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Question 1 of 10
1. Question
Which documents are necessary to maintain for the record-keeping of any promotinal materials?
Correct
According to NFA RULE 2-29:
Copies of all promotional material together with a record of the review and approval required pursuant to paragraph (e) of this Rule and supporting material for any results described pursuant to paragraphs (b)(5)-(6) or (c) of this Rule shall be maintained by each Member and shall be available for review for the periods specified in CFTC Regulation 1.31, measured from the date of final use.
Incorrect
According to NFA RULE 2-29:
Copies of all promotional material together with a record of the review and approval required pursuant to paragraph (e) of this Rule and supporting material for any results described pursuant to paragraphs (b)(5)-(6) or (c) of this Rule shall be maintained by each Member and shall be available for review for the periods specified in CFTC Regulation 1.31, measured from the date of final use.
Question 2 of 10
2. Question
Which of the following comes in the category of “promotional material”?
Correct
According to NFA RULE 2-29 "promotional material" includes:
(1) Any text of a standardized oral presentation, or any communication for publication in any newspaper, magazine or similar medium, or for
broadcast over television, radio, or other electronic media, which is disseminated or directed to the public concerning a futures
account, agreement or transaction.
(2) Any standardized form of report, letter, circular, memorandum or publication which is disseminated or directed to the public; and (iii)
any other written material disseminated or directed to the public for the purpose of soliciting a futures account, agreement or
transaction.
(3) Any uniform form of paper, email, document, memorandum or publication disseminated or directed to the public.
(4) Any other written material disseminated or directed to the public for the purpose of demanding an account, agreement or transaction in
the future.
Incorrect
Question 3 of 10
3. Question
What is the necessary condition(s) for a licensed member of the Exchange Act and their affiliates to use any promotional material specifically relating to goods for the future of protection?
Correct
Members licensed as broker-dealers pursuant to Section 15(b)(11) of the Exchange Act and their affiliates shall not use any promotional material specifically relating to goods for the future of protection unless the promotional material:
(1) Does not include any notice, caveat or disclaimer that is not legible, seeks to disclaim responsibility for the quality of the
promotional material or opinions expressed in the mate.
(2) States that security futures products are not suitable for all customers.
(3) Doesn't include any statement suggesting that security futures positions can be liquidated at any time
(4) State that supporting documentation shall be provided on request if any statements, comparisons, guidelines, statistics or other
technical data are included.
Incorrect
Members licensed as broker-dealers pursuant to Section 15(b)(11) of the Exchange Act and their affiliates shall not use any promotional material specifically relating to goods for the future of protection unless the promotional material:
(1) Does not include any notice, caveat or disclaimer that is not legible, seeks to disclaim responsibility for the quality of the
promotional material or opinions expressed in the mate.
(2) States that security futures products are not suitable for all customers.
(3) Doesn't include any statement suggesting that security futures positions can be liquidated at any time
(4) State that supporting documentation shall be provided on request if any statements, comparisons, guidelines, statistics or other
technical data are included.
Question 4 of 10
4. Question
What are the necessary document and the time required to submit by a broker or a dealer in order to trade security futures products?
Correct
According to NFA RULE 2-30:
A Member licensed as a broker or dealer in compliance with Section 15(b)(11) of the Exchange Act shall provide a copy of the Security Futures Products Disclosure Statement at or before the time the Member approves the Trade Security Futures Products Account.
Incorrect
According to NFA RULE 2-30:
A Member licensed as a broker or dealer in compliance with Section 15(b)(11) of the Exchange Act shall provide a copy of the Security Futures Products Disclosure Statement at or before the time the Member approves the Trade Security Futures Products Account.
Question 5 of 10
5. Question
The FCM carrying the active customer shall follow the following rules:
I. Contact the customer once a year
II. Verify customer details
III. Updating customer details
IV. Checks that the information obtained from that customer remains reasonably accurate
Correct
According to NFA RULE 2-29, For an active customer who is a person, the FCM Member holding the customer account shall, at least annually, contact the customer to check that the information obtained from that customer under Section (c) of this Regulation remains reasonably accurate and give the customer the opportunity to correct and complete the information.
Incorrect
According to NFA RULE 2-29, For an active customer who is a person, the FCM Member holding the customer account shall, at least annually, contact the customer to check that the information obtained from that customer under Section (c) of this Regulation remains reasonably accurate and give the customer the opportunity to correct and complete the information.
Question 6 of 10
6. Question
Upon updating the information of the customer’s account, what actions must be taken into consideration by the FCM Member?
Correct
With reference to NFA 2-29: Whenever the customer notifies the FCM Member holding the customer’s account of any material changes to the data, it must be decided if additional risk reporting is needed on the basis of the updated information to be given to the customer.
