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Question 1 of 20
1. Question
From the following options what comes under the term “Futures”?
I. Option contracts
II. Foreign futures and foreign options
III. Actual Funds
IV. Security futures productsCorrect
According to NFA RULE, 1-1 "Futures" includes: (1)Contract futures and options traded on the contract market (2)Option contracts granted by a person who has registered as a grantor of such option contracts with the Commission under Section 4c(d) of the Act or notified the Commission under the rules that he is eligible to grant such option contracts. (3)Foreign futures and foreign options made or subject to the rules of the Foreign Trade Board for or on behalf of customers of foreign futures or foreign options as specified in the rules of the Commission. (4)Leverage transactions as defined in the rules of the Commission. (5)Security futures goods as specified in paragraph 1a(45) of the Act.
Incorrect
According to NFA RULE, 1-1 "Futures" includes: (1)Contract futures and options traded on the contract market (2)Option contracts granted by a person who has registered as a grantor of such option contracts with the Commission under Section 4c(d) of the Act or notified the Commission under the rules that he is eligible to grant such option contracts. (3)Foreign futures and foreign options made or subject to the rules of the Foreign Trade Board for or on behalf of customers of foreign futures or foreign options as specified in the rules of the Commission. (4)Leverage transactions as defined in the rules of the Commission. (5)Security futures goods as specified in paragraph 1a(45) of the Act.
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Question 2 of 20
2. Question
During the period of the sanction, no Associate shall allow any individual to establish any association with him or to carry out any operation with his or her commodity interests unless approved by the following committee:
I. Committee on Business Conduct
II. Committee on Hearing Committee
III. Committee on the Appeals Committee
IV. Committee on Security ConductCorrect
According to RULE 2-26, No FCM, IB, CPO or CTA Member, FDM or Associate shall allow any individual to establish any association with him or to carry out any operation with, on behalf of or in connection with his or her commodity interests, irrespective of whether such affiliation or activity needs registration or NFA membership during the period of the sanction, unless approved by the Committee on Business Conduct, Hearing Committee or the Appeals Committee.
Incorrect
According to RULE 2-26, No FCM, IB, CPO or CTA Member, FDM or Associate shall allow any individual to establish any association with him or to carry out any operation with, on behalf of or in connection with his or her commodity interests, irrespective of whether such affiliation or activity needs registration or NFA membership during the period of the sanction, unless approved by the Committee on Business Conduct, Hearing Committee or the Appeals Committee.
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Question 3 of 20
3. Question
Which members are required by the Board of Directors of NFA?
Correct
According to NFA RULE 2-9, The Board of Directors of NFA may require FCM, IB, CPO and CTA members to adopt enhanced supervisory requirements specified by the Board on the employment history of their APs or directors or the total commissions, fees and other fees paid by their customers.
Incorrect
According to NFA RULE 2-9, The Board of Directors of NFA may require FCM, IB, CPO and CTA members to adopt enhanced supervisory requirements specified by the Board on the employment history of their APs or directors or the total commissions, fees and other fees paid by their customers.
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Question 4 of 20
4. Question
What are the necessary documents that are required to be submitted to the concerned person/party if an associate is seeking such a waiver?
Correct
According to NFA RULE 2-9, Any FCM, IB, CPO or CTA Member seeking such a waiver may submit a written request to a panel of three members of the Business Conduct Committee and/or the Hearing Committee, said members to be appointed from time to time by the Board. The Compliance Department must send a written response to the committee within 30 days of an FCM, IB, CPO or CTA Member filing a waiver request.
Incorrect
According to NFA RULE 2-9, Any FCM, IB, CPO or CTA Member seeking such a waiver may submit a written request to a panel of three members of the Business Conduct Committee and/or the Hearing Committee, said members to be appointed from time to time by the Board. The Compliance Department must send a written response to the committee within 30 days of an FCM, IB, CPO or CTA Member filing a waiver request.
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Question 5 of 20
5. Question
What is the necessary program that must be written, approved and implemented by each member of the FCM?
Correct
According to NFA RULE 2-9, Each member of the FCM and the IB shall develop and implement a written anti-money laundering program approved in writing by senior management reasonably designed to fulfill and monitor the compliance of the member with the applicable requirements of the Bank Secrecy Act (31 U.S.C. 5311, et seq.), and the implementing regulations enacted by the Treasury Department.
Incorrect
According to NFA RULE 2-9, Each member of the FCM and the IB shall develop and implement a written anti-money laundering program approved in writing by senior management reasonably designed to fulfill and monitor the compliance of the member with the applicable requirements of the Bank Secrecy Act (31 U.S.C. 5311, et seq.), and the implementing regulations enacted by the Treasury Department.
