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Question 1 of 10
1. Question
Which of the following in regards to System Participant Obligations is correct?
I. 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
II. A Participant that is a self-clearing firm shall be obligated to accept and clear each trade that the System identifies as having been effected by that Participant
III. A Participant that is an Introducing Broker or a Correspondent Executing Broker shall identify its Clearing Broker when it becomes a Participant and notify the System Operation Center if its Clearing Broker is to be changed; this will necessitate execution of a revised Participant Application Agreement
IV. If at any time a Participant fails to maintain a clearing arrangement, it shall be removed from the System until such time as a clearing arrangement is reestablished and notice of such arrangement, with an amended Reporting Participant Application Agreement, is filed with FINRA
Correct
FINRA Rule 7320. Trade Reporting Participation Requirements
System Participant Obligations
(A) 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.
(B) A Participant that is a self-clearing firm shall be obligated to accept and clear each trade that the System identifies as having been effected by that Participant.
(C) A Participant that is an Introducing Broker or a Correspondent Executing Broker shall identify its Clearing Broker when it becomes a Participant and notify the System Operation Center if its Clearing Broker is to be changed; this will necessitate execution of a revised Participant Application Agreement.
(D) If at any time a Participant fails to maintain a clearing arrangement, it shall be removed from the System until such time as a clearing arrangement is reestablished and notice of such arrangement, with an amended Reporting Participant Application Agreement, is filed with FINRA.
Incorrect
FINRA Rule 7320. Trade Reporting Participation Requirements
System Participant Obligations
(A) 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.
(B) A Participant that is a self-clearing firm shall be obligated to accept and clear each trade that the System identifies as having been effected by that Participant.
(C) A Participant that is an Introducing Broker or a Correspondent Executing Broker shall identify its Clearing Broker when it becomes a Participant and notify the System Operation Center if its Clearing Broker is to be changed; this will necessitate execution of a revised Participant Application Agreement.
(D) If at any time a Participant fails to maintain a clearing arrangement, it shall be removed from the System until such time as a clearing arrangement is reestablished and notice of such arrangement, with an amended Reporting Participant Application Agreement, is filed with FINRA.
Question 2 of 10
2. Question
Which of the following refer to any inter-dealer quotation system or any publication or electronic communications network or other device that is used by brokers or dealers to make known to others their interest in transactions in any OTC Equity Security, including offers to buy or sell at a stated price or otherwise, or invitations of offers to buy or sell?
Correct
FINRA Rule 6420. Definitions
“Quotation medium” means any inter-dealer quotation system or any publication or electronic communications network or other device that is used by brokers or dealers to make known to others their interest in transactions in any OTC Equity Security, including offers to buy or sell at a stated price or otherwise, or invitations of offers to buy or sell.
Incorrect
FINRA Rule 6420. Definitions
“Quotation medium” means any inter-dealer quotation system or any publication or electronic communications network or other device that is used by brokers or dealers to make known to others their interest in transactions in any OTC Equity Security, including offers to buy or sell at a stated price or otherwise, or invitations of offers to buy or sell.
Question 3 of 10
3. 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 4 of 10
4. Question
A member’s registration as an ADF Market Participant shall not become effective until:
I. Certifies the member’s good standing with FINRA
II. The member has executed the Certification Record pursuant to execute the Certification Record, as defined in Rule 6220
III. FINRA and the member have executed 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
IV. The member has received a notice of approval from FINRA in the designated security types specified in the member’s application pursuant to specifies whether the member is seeking registration in Nasdaq and/or CQS securities
Correct
FINRA Alternative Display Facility (ADF) Rule 6200 Series
6271. Registration as an ADF Market Maker or ADF ECN
(b) A member’s registration as an ADF Market Participant shall not become effective until:
(1) the member has received a notice of approval from FINRA in the designated security types specified in the member’s application pursuant to paragraph (a)(1)(A);
(2) the member has executed the Certification Record pursuant to paragraph (a)(2); and
(3) FINRA and the member have executed:
(A) the application pursuant to paragraph (a)(1); and
(B) the Participant Agreement pursuant to paragraph (a)(3).
