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Question 1 of 10
1. Question
In the FINRA Rule 11860 (COD Orders), which of the following procedure should be followed for acceptance of an order by a member from a customer, including foreign customers and/or broker-dealer’s trading with or through the member?
Correct
In the FINRA Rule 11860 (COD Orders), No member shall accept an order from a customer, including foreign customers and/or broker-dealer’s trading with or through the member, for eligible transactions of such customers that settle in the United States, pursuant to an arrangement whereby payment for securities purchased or delivery of securities sold is to be made to or by an agent of the customer unless the member shall have received from the customer prior to or at the time of accepting the order, the name and address of the agent and the time and account number of the customer on file with the agent and institution number, where appropriate.
Incorrect
In the FINRA Rule 11860 (COD Orders), No member shall accept an order from a customer, including foreign customers and/or broker-dealer’s trading with or through the member, for eligible transactions of such customers that settle in the United States, pursuant to an arrangement whereby payment for securities purchased or delivery of securities sold is to be made to or by an agent of the customer unless the member shall have received from the customer prior to or at the time of accepting the order, the name and address of the agent and the time and account number of the customer on file with the agent and institution number, where appropriate.
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Question 2 of 10
2. Question
In the FINRA Rule 11860 (COD Orders), at what time the member shall deliver to the customer all relevant data customarily contained in confirmation with respect to the execution of the order?
Correct
In the FINRA Rule 11860 (COD Orders), the member shall deliver to the customer, a confirmation or all relevant data customarily contained in confirmation with respect to the execution of the order, in whole or in part, not later than the close of business on the next business day after any such execution.
Incorrect
In the FINRA Rule 11860 (COD Orders), the member shall deliver to the customer, a confirmation or all relevant data customarily contained in confirmation with respect to the execution of the order, in whole or in part, not later than the close of business on the next business day after any such execution.
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Question 3 of 10
3. Question
In the FINRA Rule 11860 (COD Orders), which of the following conditions the customer will assure that instructions are delivered to its agent?
Correct
In the FINRA Rule 11860 (COD Orders), the customer will assure that instructions are delivered to its agent on the following conditions:-
(a) In the case of a purchase by the customer where the agent is to receive the securities against payment (COD), the close of business on the first business day after the date of execution of the trade as to which the particular confirmation relates.
(b) In the case of a sale by the customer where the agent is to deliver the securities against payment (POD), the close of business on the first business day after the date of execution of the trade as to which the particular confirmation relates.Incorrect
In the FINRA Rule 11860 (COD Orders), the customer will assure that instructions are delivered to its agent on the following conditions:-
(a) In the case of a purchase by the customer where the agent is to receive the securities against payment (COD), the close of business on the first business day after the date of execution of the trade as to which the particular confirmation relates.
(b) In the case of a sale by the customer where the agent is to deliver the securities against payment (POD), the close of business on the first business day after the date of execution of the trade as to which the particular confirmation relates. -
Question 4 of 10
4. Question
In the FINRA Rule 11860 (COD Orders), which of the following facilities should be utilized for the book-entry settlement of all depository eligible transactions except transactions that are to be settled outside the United States?
Correct
In the FINRA Rule 11860 (COD Orders), the facilities of a Clearing Agency shall be utilized for the book-entry settlement of all depository eligible transactions except transactions that are to be settled outside the United States.
Incorrect
In the FINRA Rule 11860 (COD Orders), the facilities of a Clearing Agency shall be utilized for the book-entry settlement of all depository eligible transactions except transactions that are to be settled outside the United States.
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Question 5 of 10
5. Question
Which of the following statement(s) is/are correct for a “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service that shall, for each transaction subject to FINRA Rule 11860 (COD Orders)?
Correct
The following statements define the “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service that shall, for each transaction subject to FINRA Rule 11860 (COD Orders):-
(a) That shall deliver a trade record to a Clearing Agency in the Clearing Agency’s format.
(b) That shall obtain a control number for the trade record from the Clearing Agency.
(c) That shall cross-reference the control number to the confirmation and subsequent affirmation of the trade.
(d) That shall include the control number when delivering the affirmation of the trade to the Clearing Agency.Incorrect
The following statements define the “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service that shall, for each transaction subject to FINRA Rule 11860 (COD Orders):-
(a) That shall deliver a trade record to a Clearing Agency in the Clearing Agency’s format.
(b) That shall obtain a control number for the trade record from the Clearing Agency.
(c) That shall cross-reference the control number to the confirmation and subsequent affirmation of the trade.