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Question 6 of 20
6. Question
Which of the following specifications must be included in an anti-money laundering program:
I. Establish and implement policies, procedures, and internal controls
II. Provide for independent testing for compliance
III. Don’t provide ongoing training for appropriate personnel
IV. Include appropriate risk-based proceduresCorrect
According to NFA RULE 2-9, anti-money laundering program includes: (1)Establish and implement policies, procedures and internal controls that are reasonably intended to prevent the financial institution from being used for money laundering or terrorist activity financing and to comply with the applicable provisions of the Bank Secrecy Act and its implementing regulations. (2)Provide for independent testing for compliance to be conducted by Member personnel or by a qualified outside party. (3)Identify a person or group responsible for the implementation and monitoring of the program's day-to-day activities and internal controls. (4)Provide ongoing training for appropriate workers. (5)Include appropriate risk-based protocols for the ongoing diligence of the customer.
Incorrect
According to NFA RULE 2-9, anti-money laundering program includes: (1)Establish and implement policies, procedures and internal controls that are reasonably intended to prevent the financial institution from being used for money laundering or terrorist activity financing and to comply with the applicable provisions of the Bank Secrecy Act and its implementing regulations. (2)Provide for independent testing for compliance to be conducted by Member personnel or by a qualified outside party. (3)Identify a person or group responsible for the implementation and monitoring of the program's day-to-day activities and internal controls. (4)Provide ongoing training for appropriate workers. (5)Include appropriate risk-based protocols for the ongoing diligence of the customer.
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Question 7 of 20
7. Question
Which of the following responsibilities comes under a Member subject to minimum capital requirements:
I. Prepare financial reports
II. Maintain a general ledger
III. Doesn’t provide English translations of other foreign-language documents
IV. File documentsCorrect
According to NFA RULE 2-10, Each Member subject to minimum capital requirements must:
(1)Prepare financial reports needed to be sent in English to the CFTC and/or NFA using U.S. dollars and U.S. accounting standards.
(2)Using U.S. dollars to manage a general ledger in English.Incorrect
According to NFA RULE 2-10, Each Member subject to minimum capital requirements must:
(1)Prepare financial reports needed to be sent in English to the CFTC and/or NFA using U.S. dollars and U.S. accounting standards.
(2)Using U.S. dollars to manage a general ledger in English. -
Question 8 of 20
8. Question
Which of the following requirements are needed from each CPO, CTA, FCM, FDM, IB, MSP and SD Member to be fulfilled:
I.Requests for extensions
II.Don’t maintain English translations of all foreign-language promotional material
III.Maintain written procedures required by CFTC or NFA rules
IV.File reportsCorrect
According to NFA RULE 2-10, each CPO, CTA, FCM, FDM, IB, MSP and SD Member must: (1)File statements, extension requests and other documents required to be sent in English to the CFTC and/or NFA. (2)Maintain English translations of all promotional material in foreign languages, including disclosure documents and websites, distributed or intended for viewing by customers in the United States, their territories or possessions. (3)Maintain written procedures required by the rules of the CFTC or the NFA in English (as well as in any other language if necessary for the Member's staff and agents to understand). (4)Provide, as requested by NFA, English translations of other foreign language reports and records and file financial information in US dollars. (5)Make available to the NFA (during the examination or in response to other inquiries) an individual who is authorized to act on behalf of the Member is fluent in English and is familiar with the affairs of the Member and financial matters.
Incorrect
According to NFA RULE 2-10, each CPO, CTA, FCM, FDM, IB, MSP and SD Member must: (1)File statements, extension requests and other documents required to be sent in English to the CFTC and/or NFA. (2)Maintain English translations of all promotional material in foreign languages, including disclosure documents and websites, distributed or intended for viewing by customers in the United States, their territories or possessions. (3)Maintain written procedures required by the rules of the CFTC or the NFA in English (as well as in any other language if necessary for the Member's staff and agents to understand). (4)Provide, as requested by NFA, English translations of other foreign language reports and records and file financial information in US dollars. (5)Make available to the NFA (during the examination or in response to other inquiries) an individual who is authorized to act on behalf of the Member is fluent in English and is familiar with the affairs of the Member and financial matters.
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Question 9 of 20
9. Question
Which of the following statements are correct according to the calculations/steps involved by the Member CTAs:
I. Member CTAs must calculate the rate of return using nominal account size as the denominator
II. Draw-down information
III. In calculating net performance, Member CTAs may include interest earned on actual funds but may not impute interest on other funds
IV. In calculating net performance, Member CTAs may include interest earned on actual funds but may impute interest on other fundsCorrect
According to NFA RULE 2-34: (1)Member CTAs shall measure the return rate in compliance with CFTC Regulation 4.35(a)(6) using the denominator of the nominal account size. (2)Draw-down data published in compliance with CFTC Regulation 4.35(a)(1)(v) and (vi) must be based on the rate of return estimates using the denominator of marginal account size. (3)Member CTAs may include interest earned on actual funds when measuring net performance but may not impute interest on other funds.
