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Question 1 of 10
1. Question
Which of the following refer to a transaction in which a dealer buys a security from any person and makes a simultaneous offsetting sale of such security to a qualified institutional buyer, including another dealer acting as riskless principal for a qualified institutional buyer?
Correct
Securities Act Rule 144A — Private Resales of Securities to Institutions:
For purposes of this section, riskless principal transaction means a transaction in which a dealer buys a security from any person and makes a simultaneous offsetting sale of such security to a qualified institutional buyer, including another dealer acting as riskless principal for a qualified institutional buyer.
Incorrect
Securities Act Rule 144A — Private Resales of Securities to Institutions:
For purposes of this section, riskless principal transaction means a transaction in which a dealer buys a security from any person and makes a simultaneous offsetting sale of such security to a qualified institutional buyer, including another dealer acting as riskless principal for a qualified institutional buyer.
Question 2 of 10
2. Question
Non-Member Clearing Organization access to and participation in the System shall be conditioned upon the Organization’s initial and continuing compliance with which of the following requirements?
I. Execution of and continuing compliance with a Non-Member Clearing Organization Participation Application Agreement
II. Non-Member Clearing Organization shall only have access to the System to operate as a service bureau for its members functioning as Reporting Order Entry Firms, Correspondent Executing Broker-Dealers, Correspondent Executing Brokers, Clearing Broker-Dealers, or Clearing Brokers, as those terms are defined in Rule 7210A
III. Participants shall commence participation in the System by initially contacting the System Operation Center to verify authorization for submitting trade data to the System for Reportable Securities
IV. Compliance with all applicable rules and operating procedures of FINRA and the SEC
Correct
FINRA Rule 7220A. Trade Reporting Participation Requirements
(a) Mandatory Participation for Clearing Agency Members
Non-Member Clearing Organization access to and participation in the System shall be conditioned upon the Organization’s initial and continuing compliance with the following requirements:
(i) execution of and continuing compliance with a Non-Member Clearing Organization Participation Application Agreement;
(ii) a Non-Member Clearing Organization shall only have access to the System to operate as a service bureau for its members functioning as Reporting Order Entry Firms, Correspondent Executing Broker-Dealers, Correspondent Executing Brokers, Clearing Broker-Dealers, or Clearing Brokers, as those terms are defined in Rule 7210A;
(iii) registration as a clearing agency pursuant to the Exchange Act, membership in a clearing agency registered pursuant to the Exchange Act, or maintenance of an effective clearing arrangement with a registered clearing agency;
(iv) compliance with all applicable rules and operating procedures of FINRA and the SEC;
Incorrect
FINRA Rule 7220A. Trade Reporting Participation Requirements
(a) Mandatory Participation for Clearing Agency Members
Non-Member Clearing Organization access to and participation in the System shall be conditioned upon the Organization’s initial and continuing compliance with the following requirements:
(i) execution of and continuing compliance with a Non-Member Clearing Organization Participation Application Agreement;
(ii) a Non-Member Clearing Organization shall only have access to the System to operate as a service bureau for its members functioning as Reporting Order Entry Firms, Correspondent Executing Broker-Dealers, Correspondent Executing Brokers, Clearing Broker-Dealers, or Clearing Brokers, as those terms are defined in Rule 7210A;
(iii) registration as a clearing agency pursuant to the Exchange Act, membership in a clearing agency registered pursuant to the Exchange Act, or maintenance of an effective clearing arrangement with a registered clearing agency;
(iv) compliance with all applicable rules and operating procedures of FINRA and the SEC;
Question 3 of 10
3. Question
Which of the following refer to 100 shares of a security unless, with respect to a particular security, the market where the security is listed determines that a normal unit of trading shall constitute other than 100 shares?
Correct
FINRA Alternative Display Facility (ADF) Rule 6200 Series
6220. Definitions
“Normal unit of trading” means 100 shares of a security unless, with respect to a particular security, the market where the security is listed determines that a normal unit of trading shall constitute other than 100 shares.
Incorrect
FINRA Alternative Display Facility (ADF) Rule 6200 Series
6220. Definitions
“Normal unit of trading” means 100 shares of a security unless, with respect to a particular security, the market where the security is listed determines that a normal unit of trading shall constitute other than 100 shares.
Question 4 of 10
4. Question
What should be done when a member is seeking registration as an ADF Market Participant?