Incorrect
FINRA Alternative Display Facility (ADF) Rule 6200 Series
6271. Registration as an ADF Market Maker or ADF ECN
(b) A member’s registration as an ADF Market Participant shall not become effective until:
(1) the member has received a notice of approval from FINRA in the designated security types specified in the member’s application pursuant to paragraph (a)(1)(A);
(2) the member has executed the Certification Record pursuant to paragraph (a)(2); and
(3) FINRA and the member have executed:
(A) the application pursuant to paragraph (a)(1); and
(B) the Participant Agreement pursuant to paragraph (a)(3).
Question 5 of 10
5. Question
Which of the following is correct in regards to Method and Timing of Transmitting Data?
I. Order information shall be transmitted in electronic form, as may be prescribed by FINRA from time to time, to a receiving location designated by FINRA.
II. The Reporting Member must transmit reports of all order events occurring on an OATS Business Day by 8:00 a.m. Eastern Time on the calendar day following the end of the OATS Business Day
III. If any item of information required to be reported is not available by the time the report must be transmitted, then the report shall be transmitted on the next day that all such items of information become available
IV. An “OATS Business Day” begins at 4:00:01 p.m. Eastern Time on one market day and ends at 4:00:00 p.m. Eastern Time on the next market day
Correct
FINRA Rule 7450. Order Data Transmission Requirements
Method and Timing of Transmitting Data
(1) Order information shall be transmitted in electronic form, as may be prescribed by FINRA from time to time, to a receiving location designated by FINRA.
(2) Each Reporting Member shall transmit to the Order Audit Trail System a report containing each applicable item of order information identified in Rule 7440(b), (c), and (d) whenever an order is originated, received, transmitted to another department within the member or to another member, modified, canceled, or executed. The Reporting Member must transmit reports of all order events occurring on an OATS Business Day by 8:00 a.m. Eastern Time on the calendar day following the end of the OATS Business Day; provided, however, that if any item of information required to be reported is not available by the time the report must be transmitted, then the report shall be transmitted on the day that all such items of information become available.
(3) For purposes of this paragraph, an “OATS Business Day” begins at 4:00:01 p.m. Eastern Time on one market day and ends at 4:00:00 p.m. Eastern Time on the next market day.
Incorrect
FINRA Rule 7450. Order Data Transmission Requirements
Method and Timing of Transmitting Data
(1) Order information shall be transmitted in electronic form, as may be prescribed by FINRA from time to time, to a receiving location designated by FINRA.
(2) Each Reporting Member shall transmit to the Order Audit Trail System a report containing each applicable item of order information identified in Rule 7440(b), (c), and (d) whenever an order is originated, received, transmitted to another department within the member or to another member, modified, canceled, or executed. The Reporting Member must transmit reports of all order events occurring on an OATS Business Day by 8:00 a.m. Eastern Time on the calendar day following the end of the OATS Business Day; provided, however, that if any item of information required to be reported is not available by the time the report must be transmitted, then the report shall be transmitted on the day that all such items of information become available.
(3) For purposes of this paragraph, an “OATS Business Day” begins at 4:00:01 p.m. Eastern Time on one market day and ends at 4:00:00 p.m. Eastern Time on the next market day.
Question 6 of 10
6. Question
Which of the following information should be contained in each last sale report?
I. A symbol indicating whether the transaction is a buy, sell or cross, and if applicable, sell short
II. Number of shares
III. Materiality matrix
IV. The time of execution expressed in hours, minutes, and seconds based on Eastern Time, unless another provision of FINRA rules requires that a different time must be included on the report
Correct
FINRA Rule 6622
(c) Information To Be Reported
Each last sale report shall contain the following information:
I. A symbol indicating whether the transaction is a buy, sell or cross, and if applicable, sell short
II. The time of execution expressed in hours, minutes, and seconds based on Eastern Time, unless another provision of FINRA rules requires that a different time must be included on the report
III. Number of shares
Incorrect
FINRA Rule 6622
(c) Information To Be Reported
Each last sale report shall contain the following information:
I. A symbol indicating whether the transaction is a buy, sell or cross, and if applicable, sell short
II. The time of execution expressed in hours, minutes, and seconds based on Eastern Time, unless another provision of FINRA rules requires that a different time must be included on the report
III. Number of shares
Question 7 of 10
7. 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.
