FINRA Series 3 Free Practice Questions 45

According to NFA RULE 2-30, Members who are not members of the Regulatory Authority for Financial Industry or their employees shall comply with the following additional requirements:
(1) A Member shall exercise due diligence in learning the important facts concerning the customer, including the investment goals and 
    the financial situation of the customer and on the basis of those facts.
(2) A copy of the background and financial information in the Member's file shall also be sent to each customer who is an individual for 
    verification within 15 days after the member becomes aware of any material change in the financial status of the customer.
(3) Any member or affiliate of FCM or IB shall propose a trade-in security futures products to a non-institutional customer.

Keeping in mind NFA RULE 2-30 Any customer who is not a non-institutional customer shall abide by the following statements:
(1) It is not in the commodity pool operated by a registered pool operator of commodities.
(2) Not an investment advisor.
(3) Not a licensed broker-dealer or commission merchant in the future.

According to NFA RULE 2-30:
No FCM or IB Member or Associate shall recommend to any customer a trade-in security futures products or a specific trading strategy relating to such products without reasonable grounds to conclude that the recommendation or strategy is not unreasonable for the customer on the basis of the current investment goals, financial situation, and needs of the customer.

“Introducing Broker” or “IB” means an initial broker as that term is used in the Commodity Exchange Act and must be licensed as such in compliance with the Commodity Exchange Act and Commission Rules.

According to NFA RULE 2-30:
Any FCM or IB Member or Associate shall recommend a security futures transaction to a customer unless the person making the recommendation has reasonable grounds to believe, at the time of making the recommendation, that the customer has such financial knowledge and experience that the customer may reasonably be expected to be able to assess the risks.

No member or associate exercising discretion over an account can affect future security transactions that are excessive in size or frequency given the investment goals and financial situation of the customer.

Registration is required for an IB unless the individual or organization is:
(1) Registered as and acting in the capacity of an AP.
(2) Registered as an FCM.
(3) Registered as a CPO and only operates pools.
(4) Registered as a CTA and either solely manages accounts under powers of attorney.
(5) Is a non-U.S. resident

An (IB) is a person or company that requests or accepts orders to buy or sell futures contracts, commodity options, off-exchange retail forex contracts or swaps, but does not accept money or other resources from customers to fund these orders.

A futures commission merchant (FCM) is an organization that demands or accepts orders to buy or sell futures contracts, futures options, retail off-exchange forex contracts or swaps, and uses customers ‘ money or other resources to fund those orders.

A Commodity Trading Advisor (CTA) is a person or company advising others, directly or indirectly, on the price or advisability of futures trading contracts, futures options, off-exchange retail forex contracts or swaps, for payment or benefit.