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Question 1 of 10
1. Question
A transfer of assets of such corporation or other person, to another person in consideration of the issuance of securities of such other person or any of its affiliates, if:
I. They are not securities of an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under section 8 of the Investment Company Act
II. Such plan or agreement provides for dissolution of the corporation or other person whose security holders are voting or consenting
III. Such plan or agreement provides for a pro rata or similar distribution of such securities to the security holders voting or consenting
IV. The board of directors or similar representatives of such corporation or other person, adopts resolutions relative to paragraph (a)(3) (i) or (ii) of this section within 1 year after the taking of such vote or consent
Correct
Securities Act Rule 145 — Reclassification of Securities, Mergers, Consolidations and Acquisitions of Assets
(3) Transfers of assets. A transfer of assets of such corporation or other person, to another person in consideration of the issuance of securities of such other person or any of its affiliates, if:
(i) Such plan or agreement provides for dissolution of the corporation or other person whose security holders are voting or consenting; or
(ii) Such plan or agreement provides for a pro rata or similar distribution of such securities to the security holders voting or consenting; or
(iii) The board of directors or similar representatives of such corporation or other person, adopts resolutions relative to paragraph (a)(3) (i) or (ii) of this section within 1 year after the taking of such vote or consent; or
(iv) The transfer of assets is a part of a preexisting plan for distribution of such securities, notwithstanding paragraph (a)(3) (i), (ii), or (iii) of this section.
Incorrect
Securities Act Rule 145 — Reclassification of Securities, Mergers, Consolidations and Acquisitions of Assets
(3) Transfers of assets. A transfer of assets of such corporation or other person, to another person in consideration of the issuance of securities of such other person or any of its affiliates, if:
(i) Such plan or agreement provides for dissolution of the corporation or other person whose security holders are voting or consenting; or
(ii) Such plan or agreement provides for a pro rata or similar distribution of such securities to the security holders voting or consenting; or
(iii) The board of directors or similar representatives of such corporation or other person, adopts resolutions relative to paragraph (a)(3) (i) or (ii) of this section within 1 year after the taking of such vote or consent; or
(iv) The transfer of assets is a part of a preexisting plan for distribution of such securities, notwithstanding paragraph (a)(3) (i), (ii), or (iii) of this section.
Question 2 of 10
2. Question
Which of the following refer to the member firm that has been identified in the System as a party to the transaction, but does not execute or clear trades?
Correct
FINRA Rule 7110
The term “Introducing Broker-Dealer” or “introducing broker” shall mean the member firm that has been identified in the System as a party to the transaction, but does not execute or clear trades.
Incorrect
FINRA Rule 7110
The term “Introducing Broker-Dealer” or “introducing broker” shall mean the member firm that has been identified in the System as a party to the transaction, but does not execute or clear trades.
Question 3 of 10
3. 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 4 of 10
4. 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. An adequate description of the security and the plan, if any, under which the security is proposed to be issued or distributed
II. Provision for marking the contract to the market
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 5 of 10
5. Question
Proposed Rule 15g-1 would exempt which of the following selected transactions from the proposed disclosure obligations to customers?
1. Transactions in penny stocks by a broker-dealer that does less than 5 percent of its securities business in penny stocks and that has not been a market maker, during the past year, in the penny stock that is the subject of the transactions
II. Transactions in securities the issuer of which has net tangible assets exceeding $1 million, if that issuer has been in continuous operation for at least three years, or $4 million, if the issuer has been in continuous operation for less than three years
III. Transactions in securities where the customer is an institutional accredited investor
IV. Transactions that are not recommended by the broker-dealer
Correct
Proposed SEC Rule 15g-1 (Exemptions)
Proposed Rule 15g-1 would exempt selected transactions from the proposed disclosure obligations to customers as follows: (1) transactions in penny stocks by a broker-dealer that does less than 5 percent of its securities business in penny stocks and that has not been a market maker, during the past year, in the penny stock that is the subject of the transactions; (2) transactions in securities the issuer of which has net tangible assets exceeding $2 million, if that issuer has been in continuous operation for at least three years, or $5 million, if the issuer has been in continuous operation for less than three years; (3) transactions in securities where the customer is an institutional accredited investor; (4) transactions that are not recommended by the broker-dealer; and (5) transactions in which the purchaser is the issuer of the penny stock that is the subject of the transaction.
