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Question 1 of 10
1. Question
Published Trading Information will be presented on FINRA’s web site as which of the following?
I. Trading Information will be published no earlier than two month following the end of the Trading Information month, aggregate volume totals across all OTC Equity Securities
II. 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)
III. Trading Information will be aggregated for members that have executed on average fewer than 200 transactions per day across all OTC Equity Securities during the applicable Trading Information period
IV. Trading Information will be aggregated for members that have executed on average fewer than 200 transactions per day in an OTC Equity Security during the applicable Trading Information period
Correct
FINRA Rule 6610. General
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 OTC Equity Securities 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 OTC Equity Security during the applicable Trading Information period.
Incorrect
FINRA Rule 6610. General
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 OTC Equity Securities 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 OTC Equity Security during the applicable Trading Information period.
Question 2 of 10
2. Question
Which of the following about Normal Business Hours is correct?
I. An ADF Trading Center shall be open for business as of 9:30 a.m. Eastern Time and shall close no earlier than 4:00 p.m. Eastern Time
II. An ADF Trading Center may be open for business on a voluntary basis for any period of time between 7:00 a.m. Eastern Time and 8:30 a.m. Eastern Time or between 4:00 p.m. Eastern Time and 6:30 p.m. Eastern Time
III. An ADF Trading Center whose quotes are open before 9:30 a.m. Eastern Time or after 4:00 p.m. Eastern Time shall be obligated to comply, while its quotes are open.
IV. With all FINRA rules that are not by their express terms, or by an official interpretation of FINRA, inapplicable to any part of the 8:00 a.m. to 9:30 a.m. Eastern Time or the 4:00 p.m. to 6:30 p.m. Eastern Time periods
Correct
FINRA Rule 6273. Normal Business Hours
An ADF Trading Center shall be open for business as of 9:30 a.m. Eastern Time and shall close no earlier than 4:00 p.m. Eastern Time. An ADF Trading Center may be open for business on a voluntary basis for any period of time between 8:00 a.m. Eastern Time and 9:30 a.m. Eastern Time or between 4:00 p.m. Eastern Time and 6:30 p.m. Eastern Time. An ADF Trading Center whose quotes are open before 9:30 a.m. Eastern Time or after 4:00 p.m. Eastern Time shall be obligated to comply, while its quotes are open, with all FINRA rules that are not by their express terms, or by an official interpretation of FINRA, inapplicable to any part of the 8:00 a.m. to 9:30 a.m. Eastern Time or the 4:00 p.m. to 6:30 p.m. Eastern Time periods.
Incorrect
FINRA Rule 6273. Normal Business Hours
An ADF Trading Center shall be open for business as of 9:30 a.m. Eastern Time and shall close no earlier than 4:00 p.m. Eastern Time. An ADF Trading Center may be open for business on a voluntary basis for any period of time between 8:00 a.m. Eastern Time and 9:30 a.m. Eastern Time or between 4:00 p.m. Eastern Time and 6:30 p.m. Eastern Time. An ADF Trading Center whose quotes are open before 9:30 a.m. Eastern Time or after 4:00 p.m. Eastern Time shall be obligated to comply, while its quotes are open, with all FINRA rules that are not by their express terms, or by an official interpretation of FINRA, inapplicable to any part of the 8:00 a.m. to 9:30 a.m. Eastern Time or the 4:00 p.m. to 6:30 p.m. Eastern Time periods.
Question 3 of 10
3. Question
Disruptive quoting and trading activity shall include a frequent pattern in which the following facts are present:
(1) Disruptive Quoting and Trading Activity Type 1:
I. A party enters multiple limit orders on one side of the market at various price levels (the “Displayed Orders”)
II. A party narrows the spread for a security by placing an order inside the national best bid and national best offer (“NBBO”)
III. Following the entry of the Displayed Orders, the level of supply and demand for the security changes
IV. The party enters one or more orders on the opposite side of the market of the Displayed Orders (the “Contra-Side Orders”) that are subsequently executed
Correct
FINRA Rule 5210. Publication of Transactions and Quotations
Disruptive quoting and trading activity shall include a frequent pattern in which the following facts are present:
(1) Disruptive Quoting and Trading Activity Type 1:
(A) a party enters multiple limit orders on one side of the market at various price levels (the “Displayed Orders”); and
(B) following the entry of the Displayed Orders, the level of supply and demand for the security changes; and
(C) the party enters one or more orders on the opposite side of the market of the Displayed Orders (the “Contra-Side Orders”) that are subsequently executed; and
(D) following the execution of the Contra-Side Orders, the party cancels the Displayed Orders.
Incorrect
FINRA Rule 5210. Publication of Transactions and Quotations
Disruptive quoting and trading activity shall include a frequent pattern in which the following facts are present:
(1) Disruptive Quoting and Trading Activity Type 1:
(A) a party enters multiple limit orders on one side of the market at various price levels (the “Displayed Orders”); and
(B) following the entry of the Displayed Orders, the level of supply and demand for the security changes; and
(C) the party enters one or more orders on the opposite side of the market of the Displayed Orders (the “Contra-Side Orders”) that are subsequently executed; and
(D) following the execution of the Contra-Side Orders, the party cancels the Displayed Orders.