I. Execute the Certification Record, as defined in Rule 6220
II. Execute a Participant Agreement with FINRA at least nine months (or such other shorter time period as may be designated by FINRA) prior to quoting or reporting trades on the ADF
III. File an application with FINRA in which the member specifies whether the member is seeking registration in Nasdaq and/or CQS securities
IV. Certifies the member’s good standing with FINRA
Correct
FINRA Rule 6271. Registration as an ADF Market Maker or ADF ECN
A member is seeking registration as an ADF Market Participant shall:
I. Execute the Certification Record, as defined in Rule 6220
II. Execute a Participant Agreement with FINRA at least six months (or such other shorter time period as may be designated by FINRA) prior to quoting or reporting trades on the ADF
III. File an application with FINRA in which the member specifies whether the member is seeking registration in Nasdaq and/or CQS securities
IV. Certifies the member’s good standing with FINRA
Incorrect
FINRA Rule 6271. Registration as an ADF Market Maker or ADF ECN
A member is seeking registration as an ADF Market Participant shall:
I. Execute the Certification Record, as defined in Rule 6220
II. Execute a Participant Agreement with FINRA at least six months (or such other shorter time period as may be designated by FINRA) prior to quoting or reporting trades on the ADF
III. File an application with FINRA in which the member specifies whether the member is seeking registration in Nasdaq and/or CQS securities
IV. Certifies the member’s good standing with FINRA
Question 5 of 10
5. Question
Which of the following term refer to the executing brokers, Introducing Brokers and Clearing Brokers, if any?
Correct
FINRA Rule 7210B. Definitions
The term “Parties to the Transaction” shall mean the executing brokers, Introducing Brokers and Clearing Brokers, if any.
Incorrect
FINRA Rule 7210B. Definitions
The term “Parties to the Transaction” shall mean the executing brokers, Introducing Brokers and Clearing Brokers, if any.
Question 6 of 10
6. Question
Which of the following should a member seeking registration as an ADF Market Participant be doing?
I. Execute a Participant Agreement with FINRA at least six months (or such other shorter time period as may be designated by FINRA) prior to quoting or reporting trades on the ADF
II. Execute the Certification Record
III. Provides FINRA with reasonable monthly projections of the volume of data that the member anticipates submitting to the ADF
IV. Agrees that failing to submit 65% of the ADF Market Participant’s quoting and trading volume to the ADF will result in the forfeiture of some or all of the ADF Deposit Amount pursuant to the ADF Deposit Terms
Correct
FINRA Rule 6271. Registration as an ADF Market Maker or ADF ECN
A member seeking registration as an ADF Market Participant shall:
I. Execute a Participant Agreement with FINRA at least six months (or such other shorter time period as may be designated by FINRA) prior to quoting or reporting trades on the ADF
II. Execute the Certification Record
III. Agrees that failing to submit 65% of the ADF Market Participant’s quoting and trading volume to the ADF will result in the forfeiture of some or all of the ADF Deposit Amount pursuant to the ADF Deposit Terms
IV. Provides FINRA with reasonable monthly projections of the volume of data that the member anticipates submitting to the ADF
Incorrect
FINRA Rule 6271. Registration as an ADF Market Maker or ADF ECN
A member seeking registration as an ADF Market Participant shall:
I. Execute a Participant Agreement with FINRA at least six months (or such other shorter time period as may be designated by FINRA) prior to quoting or reporting trades on the ADF
II. Execute the Certification Record
III. Agrees that failing to submit 65% of the ADF Market Participant’s quoting and trading volume to the ADF will result in the forfeiture of some or all of the ADF Deposit Amount pursuant to the ADF Deposit Terms
IV. Provides FINRA with reasonable monthly projections of the volume of data that the member anticipates submitting to the ADF
Question 7 of 10
7. Question
No member or person associated with a member shall:
I. Engage in any underwriting (or any syndicate for the underwriting) of securities to the extent permitted by the federal securities laws
II. Direct or request another member to alter a price (including a quotation)
III. Engage, directly or indirectly, in any conduct that threatens, harasses, coerces, intimidates or otherwise attempts improperly to influence another member, a person associated with a member, or any other person
IV. Engage in any underwriting (or any syndicate for the underwriting) of securities to the extent permitted by the federal securities laws. Coordinate the prices (including quotations), trades or trade reports of such member with any other member or person associated with a member, or any other person
Correct
FINRA Rule 5240. Anti-Intimidation/Coordination
No member or person associated with a member shall:
I. Coordinate the prices (including quotations), trades or trade reports of such member with any other member or person associated with a member, or any other person
II. Direct or request another member to alter a price (including a quotation)
III. Engage, directly or indirectly, in any conduct that threatens, harasses, coerces, intimidates or otherwise attempts improperly to influence another member, a person associated with a member, or any other person
Incorrect
FINRA Rule 5240. Anti-Intimidation/Coordination
No member or person associated with a member shall:
I. Coordinate the prices (including quotations), trades or trade reports of such member with any other member or person associated with a member, or any other person
II. Direct or request another member to alter a price (including a quotation)
III. Engage, directly or indirectly, in any conduct that threatens, harasses, coerces, intimidates or otherwise attempts improperly to influence another member, a person associated with a member, or any other person
Question 8 of 10
8. Question
Each confirmation or comparison covering a contract in a “when, as and if issued” or “when, as and if distributed” security shall, at a minimum, contain which of the following?