Incorrect
Proposed SEC Rule 15g-1 (Exemptions)
Proposed Rule 15g-1 would exempt selected transactions from the proposed disclosure obligations to customers as follows: (1) transactions in penny stocks by a broker-dealer that does less than 5 percent of its securities business in penny stocks and that has not been a market maker, during the past year, in the penny stock that is the subject of the transactions; (2) transactions in securities the issuer of which has net tangible assets exceeding $2 million, if that issuer has been in continuous operation for at least three years, or $5 million, if the issuer has been in continuous operation for less than three years; (3) transactions in securities where the customer is an institutional accredited investor; (4) transactions that are not recommended by the broker-dealer; and (5) transactions in which the purchaser is the issuer of the penny stock that is the subject of the transaction.
Question 6 of 10
6. Question
Which of the following Published Trading Information will be presented on FINRA’s web site?
I. Trading Information will be aggregated for all Market Participant Identifiers (MPIDs) used by a single member (excluding, if applicable, any MPIDs used by the member for reporting trades executed in its alternative trading system)
II. Trading Information will be aggregated for members that have executed on average fewer than 200 transactions per day across all NMS stocks during the applicable Trading Information period
III. Trading Information will be aggregated no earlier than one month following the end of the Trading Information month, aggregate volume totals across all NMS stocks
IV. Trading Information will be aggregated for members that have executed on average fewer than 200 transactions per day in an NMS stock during the applicable Trading Information period
Correct
FINRA Rule 6110 — Trading Otherwise than on an Exchange
6110. Trading Otherwise than on an Exchange
(2) Published Trading Information will be presented on FINRA’s web site as follows:
(A) Trading Information will be aggregated for all Market Participant Identifiers (MPIDs) used by a single member (excluding, if applicable, any MPIDs used by the member for reporting trades executed in its alternative trading system).
(B) Trading Information will be aggregated for members that have executed on average fewer than 200 transactions per day across all NMS stocks during the applicable Trading Information period.
(C) Trading Information will be aggregated for members that have executed on average fewer than 200 transactions per day in an NMS stock during the applicable Trading Information period.
Incorrect
FINRA Rule 6110 — Trading Otherwise than on an Exchange
6110. Trading Otherwise than on an Exchange
(2) Published Trading Information will be presented on FINRA’s web site as follows:
(A) Trading Information will be aggregated for all Market Participant Identifiers (MPIDs) used by a single member (excluding, if applicable, any MPIDs used by the member for reporting trades executed in its alternative trading system).
(B) Trading Information will be aggregated for members that have executed on average fewer than 200 transactions per day across all NMS stocks during the applicable Trading Information period.
(C) Trading Information will be aggregated for members that have executed on average fewer than 200 transactions per day in an NMS stock during the applicable Trading Information period.
Question 7 of 10
7. Question
Pursuant to the Rule 9600 Series, the staff for good cause shown after taking into consideration all relevant factors, may exempt, upon application and subject to specified terms and conditions, a member alternative trading system (“ATS”) from the trade reporting obligation under paragraph (b) of Rules 6282, 6380A and 6380B, if such exemption is consistent with the protection of investors and the public interest.
Hence, the staff will grant an exemption only if which of the following criteria are satisfied?
I. Trades are between ATS subscribers that are both FINRA members
II. The ATS demonstrates that the member subscribers are fully disclosed to one another at all times on the ATS
III. The system does not permit automatic execution, and a member subscriber must take affirmative steps beyond the submission of an order to agree to a trade with another member subscriber
IV. The ATS agrees to provide to FINRA on a daily basis, or such other basis as prescribed by FINRA, data relating to the volume of trades by security executed by the ATS’s member subscribers using the ATS’s system, and the ATS acknowledges that failure to report such data to FINRA, in addition to constituting a violation of FINRA rules, will result in revocation of any exemption granted pursuant to this Rule
Correct
Pursuant to the Rule 9600 Series, the staff for good cause shown after taking into consideration all relevant factors, may exempt, upon application and subject to specified terms and conditions, a member alternative trading system (“ATS”) from the trade reporting obligation under paragraph (b) of Rules 6282, 6380A and 6380B, if such exemption is consistent with the protection of investors and the public interest.