Question 8 of 10
8. Question
Which of the following is correct about Normal Business Hours?
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 9:00 a.m. to 10:30 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 9 of 10
9. Question
Which of the following are the factors which the Board believes that members and the Association’s committees should take into consideration in determining the fairness of a mark-up?
I. The Type of Security Involved
II. The Amount of Money Involved in a Transaction
III. The Pattern of Mark-Ups
IV. The Nature of the Member’s Business
Correct
2120. Commissions, Mark Ups and Charges
2121. Fair Prices and Commissions
(b) Relevant Factors
Some of the factors which the Board believes that members and the Association’s committees should take into consideration in determining the fairness of a mark-up are as follow:
I. The Type of Security Involved
II. The Amount of Money Involved in a Transaction
III. The Pattern of Mark-Ups
IV. The Nature of the Member’s Business
Incorrect
2120. Commissions, Mark Ups and Charges
2121. Fair Prices and Commissions
(b) Relevant Factors
Some of the factors which the Board believes that members and the Association’s committees should take into consideration in determining the fairness of a mark-up are as follow:
I. The Type of Security Involved
II. The Amount of Money Involved in a Transaction
III. The Pattern of Mark-Ups
IV. The Nature of the Member’s Business
Question 10 of 10
10. Question
The minimum amount of price improvement necessary for a member to execute an order on a proprietary basis when holding an unexecuted limit order in that same security, and not be required to execute the held limit order is as follows:
I. For customer limit orders priced greater than or equal to $0.01 and less than $1.00, the minimum amount of price improvement required is the lesser of $0.01 or one-half (1/2) of the current inside spread
II. For customer limit orders priced less than $0.01 but greater than or equal to $0.001, the minimum amount of price improvement required is the lesser of $0.001 or one-half (1/2) of the current inside spread
III. For customer limit orders priced less than $0.001 but greater than or equal to $0.0001, the minimum amount of price improvement required is the lesser of $0.0001 or one-half (1/2) of the current inside spread
IV. For customer limit orders priced lesser than or equal to $1.00, the minimum amount of price improvement required is $0.01 for NMS stocks and the lesser of $0.01 or one-half (1/2) of the current inside spread for OTC equity securities
Correct
FINRA Rule 5320. Prohibition Against Trading Ahead of Customer Orders
The minimum amount of price improvement necessary for a member to execute an order on a proprietary basis when holding an unexecuted limit order in that same security, and not be required to execute the held limit order is as follows:
I. For customer limit orders priced lesser than or equal to $1.00, the minimum amount of price improvement required is $0.01 for NMS stocks and the lesser of $0.01 or one-half (1/2) of the current inside spread for OTC equity securities
II. For customer limit orders priced greater than or equal to $0.01 and less than $1.00, the minimum amount of price improvement required is the lesser of $0.01 or one-half (1/2) of the current inside spread
III. For customer limit orders priced less than $0.01 but greater than or equal to $0.001, the minimum amount of price improvement required is the lesser of $0.001 or one-half (1/2) of the current inside spread
IV. For customer limit orders priced less than $0.001 but greater than or equal to $0.0001, the minimum amount of price improvement required is the lesser of $0.0001 or one-half (1/2) of the current inside spread
Incorrect
FINRA Rule 5320. Prohibition Against Trading Ahead of Customer Orders
The minimum amount of price improvement necessary for a member to execute an order on a proprietary basis when holding an unexecuted limit order in that same security, and not be required to execute the held limit order is as follows:
I. For customer limit orders priced lesser than or equal to $1.00, the minimum amount of price improvement required is $0.01 for NMS stocks and the lesser of $0.01 or one-half (1/2) of the current inside spread for OTC equity securities
II. For customer limit orders priced greater than or equal to $0.01 and less than $1.00, the minimum amount of price improvement required is the lesser of $0.01 or one-half (1/2) of the current inside spread
III. For customer limit orders priced less than $0.01 but greater than or equal to $0.001, the minimum amount of price improvement required is the lesser of $0.001 or one-half (1/2) of the current inside spread
IV. For customer limit orders priced less than $0.001 but greater than or equal to $0.0001, the minimum amount of price improvement required is the lesser of $0.0001 or one-half (1/2) of the current inside spread
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