Question 4 of 10
4. Question
Which of the following correctly define “ATS Trading Information”?
I. The number of shares of each NMS stock executed within the ATS or executed by the ATS’s member subscribers using the ATS’s system
II. The number of trades in each NMS stock executed within the ATS or executed by the ATS’s member subscribers using the ATS’s system
III. ATS Trading Information regarding NMS stocks in Tier 1 of the NMS Plan to Address Extraordinary Market Volatility
IV. ATS Trading Information regarding NMS stocks that are subject to FINRA trade reporting requirements and are not in Tier 1 of the NMS Plan to Address Extraordinary Market Volatility
Correct
FINRA Rule 6183. Exemption from Trade Reporting Obligation for Certain Alternative Trading Systems
“ATS Trading Information” means:
(A) the number of shares of each NMS stock executed within the ATS or executed by the ATS’s member subscribers using the ATS’s system; and
(B) the number of trades in each NMS stock executed within the ATS or executed by the ATS’s member subscribers using the ATS’s system.
Incorrect
FINRA Rule 6183. Exemption from Trade Reporting Obligation for Certain Alternative Trading Systems
“ATS Trading Information” means:
(A) the number of shares of each NMS stock executed within the ATS or executed by the ATS’s member subscribers using the ATS’s system; and
(B) the number of trades in each NMS stock executed within the ATS or executed by the ATS’s member subscribers using the ATS’s system.
Question 5 of 10
5. Question
Indirect Beneficial Owners. For the purposes of Rule 5131(b), a member may rely upon a written representation obtained within the prior 12 months from a person authorized to represent an account that does not look through to the beneficial owners of any unaffiliated private fund invested in the account, except for beneficial owners that are control persons of the investment adviser to such private fund, that such unaffiliated private fund:
I. is managed by an investment adviser
II. has assets greater than $50 million
III. owns less than 25% of the account and is not a fund in which a single investor has a beneficial interest of 25% or more
IV. was not formed for the specific purpose of investing in the account
Correct
FINRA Rule 5131 — New Issue Allocations and Distributions
5131. New Issue Allocations and Distributions
Indirect Beneficial Owners. For the purposes of Rule 5131(b), a member may rely upon a written representation obtained within the prior 12 months from a person authorized to represent an account that does not look through to the beneficial owners of any unaffiliated private fund invested in the account, except for beneficial owners that are control persons of the investment adviser to such private fund, that such unaffiliated private fund:
(1) is managed by an investment adviser;
(2) has assets greater than $50 million;
(3) owns less than 25% of the account and is not a fund in which a single investor has a beneficial interest of 25% or more; and
(4) was not formed for the specific purpose of investing in the account.
Incorrect
FINRA Rule 5131 — New Issue Allocations and Distributions
5131. New Issue Allocations and Distributions
Indirect Beneficial Owners. For the purposes of Rule 5131(b), a member may rely upon a written representation obtained within the prior 12 months from a person authorized to represent an account that does not look through to the beneficial owners of any unaffiliated private fund invested in the account, except for beneficial owners that are control persons of the investment adviser to such private fund, that such unaffiliated private fund:
(1) is managed by an investment adviser;
(2) has assets greater than $50 million;
(3) owns less than 25% of the account and is not a fund in which a single investor has a beneficial interest of 25% or more; and
(4) was not formed for the specific purpose of investing in the account.
Question 6 of 10
6. Question
Which of the following refer to the term restricted securities is correct?
I. Securities acquired directly or indirectly from the issuer, or from an affiliate of the issuer, in a transaction or chain of transactions not involving any public offering
II. Securities acquired from the issuer that are subject to the resale limitations of §230.502(d) under Regulation D or §230.701(c)
III. Securities acquired in a transaction or chain of transactions meeting the requirements of §230.144A
IV. Non-participatory preferred stock, which is defined as non-convertible capital stock, the holders of which are entitled to a preference in payment of dividends and in distribution of assets on liquidation, dissolution, or winding up of the issuer, but are not entitled to participate in residual earnings or assets of the issuer
Correct
Securities Act of 1933 (Securities Act) Rule 144
The term restricted securities means:
(i) Securities acquired directly or indirectly from the issuer, or from an affiliate of the issuer, in a transaction or chain of transactions not involving any public offering;
(ii) Securities acquired from the issuer that are subject to the resale limitations of §230.502(d) under Regulation D or §230.701(c);
(iii) Securities acquired in a transaction or chain of transactions meeting the requirements of §230.144A;
(iv) Securities acquired from the issuer in a transaction subject to the conditions of Regulation CE (§230.1001);
Incorrect
Securities Act of 1933 (Securities Act) Rule 144
The term restricted securities means:
(i) Securities acquired directly or indirectly from the issuer, or from an affiliate of the issuer, in a transaction or chain of transactions not involving any public offering;
(ii) Securities acquired from the issuer that are subject to the resale limitations of §230.502(d) under Regulation D or §230.701(c);
(iii) Securities acquired in a transaction or chain of transactions meeting the requirements of §230.144A;
(iv) Securities acquired from the issuer in a transaction subject to the conditions of Regulation CE (§230.1001);
Question 7 of 10
7. 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 8 of 10
8. Question
Under the Securities Act Rule 144A — Private Resales of Securities to Institutions, the requirement that the information be reasonably current will be presumed to be satisfied if:
I. The securities are sold only to a qualified institutional buyer or to a purchaser that the seller and any person acting on behalf of the seller reasonably believe is a qualified institutional buyer