Hence, the staff will grant an exemption only if which of the following criteria are satisfied?
I. Trades are between ATS subscribers that are both FINRA members
II. The ATS demonstrates that the member subscribers are fully disclosed to one another at all times on the ATS
III. The system does not permit automatic execution, and a member subscriber must take affirmative steps beyond the submission of an order to agree to a trade with another member subscriber
IV. The ATS agrees to provide to FINRA on a monthly basis, or such other basis as prescribed by FINRA, data relating to the volume of trades by security executed by the ATS’s member subscribers using the ATS’s system, and the ATS acknowledges that failure to report such data to FINRA, in addition to constituting a violation of FINRA rules, will result in revocation of any exemption granted pursuant to this Rule
Incorrect
Pursuant to the Rule 9600 Series, the staff for good cause shown after taking into consideration all relevant factors, may exempt, upon application and subject to specified terms and conditions, a member alternative trading system (“ATS”) from the trade reporting obligation under paragraph (b) of Rules 6282, 6380A and 6380B, if such exemption is consistent with the protection of investors and the public interest.
Hence, the staff will grant an exemption only if which of the following criteria are satisfied?
I. Trades are between ATS subscribers that are both FINRA members
II. The ATS demonstrates that the member subscribers are fully disclosed to one another at all times on the ATS
III. The system does not permit automatic execution, and a member subscriber must take affirmative steps beyond the submission of an order to agree to a trade with another member subscriber
IV. The ATS agrees to provide to FINRA on a monthly basis, or such other basis as prescribed by FINRA, data relating to the volume of trades by security executed by the ATS’s member subscribers using the ATS’s system, and the ATS acknowledges that failure to report such data to FINRA, in addition to constituting a violation of FINRA rules, will result in revocation of any exemption granted pursuant to this Rule
Question 8 of 10
8. Question
Which of the following is correct on the dates of delivery?
I. In connection with a transaction for “cash,” delivery shall be made at the office of the purchaser on the day of the transaction
II. In connection with a transaction “regular way,” delivery shall be made at the office of the purchaser on, but not after, the second business day following the date of the transaction
III. Contracts due on a day other than a business day shall mature on the next business day
IV. In connection with a transaction “buyer’s option,” delivery shall be made at the office of the purchaser on the date on which the option expires
Correct
FINRA Rule 11320. Dates of Delivery
Dates of delivery
I. In connection with a transaction for “cash,” delivery shall be made at the office of the purchaser on the day of the transaction
II. In connection with a transaction “regular way,” delivery shall be made at the office of the purchaser on, but not after, the second business day following the date of the transaction
III. Contracts due on a day other than a business day shall mature on the next business day
IV. In connection with a transaction “buyer’s option,” delivery shall be made at the office of the purchaser on the date on which the option expires
Incorrect
FINRA Rule 11320. Dates of Delivery
Dates of delivery
I. In connection with a transaction for “cash,” delivery shall be made at the office of the purchaser on the day of the transaction
II. In connection with a transaction “regular way,” delivery shall be made at the office of the purchaser on, but not after, the second business day following the date of the transaction
III. Contracts due on a day other than a business day shall mature on the next business day
IV. In connection with a transaction “buyer’s option,” delivery shall be made at the office of the purchaser on the date on which the option expires
Question 9 of 10
9. Question
Any member initiating or resuming quotations in reliance on the exception provided by SEA Rule 15c2-11(f)(2) must be able to demonstrate eligibility for the exception by making a contemporaneous record of:
I. The identification of each associated person who receives the unsolicited customer order or indication of interest directly from the customer, if applicable
II. The identity of the customer
III. The date and time the unsolicited customer order or indication of interest was received
IV. The terms of the unsolicited customer order or indication of interest that is the subject of the quotation
Correct
FINRA Rule 6432. Compliance with the Information Requirements of SEA Rule 15c2-11
Any member initiating or resuming quotations in reliance on the exception provided by SEA Rule 15c2-11(f)(2) must be able to demonstrate eligibility for the exception by making a contemporaneous record of:
(a) the identification of each associated person who receives the unsolicited customer order or indication of interest directly from the customer, if applicable;
(b) the identity of the customer;
(c) the date and time the unsolicited customer order or indication of interest was received; and
(d) the terms of the unsolicited customer order or indication of interest that is the subject of the quotation (e.g., security name and symbol, size, side of the market, duration (if specified) and, if priced, the price).