Incorrect
With reference to NFA 2-29: Whenever the customer notifies the FCM Member holding the customer’s account of any material changes to the data, it must be decided if additional risk reporting is needed on the basis of the updated information to be given to the customer.
Question 7 of 10
7. Question
Who is held responsible in order to determine the additional risk disclosure due to changed information of the customer?
Correct
According to NFA RULE 2-29, It is the responsibility of the Member or Associate currently requesting and communicating with the customer to determine whether additional risk disclosure on the basis of the changed information is required. In some cases, the participant may implement or manage the account; in other cases, the carrying FCM may be.
Incorrect
According to NFA RULE 2-29, It is the responsibility of the Member or Associate currently requesting and communicating with the customer to determine whether additional risk disclosure on the basis of the changed information is required. In some cases, the participant may implement or manage the account; in other cases, the carrying FCM may be.
Question 8 of 10
8. Question
Which of the following information needs to be obtained from the customer?
I. Personal details of the customer
II. The customer’s current estimated annual income
III. The customer’s current value annual income
IV. An indication of the customer’s previous investment and futures trading experience
Correct
Keeping in mind NFA RULE 2-29, the information to be obtained from the customer shall include at least the following:
(1) The customer's true name and address, and principal occupation or business;
(2) To individual customers, the current estimated annual income and the net value of the company are calculated. For all other customers,
the net value or net assets of the company and the current estimated annual income of the previous year were or were not available
(3) For individuals, the customer's approximate age or date of birth.
(4) An indication of the customer's previous investment and futures trading experience.
(5) Such other information deemed appropriate by such Member or Associate to disclose the risks of futures trading to the customer.
Incorrect
Keeping in mind NFA RULE 2-29, the information to be obtained from the customer shall include at least the following:
(1) The customer's true name and address, and principal occupation or business;
(2) To individual customers, the current estimated annual income and the net value of the company are calculated. For all other customers,
the net value or net assets of the company and the current estimated annual income of the previous year were or were not available
(3) For individuals, the customer's approximate age or date of birth.
(4) An indication of the customer's previous investment and futures trading experience.
(5) Such other information deemed appropriate by such Member or Associate to disclose the risks of futures trading to the customer.
Question 9 of 10
9. Question
Members who are not also members of the Regulatory Authority for the Financial Industry and their associates should obtain the following information from each individual customer:
I. Whether the account of the consumer is for purposes of speculation
II. The customer’s employment status
III. The risk disclosure
IV. The customer’s marital status
Correct
According to NFA RULE 2-30: Members that are not also members of the Financial Industry Regulatory Authority and their Associates must obtain the following information from each customer who is an individual if the customer trades security futures products:
(1) Whether the account of the consumer is for purposes of speculation or hedging.
(2) The customer’s employment status, for instance, name of the employer, self-employed or retired.
(3) The customer’s estimated liquid net worth.
(4) The customer’s marital status and a number of dependents.
Incorrect
According to NFA RULE 2-30: Members that are not also members of the Financial Industry Regulatory Authority and their Associates must obtain the following information from each customer who is an individual if the customer trades security futures products:
(1) Whether the account of the consumer is for purposes of speculation or hedging.
(2) The customer’s employment status, for instance, name of the employer, self-employed or retired.
(3) The customer’s estimated liquid net worth.
(4) The customer’s marital status and a number of dependents.
Question 10 of 10
10. Question
What are the necessary conditions that shall be included in the risk report to be issued to the client?
Correct
At least the following shall be included in the risk report to be issued to the client keeping in mind NFA RULE 2-30:
(1) the Risk Disclosure Statement required by CFTC Regulation 1.55, if the Member is required by that Regulation to provide it;
(2) the Disclosure Document required by CFTC Regulation 4.31, if the Member is required by that Regulation to provide it;
(3) the Options Disclosure Statement required by CFTC Regulation 33.7 if the Member is required by that Regulation to provide it; and
(4) the Disclosure Document required by CFTC Regulation 31.11, if the Member is required by that Regulation to provide it.
Incorrect
At least the following shall be included in the risk report to be issued to the client keeping in mind NFA RULE 2-30:
(1) the Risk Disclosure Statement required by CFTC Regulation 1.55, if the Member is required by that Regulation to provide it;
(2) the Disclosure Document required by CFTC Regulation 4.31, if the Member is required by that Regulation to provide it;
(3) the Options Disclosure Statement required by CFTC Regulation 33.7 if the Member is required by that Regulation to provide it; and
(4) the Disclosure Document required by CFTC Regulation 31.11, if the Member is required by that Regulation to provide it.
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