all individuals in the related supervisory chain must register as associated persons (APs) with the National Futures Association (NFA). The exceptions to the AP registration requirement are as follows:
• The individual is already registered with the National Futures Association (NFA) as either a futures commission merchant (FCM), an introducing broker (IB), or a floor broker (FB).
• The individual is already registered as a commodity pool operator (CPO) in association with a CPO, unless he or she is already registered with the National Association of Securities Dealers (NASD) and futures activity is specific to the CPO only.
• The individual is already registered as a commodity trading advisor (CTA) in association with a CTA.Incorrect
Associated person
Generally, all individuals who have contact with customers for the purpose of securing orders and all individuals in the related supervisory chain must register as associated persons (APs) with the National Futures Association (NFA). The exceptions to the AP registration requirement are as follows:
• The individual is already registered with the National Futures Association (NFA) as either a futures commission merchant (FCM), an introducing broker (IB), or a floor broker (FB).
• The individual is already registered as a commodity pool operator (CPO) in association with a CPO, unless he or she is already registered with the National Association of Securities Dealers (NASD) and futures activity is specific to the CPO only.
• The individual is already registered as a commodity trading advisor (CTA) in association with a CTA. -
Question 5 of 10
5. Question
Regarding associated person, which of the following statements is true?
Correct
Generally, all individuals who have contact with customers for the purpose of securing orders and all individuals in the related supervisory chain must register as associated persons (APs) with the National Futures Association (NFA). The exceptions to the AP registration requirement are as follows:
• The individual is already registered with the National Futures Association (NFA) as either a futures commission merchant (FCM), an introducing broker (IB), or a floor broker (FB).
• The individual is already registered as a commodity pool operator (CPO) in association with a CPO, unless he or she is already registered with the National Association of Securities Dealers (NASD) and futures activity is specific to the CPO only.
• The individual is already registered as a commodity trading advisor (CTA) in association with a CTA.Incorrect
Generally, all individuals who have contact with customers for the purpose of securing orders and all individuals in the related supervisory chain must register as associated persons (APs) with the National Futures Association (NFA). The exceptions to the AP registration requirement are as follows:
• The individual is already registered with the National Futures Association (NFA) as either a futures commission merchant (FCM), an introducing broker (IB), or a floor broker (FB).
• The individual is already registered as a commodity pool operator (CPO) in association with a CPO, unless he or she is already registered with the National Association of Securities Dealers (NASD) and futures activity is specific to the CPO only.
• The individual is already registered as a commodity trading advisor (CTA) in association with a CTA. -
Question 6 of 10
6. Question
Which of the following statements are not included in the Rule 401?
Correct
Rule 401
Rule 401 states that any National Futures Association (NFA) applicant acting in the following roles is required to demonstrate proficiency via a satisfactory score on the Series 3 proficiency exam:
• futures commission merchant (FCM)
• retail foreign exchange dealer (RFED)
• introducing broker (IB)
• commodity pool operator (CPO)
• commodity trading advisor (CTA)
• leverage transaction merchant (LTM)
• any associated person (AP) associated with the above rolesIncorrect
Rule 401
Rule 401 states that any National Futures Association (NFA) applicant acting in the following roles is required to demonstrate proficiency via a satisfactory score on the Series 3 proficiency exam:
• futures commission merchant (FCM)
• retail foreign exchange dealer (RFED)
• introducing broker (IB)
• commodity pool operator (CPO)
• commodity trading advisor (CTA)
• leverage transaction merchant (LTM)
• any associated person (AP) associated with the above roles -
Question 7 of 10
7. Question
Regarding exemption of CPO, which of the following statements is true?
Correct
Exemption of CPO
A CPO may be exempt from NFA registration if certain characteristics of the pool fall below certain size and operational thresholds. For example, if a CPO’s compensation is limited to cover his operating expenses, if the CPO operates only one pool, and if the pool is not advertised, then the CPO may be exempt. Another way a CPO may be exempt is if none of the pools he operates has more than 15 participants and if the total aggregate gross capital contributions for his managed pools do not exceed $400,000.Incorrect
Exemption of CPO
A CPO may be exempt from NFA registration if certain characteristics of the pool fall below certain size and operational thresholds. For example, if a CPO’s compensation is limited to cover his operating expenses, if the CPO operates only one pool, and if the pool is not advertised, then the CPO may be exempt. Another way a CPO may be exempt is if none of the pools he operates has more than 15 participants and if the total aggregate gross capital contributions for his managed pools do not exceed $400,000. -
Question 8 of 10
8. Question
From the statements below regarding the exempt individuals, which one is not included?
Correct
Individuals who provide trading advice
The exempt individuals include:
• individuals who advise no more than 15 people, and do not present themselves to the public as a CTA
• individuals engaged in a business subject to state regulation (such as an insurance company)
• individuals engaged in the business of cash markets, such as dealers, brokers, or sellers
• individuals engaged in various other professions specifically defined by the CEAIncorrect
Individuals who provide trading advice
The exempt individuals include:
• individuals who advise no more than 15 people, and do not present themselves to the public as a CTA
• individuals engaged in a business subject to state regulation (such as an insurance company)
• individuals engaged in the business of cash markets, such as dealers, brokers, or sellers
• individuals engaged in various other professions specifically defined by the CEA -
Question 9 of 10
9. Question
Which of the following statements is true regarding individuals who provide trading advice?
Correct
Individuals who provide trading advice
Generally speaking, an individual qualifies as a CTA if advice is provided either directly or indirectly. However, NFA registration rules provide a registration requirement exemption if the advice provided is not specifically tailored to the individual account of a customer. Examples would include publications such as books and periodicals, which present the same advice to all readers. Exemptions also exist for those whose advisory services are an incidental part of their trade or business.Incorrect
Individuals who provide trading advice
Generally speaking, an individual qualifies as a CTA if advice is provided either directly or indirectly. However, NFA registration rules provide a registration requirement exemption if the advice provided is not specifically tailored to the individual account of a customer. Examples would include publications such as books and periodicals, which present the same advice to all readers. Exemptions also exist for those whose advisory services are an incidental part of their trade or business. -
Question 10 of 10
10. Question
Which of the following statements is false regarding IB and FCM?
Correct
IB and FCM
An IB cannot accept customer funds, and therefore requires the services of an FCM. The FCM may act either in a service provider capacity, where the IB remains independent, or in a guarantor capacity. An IB acting under a guaranty agreement with an FCM is required to process all customer activity through the guarantor FCM. An independent IB is not restricted to using a specific FCM to process customer account activity. Regulations prevent an IB from accepting customer funds with the exception of checks made payable to a futures commission merchant (FCM). Therefore, an IB must register as an FCM in order to accept customer payments. An IB that registers as an FCM is subject to a higher threshold with respect to minimum capital and reporting requirements.Incorrect
IB and FCM
An IB cannot accept customer funds, and therefore requires the services of an FCM. The FCM may act either in a service provider capacity, where the IB remains independent, or in a guarantor capacity. An IB acting under a guaranty agreement with an FCM is required to process all customer activity through the guarantor FCM. An independent IB is not restricted to using a specific FCM to process customer account activity. Regulations prevent an IB from accepting customer funds with the exception of checks made payable to a futures commission merchant (FCM). Therefore, an IB must register as an FCM in order to accept customer payments. An IB that registers as an FCM is subject to a higher threshold with respect to minimum capital and reporting requirements.