Incorrect
FINRA Rule 6432. Compliance with the Information Requirements of SEA Rule 15c2-11
Any member initiating or resuming quotations in reliance on the exception provided by SEA Rule 15c2-11(f)(2) must be able to demonstrate eligibility for the exception by making a contemporaneous record of:
(a) the identification of each associated person who receives the unsolicited customer order or indication of interest directly from the customer, if applicable;
(b) the identity of the customer;
(c) the date and time the unsolicited customer order or indication of interest was received; and
(d) the terms of the unsolicited customer order or indication of interest that is the subject of the quotation (e.g., security name and symbol, size, side of the market, duration (if specified) and, if priced, the price).
Question 10 of 10
10. Question
What are the Transaction Reporting Outside Normal Market Hours like?
I. Last sale reports of transactions in ADF-eligible securities executed between 8:00 a.m. and 9:30 a.m. Eastern Time shall be reported as soon as practicable but no later than 15 seconds after execution and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours
II. Last sale reports of transactions in ADF-eligible securities executed between 4:00 p.m. and 6:30 p.m. Eastern Time shall be reported as soon as practicable but no later than 10 seconds after execution and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours
III. Last sale reports of transactions in ADF-eligible securities executed between midnight and 8:00 a.m. Eastern Time shall be reported by 8:15 a.m. Eastern Time on trade date and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours
IV. Last sale reports of transactions in ADF-eligible securities executed (i) between 6:30 p.m. and midnight Eastern Time or (ii) on any non-business day (i.e., weekend or holiday) shall be reported the following business day by 8:15 a.m. Eastern Time, be designated “as/of” trades to denote their execution on a prior day and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours
Correct
FINRA Rule 6282. Transactions Reported by Members to the ADF
(2) Transaction Reporting Outside Normal Market Hours
(A) Last sale reports of transactions in ADF-eligible securities executed between 8:00 a.m. and 9:30 a.m. Eastern Time shall be reported as soon as practicable but no later than 10 seconds after execution and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours.
(B) Last sale reports of transactions in ADF-eligible securities executed between 4:00 p.m. and 6:30 p.m. Eastern Time shall be reported as soon as practicable but no later than 10 seconds after execution and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours.
(C) Last sale reports of transactions in ADF-eligible securities executed between midnight and 8:00 a.m. Eastern Time shall be reported by 8:15 a.m. Eastern Time on trade date and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours.
(D) Last sale reports of transactions in ADF-eligible securities executed (i) between 6:30 p.m. and midnight Eastern Time or (ii) on any non-business day (i.e., weekend or holiday) shall be reported the following business day by 8:15 a.m. Eastern Time, be designated “as/of” trades to denote their execution on a prior day and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours.
Incorrect
FINRA Rule 6282. Transactions Reported by Members to the ADF
(2) Transaction Reporting Outside Normal Market Hours
(A) Last sale reports of transactions in ADF-eligible securities executed between 8:00 a.m. and 9:30 a.m. Eastern Time shall be reported as soon as practicable but no later than 10 seconds after execution and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours.
(B) Last sale reports of transactions in ADF-eligible securities executed between 4:00 p.m. and 6:30 p.m. Eastern Time shall be reported as soon as practicable but no later than 10 seconds after execution and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours.
(C) Last sale reports of transactions in ADF-eligible securities executed between midnight and 8:00 a.m. Eastern Time shall be reported by 8:15 a.m. Eastern Time on trade date and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours.
(D) Last sale reports of transactions in ADF-eligible securities executed (i) between 6:30 p.m. and midnight Eastern Time or (ii) on any non-business day (i.e., weekend or holiday) shall be reported the following business day by 8:15 a.m. Eastern Time, be designated “as/of” trades to denote their execution on a prior day and be designated with the unique trade report modifier, as specified by FINRA, to denote their execution outside normal market hours.
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