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Question 1 of 10
1. Question
What is the sole purpose of customer’s sweep account programs that are managed by Futures Commission Merchants?
Correct
As per NFA Rule 2-4, Futures Commission Merchants (“FCMs”) that aim to establish and give customers sweep account programs to manage cash balances due to the increasingly competitive business environment.
Incorrect
As per NFA Rule 2-4, Futures Commission Merchants (“FCMs”) that aim to establish and give customers sweep account programs to manage cash balances due to the increasingly competitive business environment.
Question 2 of 10
2. Question
How does the sweep account programs carry out its functionality?
Correct
According to NFA Rule 2-4, Such sweep account programs move the excess funds of a customer from a managed product account (whether a segregated customer account, protected account or approved customer account swaps) to an unregulated customer account at the FCM.
Incorrect
According to NFA Rule 2-4, Such sweep account programs move the excess funds of a customer from a managed product account (whether a segregated customer account, protected account or approved customer account swaps) to an unregulated customer account at the FCM.
Question 3 of 10
3. Question
What is the major advantage that the customer achieves through these sweep account programs?
Correct
According to NFA Rule 2-4, The customer can obtain a higher return on investment than the maintenance of funds in commodity accounts regulated by the customer of the FCM.
Incorrect
According to NFA Rule 2-4, The customer can obtain a higher return on investment than the maintenance of funds in commodity accounts regulated by the customer of the FCM.
Question 4 of 10
4. Question
From the following responsibilities which should be observed by the FCM’s:
I. Identifying the sweep account holding entity is optional
II. Check the entity’s regulatory requirements
III. Product terms and conditions should not be published
IV. Identify the risks and characteristics of their programs
Correct
As per NFA Rule 2-4, FCMs should describe the entity holding the sweep account and whether that entity is subject to regulation, and should report any relevant terms and conditions, threats and characteristics of their programs offered.
Incorrect
As per NFA Rule 2-4, FCMs should describe the entity holding the sweep account and whether that entity is subject to regulation, and should report any relevant terms and conditions, threats and characteristics of their programs offered.
Question 5 of 10
5. Question
What are the additional responsibilities apart from the key responsibilities of an FCM member managing sweep account:
I. Provides details about whether the FCM receives compensation
II. Should not advise the consumer which agency to contact in order to obtain access to any funds collected
III. These reports should be made when a sweep account plan is introduced
IV. Should report any conflicts of interest to customers
Correct
As per NFA Rule 2-4, Additionally, FCMs should inform customers of any conflicts of interest related to the programs offered, including whether the FCM receives payment or other benefits for the balance of customers held in the sweep account, and the FCM should advise the customer which agency to contact to gain access to any swept funds. At the time of sweeping account prog, an FCM will make such disclosures.
Such disclosures should be made by an FCM when a sweep account plan is introduced to a customer and the disclosures will, of course, be revised for participants if any significant changes are made to an existing sweep system.
Incorrect
As per NFA Rule 2-4, Additionally, FCMs should inform customers of any conflicts of interest related to the programs offered, including whether the FCM receives payment or other benefits for the balance of customers held in the sweep account, and the FCM should advise the customer which agency to contact to gain access to any swept funds. At the time of sweeping account prog, an FCM will make such disclosures.
Such disclosures should be made by an FCM when a sweep account plan is introduced to a customer and the disclosures will, of course, be revised for participants if any significant changes are made to an existing sweep system.
Question 6 of 10
6. Question
In case the FCM’s programs transfer funds to a non-regulated account that does not offer protections that actions should be performed by an FCM member?
Correct
According to NFA Rule 2-4, If the programs of the FCM transfer funds to a non-regulated account that does not offer similar protections to those allocated funds held in a customer-regulated commodity account, then the FCM must disclose this fact and describe the impact on customer funds in the unlikely event that the entity holds bankruptcy sweep account files.
Incorrect
According to NFA Rule 2-4, If the programs of the FCM transfer funds to a non-regulated account that does not offer similar protections to those allocated funds held in a customer-regulated commodity account, then the FCM must disclose this fact and describe the impact on customer funds in the unlikely event that the entity holds bankruptcy sweep account files.
Question 7 of 10
7. Question
What is the significance of using well-designed ethics training programs?
Correct
As per NFA Rules 2-9 and 2-36, Using well-designed ethics training programs supports the oversight of their employees and business activities by each Member.
Incorrect
As per NFA Rules 2-9 and 2-36, Using well-designed ethics training programs supports the oversight of their employees and business activities by each Member.
Question 8 of 10
8. Question
Which of the following key points should be addressed in the written procedures that outline their ethics training program:
I. Name of the training instructor
II. Contents of the program
III. Information about the instructor
IV. Format of the training is optional
Correct
According to NFA Rules 2-9 and 2-36, Acceptable procedures will address:
(A) Themes to be addressed in the training program.
(B) Who will offer the training?
(C) The format of the training.
(D) The rate with which the Member plans to receive ethical training for its employees.
(E) How the organization will report that its prescribed protocols have been followed.
Incorrect
According to NFA Rules 2-9 and 2-36, Acceptable procedures will address:
(A) Themes to be addressed in the training program.
(B) Who will offer the training?
(C) The format of the training.
(D) The rate with which the Member plans to receive ethical training for its employees.
(E) How the organization will report that its prescribed protocols have been followed.
Question 9 of 10
9. Question
From the following topics select the topics that an ethics training program should address:
I. How to establish effective supervisory systems and internal controls
II. An explanation of the applicable laws is not necessary
III. Obtaining the financial situation only
IV. Obtaining and assessing the financial situation
Correct
As per NFA Rules 2-9 and 2-36, The Declaration lists the following issues to be discussed by an ethical training program:
(A) An overview of the laws and regulations applicable to self-regulatory organizations.
(B) The obligation of the registrant to observe fair and equitable principles of trade with the public.
(C) How to establish effective supervisory systems and internal controls.
(D) Obtaining and assessing the financial situation and investment experience of customers
(E) How to behave honestly and reasonably in the best interests of consumers and business reputation with proper skill and consideration.
Incorrect
As per NFA Rules 2-9 and 2-36, The Declaration lists the following issues to be discussed by an ethical training program:
(A) An overview of the laws and regulations applicable to self-regulatory organizations.
(B) The obligation of the registrant to observe fair and equitable principles of trade with the public.
(C) How to establish effective supervisory systems and internal controls.
(D) Obtaining and assessing the financial situation and investment experience of customers
(E) How to behave honestly and reasonably in the best interests of consumers and business reputation with proper skill and consideration.
Question 10 of 10
10. Question
Which suitable criteria must be fulfilled by the trainer to provide training on ethics the trainer:
I. Fair in faith
II. Not subject to any investigations
III. Relevant industry experience
IV. Having basic knowledge
Correct
According to NFA Rules 2-9 and 2-36, That Member will ensure that their chosen provider is eligible and provide evidence that the provider has completed relevant ability testing and has three years of relevant industry or similar experience.
Incorrect
According to NFA Rules 2-9 and 2-36, That Member will ensure that their chosen provider is eligible and provide evidence that the provider has completed relevant ability testing and has three years of relevant industry or similar experience.
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