Incorrect
According to NFA RULE 2-34: (1)Member CTAs shall measure the return rate in compliance with CFTC Regulation 4.35(a)(6) using the denominator of the nominal account size. (2)Draw-down data published in compliance with CFTC Regulation 4.35(a)(1)(v) and (vi) must be based on the rate of return estimates using the denominator of marginal account size. (3)Member CTAs may include interest earned on actual funds when measuring net performance but may not impute interest on other funds.
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Question 10 of 20
10. Question
For partially-funded accounts, written confirmation shall contain the following information:
I. The name of the trading program
II. The nominal account size only agreed by the CTA
III. The nominal account size agreed to by the client and the CTA.
IV. The description of the trading programCorrect
According to NFA RULE 2-34, for partially-funded accounts, a Member CTA must either receive from a client or deliver to a client a written confirmation that contains the following information:
(1)The name or description of the trading program
(2)The nominal account size agreed to by the client and the CTA.Incorrect
According to NFA RULE 2-34, for partially-funded accounts, a Member CTA must either receive from a client or deliver to a client a written confirmation that contains the following information:
(1)The name or description of the trading program
(2)The nominal account size agreed to by the client and the CTA. -
Question 11 of 20
11. Question
What is the necessary condition required for new clients before the CTA places the first trade for the client?
Correct
According to NFA RULE 2-34, The written confirmation must be received or delivered to the customer for new customers before the CTA places the customer’s first trade.
Incorrect
According to NFA RULE 2-34, The written confirmation must be received or delivered to the customer for new customers before the CTA places the customer’s first trade.
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Question 12 of 20
12. Question
What is the necessary condition required for the existing clients before the CTA places the first trade for the client?
Correct
According to NFA RULE 2-34, For existing customers, the written confirmation must be received or delivered to the customer before any of the information required under Section (b)(1) of this rule is changed after the CTA places the first trade. The written confirmation must include the new information and the change’s effective date, but it must not contain any information that will remain the same.
Incorrect
According to NFA RULE 2-34, For existing customers, the written confirmation must be received or delivered to the customer before any of the information required under Section (b)(1) of this rule is changed after the CTA places the first trade. The written confirmation must include the new information and the change’s effective date, but it must not contain any information that will remain the same.
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Question 13 of 20
13. Question
From the following statements which come under the responsibility of an Associate Member of NFA:
I. Member shall establish and enforce adequate procedures to review all records
II. Each Member or Associate shall make or obtain a record
III. Member or Associate shall be entitled to rely on the customer
IV. Shall be required to verify customer informationCorrect
According to NFA RULE 2-36, the responsibility of an Associate Member of NFA includes:
(1)Member shall establish and enforce appropriate procedures for the evaluation of all records.
(2)Each Member or Associate shall make or obtain a record.
(3)Member or Associate shall be entitled to rely on the customer.
(4)Shall not be required to verify customer information.Incorrect
According to NFA RULE 2-36, the responsibility of an Associate Member of NFA includes:
(1)Member shall establish and enforce appropriate procedures for the evaluation of all records.
(2)Each Member or Associate shall make or obtain a record.
(3)Member or Associate shall be entitled to rely on the customer.
(4)Shall not be required to verify customer information. -
Question 14 of 20
14. Question
From the following statements, Associate of a Forex Dealer Member must not engage in any forex transaction shall:
I. Deceive any other person
II. Willfully make a false report
III. Tend to affect the price of any foreign currency
IV. Engage in the manipulation of the value of any foreign currency or forex tradeCorrect
According to NFA RULE 2-36, No Forex Dealer Member or Associate of a Forex Dealer Member engaging in any forex transaction shall: (1)Cheat, defraud or deceive any other person or threaten to cheat, defraud or deceive. (2)Willfully make a false report or cause a false record in or in connection with any forex transaction to be entered or caused. (3)Disseminate or cause misleading or false information that affects or tends to affect the price of any foreign currency. (4)Engage in the manipulation of the value of any foreign currency or forex trade. (5)Deliberately submit substantially false or misleading information regarding forex transactions to NFA or its agents. (6)Embezzle, steal or purloin or knowingly convert to any person in or in connection with a forex transaction any money, securities or other property received or accrued.
Incorrect
According to NFA RULE 2-36, No Forex Dealer Member or Associate of a Forex Dealer Member engaging in any forex transaction shall: (1)Cheat, defraud or deceive any other person or threaten to cheat, defraud or deceive. (2)Willfully make a false report or cause a false record in or in connection with any forex transaction to be entered or caused. (3)Disseminate or cause misleading or false information that affects or tends to affect the price of any foreign currency. (4)Engage in the manipulation of the value of any foreign currency or forex trade. (5)Deliberately submit substantially false or misleading information regarding forex transactions to NFA or its agents. (6)Embezzle, steal or purloin or knowingly convert to any person in or in connection with a forex transaction any money, securities or other property received or accrued.