II. The statement of the nature of the issuer’s business and its products and services offered is as of a date within 12 months prior to the date of resale
III. With regard to foreign private issuers, the required information meets the timing requirements of the issuer’s home country or principal trading markets
IV. Offers and sales of securities pursuant to this section shall be deemed not to affect the availability of any exemption or safe harbor relating to any previous or subsequent offer or sale of such securities by the issuer or any prior or subsequent holder thereof
Correct
Securities Act Rule 144A — Private Resales of Securities to Institutions
The requirement that the information be reasonably current will be presumed to be satisfied if:
(A) The balance sheet is as of a date less than 16 months before the date of resale, the statements of profit and loss and retained earnings are for the 12 months preceding the date of such balance sheet, and if such balance sheet is not as of a date less than 6 months before the date of resale, it shall be accompanied by additional statements of profit and loss and retained earnings for the period from the date of such balance sheet to a date less than 6 months before the date of resale; and
(B) The statement of the nature of the issuer’s business and its products and services offered is as of a date within 12 months prior to the date of resale; or
(C) With regard to foreign private issuers, the required information meets the timing requirements of the issuer’s home country or principal trading markets.
(e) Offers and sales of securities pursuant to this section shall be deemed not to affect the availability of any exemption or safe harbor relating to any previous or subsequent offer or sale of such securities by the issuer or any prior or subsequent holder thereof.
Incorrect
Securities Act Rule 144A — Private Resales of Securities to Institutions
The requirement that the information be reasonably current will be presumed to be satisfied if:
(A) The balance sheet is as of a date less than 16 months before the date of resale, the statements of profit and loss and retained earnings are for the 12 months preceding the date of such balance sheet, and if such balance sheet is not as of a date less than 6 months before the date of resale, it shall be accompanied by additional statements of profit and loss and retained earnings for the period from the date of such balance sheet to a date less than 6 months before the date of resale; and
(B) The statement of the nature of the issuer’s business and its products and services offered is as of a date within 12 months prior to the date of resale; or
(C) With regard to foreign private issuers, the required information meets the timing requirements of the issuer’s home country or principal trading markets.
(e) Offers and sales of securities pursuant to this section shall be deemed not to affect the availability of any exemption or safe harbor relating to any previous or subsequent offer or sale of such securities by the issuer or any prior or subsequent holder thereof.
Question 9 of 10
9. Question
FINRA Rule 5270. Front Running of Block Transactions
Rule 5270 does not preclude transactions that the member can demonstrate are unrelated to the material, non-public market information received in connection with the customer order. These types of transactions may include:
I. Transactions where the member has information barriers established to prevent internal disclosure of such information
II. Transactions in the same security related to a prior customer order in that security
III. Transactions to correct bona fide errors
IV. Transactions to offset odd-lot orders
Correct
Rule 5270 does not preclude transactions that the member can demonstrate are unrelated to the material, non-public market information received in connection with the customer order. These types of transactions may include:
(1) transactions where the member has information barriers established to prevent internal disclosure of such information;
(2) transactions in the same security related to a prior customer order in that security;
(3) transactions to correct bona fide errors; or
(4) transactions to offset odd-lot orders.
Incorrect
Rule 5270 does not preclude transactions that the member can demonstrate are unrelated to the material, non-public market information received in connection with the customer order. These types of transactions may include:
(1) transactions where the member has information barriers established to prevent internal disclosure of such information;
(2) transactions in the same security related to a prior customer order in that security;
(3) transactions to correct bona fide errors; or
(4) transactions to offset odd-lot orders.
Question 10 of 10
10. Question
Which of the following of Transaction Reporting to the FINRA/NYSE Trade Reporting Facility Outside Normal Market Hours is correct?
I. Last sale reports of transactions in designated securities executed between 10:00 a.m. and 11:30 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
II. Last sale reports of transactions in designated securities executed between 4:00 p.m. and 8:00 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 designated 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 designated securities executed (i) between 8:00 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 9:15 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 6380B. Transaction Reporting
(a) When and How Transactions are Reported
(2) Transaction Reporting to the FINRA/NYSE Trade Reporting Facility Outside Normal Market Hours
(A) Last sale reports of transactions in designated 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 designated securities executed between 4:00 p.m. and 8:00 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 designated 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 designated securities executed (i) between 8:00 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 6380B. Transaction Reporting
(a) When and How Transactions are Reported
(2) Transaction Reporting to the FINRA/NYSE Trade Reporting Facility Outside Normal Market Hours
(A) Last sale reports of transactions in designated 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 designated securities executed between 4:00 p.m. and 8:00 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 designated 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 designated securities executed (i) between 8:00 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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