I. Provision for marking the contract to the market
II. An adequate description of the security and the plan, if any, under which the security is proposed to be issued or distributed
III. Designation of FINRA as the authority which shall rule upon the performance of the contract
IV. Demographic information of the board of directors
Correct
FINRA/Nasdaq Uniform Practice Codes
11130. When, As and If Issued/Distributed Contracts
(2) Each confirmation or comparison covering a contract in a “when, as and if issued” or “when, as and if distributed” security shall, at a minimum, contain:
(A) an adequate description of the security and the plan, if any, under which the security is proposed to be issued or distributed;
(B) designation of FINRA as the authority which shall rule upon the performance of the contract; and
(C) provision for marking the contract to the market.
Incorrect
FINRA/Nasdaq Uniform Practice Codes
11130. When, As and If Issued/Distributed Contracts
(2) Each confirmation or comparison covering a contract in a “when, as and if issued” or “when, as and if distributed” security shall, at a minimum, contain:
(A) an adequate description of the security and the plan, if any, under which the security is proposed to be issued or distributed;
(B) designation of FINRA as the authority which shall rule upon the performance of the contract; and
(C) provision for marking the contract to the market.
Question 9 of 10
9. Question
Shall halt trading otherwise than on an exchange in any NMS stock, as defined in Rule 600(b)(47) of SEC Regulation NMS, whenever any market that has the authority to call a regulatory halt in the security imposes a trading halt, or suspends the listing, to which of the following?
I. Permit dissemination of material news
II. Obtain information from the issuer relating to material news
III. Obtain information relating to the issuer’s ability to meet listing qualification requirements
IV. Obtain any other information that is necessary to protect investors and the public interest
Correct
FINRA Rule 6120. Trading Halts
Shall halt trading otherwise than on an exchange in any NMS stock, as defined in Rule 600(b)(47) of SEC Regulation NMS, whenever any market that has the authority to call a regulatory halt in the security imposes a trading halt, or suspends the listing, to:
(A) permit dissemination of material news;
(B) obtain information from the issuer relating to material news;
(C) obtain information relating to the issuer’s ability to meet listing qualification requirements; or
(D) obtain any other information that is necessary to protect investors and the public interest.
Incorrect
FINRA Rule 6120. Trading Halts
Shall halt trading otherwise than on an exchange in any NMS stock, as defined in Rule 600(b)(47) of SEC Regulation NMS, whenever any market that has the authority to call a regulatory halt in the security imposes a trading halt, or suspends the listing, to:
(A) permit dissemination of material news;
(B) obtain information from the issuer relating to material news;
(C) obtain information relating to the issuer’s ability to meet listing qualification requirements; or
(D) obtain any other information that is necessary to protect investors and the public interest.
Question 10 of 10
10. Question
Which of the following refer to the changes in price that securities undergo when trading?
Correct
FINRA Rule 2265. Extended Hours Trading Risk Disclosure
Risk of Higher Volatility. Volatility refers to the changes in price that securities undergo when trading. Generally, the higher the volatility of a security, the greater its price swings. There may be greater volatility in extended hours trading than in regular trading hours. As a result, your order may only be partially executed, or not at all, or you may receive an inferior price when engaging in extended hours trading than you would during regular trading hours.
Incorrect
FINRA Rule 2265. Extended Hours Trading Risk Disclosure
Risk of Higher Volatility. Volatility refers to the changes in price that securities undergo when trading. Generally, the higher the volatility of a security, the greater its price swings. There may be greater volatility in extended hours trading than in regular trading hours. As a result, your order may only be partially executed, or not at all, or you may receive an inferior price when engaging in extended hours trading than you would during regular trading hours.
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