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Question 15 of 20
15. Question
What are the basic equitable principles of trade of a Forex Dealer Members and their Associates shall observe?
Correct
According to NFA RULE 2-36, In the conduct of their forex company, Forex Dealer Members and their Employees shall follow high standards of commercial integrity and fair and fair trade principles.
Incorrect
According to NFA RULE 2-36, In the conduct of their forex company, Forex Dealer Members and their Employees shall follow high standards of commercial integrity and fair and fair trade principles.
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Question 16 of 20
16. Question
Which are the limitation(s) that allow a non-member to carry out a forex account?
Correct
According to NFA RULE 2-36, The limitations are: (1)A non-Member is a member of another futures group registered in compliance with Section 17 of the Act or is excluded by a Board resolution from this prohibition. (2)The suspended Member shall be removed from this prohibition by the Committee of Appeals.
Incorrect
According to NFA RULE 2-36, The limitations are: (1)A non-Member is a member of another futures group registered in compliance with Section 17 of the Act or is excluded by a Board resolution from this prohibition. (2)The suspended Member shall be removed from this prohibition by the Committee of Appeals.
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Question 17 of 20
17. Question
When a customer first opens an account which information should be provided by each Forex Dealer Member to the customer?
Correct
According to NFA RUE 2-36, When a customer first opens an account and at least once a year afterward, each Forex Dealer Member shall provide written information about the Background Affiliation Status Information Center (BASIC) of NFA, including the website address, to each customer.
Incorrect
According to NFA RUE 2-36, When a customer first opens an account and at least once a year afterward, each Forex Dealer Member shall provide written information about the Background Affiliation Status Information Center (BASIC) of NFA, including the website address, to each customer.
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Question 18 of 20
18. Question
Which of the following statement is true about timespan required for the review and approval of all promotional material:
I. At least 10 days prior to its first use or such shorter period as may be allowed by NFA.
II. At least 10-15 days prior to its first use or such shorter period as may be allowed by NFA.
III. At least 10 days after to its first use or such shorter period as may be allowed by NFA.
IV. At least 20 days prior to its first use or such shorter period as may be allowed by NFA.Correct
According to NFA RULE 2-36, The Department of Enforcement may require any Forex Dealer Member to file copies of all promotional material with NFA for review and approval at least 10 days prior to its first use or such shorter period as may be allowed by NFA.
Incorrect
According to NFA RULE 2-36, The Department of Enforcement may require any Forex Dealer Member to file copies of all promotional material with NFA for review and approval at least 10 days prior to its first use or such shorter period as may be allowed by NFA.
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Question 19 of 20
19. Question
From the following choices, what are the responsibilities of a CCO:
I. Prepares an annual report
II. Submits the annual report to the Forex Dealer Members Board of Directors
III. Does the documentation
IV. Submits the annual report to the Senior OfficerCorrect
According to NFA RUL 2-36, Each CCO must prepare an annual report that meets the requirements of CFTC Regulation 3.3(e) and must provide the annual report to the Forex Dealer Members Board of Directors or Senior Officer.
Incorrect
According to NFA RUL 2-36, Each CCO must prepare an annual report that meets the requirements of CFTC Regulation 3.3(e) and must provide the annual report to the Forex Dealer Members Board of Directors or Senior Officer.
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Question 20 of 20
20. Question
From the following, what timespan is allocated to a Forex Dealer to submit the annual report to the NFA:
I. Within 50 days of the end of the fiscal year of the Forex Dealer Representative
II. Within 90 days of the end of the fiscal year of the Forex Dealer Representative
III. Within 80 days of the end of the fiscal year of the Forex Dealer Representative
IV. Within 70 days of the end of the fiscal year of the Forex Dealer RepresentativeCorrect
According to NFA RULE 2-36, Every representative of the Forex Dealer shall submit the annual report to the NFA within 90 days of the end of the fiscal year of the Forex Dealer Representative. The annual report must include a certificate from the CCO or Chief Executive Officer of the Forex Dealer Member that the information contained in the annual report is accurate and complete to the best of his or her knowledge and reasonable belief and under penalty of law.
Incorrect
According to NFA RULE 2-36, Every representative of the Forex Dealer shall submit the annual report to the NFA within 90 days of the end of the fiscal year of the Forex Dealer Representative. The annual report must include a certificate from the CCO or Chief Executive Officer of the Forex Dealer Member that the information contained in the annual report is accurate and complete to the best of his or her knowledge and reasonable belief and under penalty of law.