(d) That shall include the control number when delivering the affirmation of the trade to the Clearing Agency. -
Question 6 of 10
6. Question
In the FINRA Rule 11860 (COD Orders), which of the following statement(s) is/are correct for a “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service that certifies to its customers?
Correct
In the FINRA Rule 11860 (COD Orders), the following statements define the “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service that certifies to its customers:-
(a) With respect to its electronic trade confirmation/affirmation system, that it has a capacity requirements evaluation and monitoring process that allows the vendor to formulate current and anticipated estimated capacity requirements.
(b) That its electronic trade confirmation/affirmation system has sufficient capacity to process the specified volume of data that it reasonably anticipates being entered into its electronic trade confirmation/affirmation system during the upcoming year.
(c) That its electronic trade confirmation/affirmation system has formal contingency procedures, that the entity has followed a formal process of reviewing the likelihood of contingency occurrences, and that the contingency protocols are reviewed, tested and updated on a regular basis.
(d) That its electronic trade confirmation/affirmation system has a process for preventing, detecting, and controlling any potential or actual systems integrity failures, and its procedures designed to protect against security breaches are followed.
(e) That its current assets exceed its current liabilities by at least $500,000.Incorrect
In the FINRA Rule 11860 (COD Orders), the following statements define the “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service that certifies to its customers:-
(a) With respect to its electronic trade confirmation/affirmation system, that it has a capacity requirements evaluation and monitoring process that allows the vendor to formulate current and anticipated estimated capacity requirements.
(b) That its electronic trade confirmation/affirmation system has sufficient capacity to process the specified volume of data that it reasonably anticipates being entered into its electronic trade confirmation/affirmation system during the upcoming year.
(c) That its electronic trade confirmation/affirmation system has formal contingency procedures, that the entity has followed a formal process of reviewing the likelihood of contingency occurrences, and that the contingency protocols are reviewed, tested and updated on a regular basis.
(d) That its electronic trade confirmation/affirmation system has a process for preventing, detecting, and controlling any potential or actual systems integrity failures, and its procedures designed to protect against security breaches are followed.
(e) That its current assets exceed its current liabilities by at least $500,000. -
Question 7 of 10
7. Question
In the FINRA Rule 11860 (COD Orders), what is the time interval for the submission of an Auditor’s Report to the SEC staff by the “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service when it begins providing services?
Correct
In the FINRA Rule 11860 (COD Orders), when “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service begins to provide such services and thereafter annually submits an Auditor’s Report to the SEC staff which is not deemed unacceptable by the SEC staff.
Incorrect
In the FINRA Rule 11860 (COD Orders), when “Qualified Vendor” that is a vendor or electronic confirmation and affirmation service begins to provide such services and thereafter annually submits an Auditor’s Report to the SEC staff which is not deemed unacceptable by the SEC staff.
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Question 8 of 10
8. Question
In the FINRA Rule 11860 (COD Orders), which of the following action should be taken by “Qualified Vendor” if it intends to cease providing services, and supplies supplemental information regarding its electronic trade confirmation/affirmation services as requested by FINRA or SEC staff?
Correct
In the FINRA Rule 11860 (COD Orders), immediately notifies the SEC staff in writing if “Qualified Vendor” intends to cease providing services, and supplies supplemental information regarding its electronic trade confirmation/affirmation services as requested by FINRA or SEC staff.
Incorrect
In the FINRA Rule 11860 (COD Orders), immediately notifies the SEC staff in writing if “Qualified Vendor” intends to cease providing services, and supplies supplemental information regarding its electronic trade confirmation/affirmation services as requested by FINRA or SEC staff.
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Question 9 of 10
9. Question
In the FINRA Rule 11860 (COD Orders), which of the following condition the “Qualified Vendor” may cease to be qualified?
Correct
In the FINRA Rule 11860 (COD Orders), a vendor may cease to be qualified on the following conditions:-
(a) The SEC staff deems the Auditor’s report unacceptable either because it contains any findings of material weaknesses, or for other identified reasons.
(b) The SEC staff notifies the vendor in writing that it is no longer qualified.Incorrect
In the FINRA Rule 11860 (COD Orders), a vendor may cease to be qualified on the following conditions:-
(a) The SEC staff deems the Auditor’s report unacceptable either because it contains any findings of material weaknesses, or for other identified reasons.
(b) The SEC staff notifies the vendor in writing that it is no longer qualified. -
Question 10 of 10
10. Question
In the FINRA Rule 11860 (COD Orders), a written “Auditor’s Report” prepared by which of the following authority?
Correct
In the FINRA Rule 11860 (COD Orders), a written “Auditor’s Report” prepared by competent, independent, external audit personnel in accordance with the standards of the American Institute of Certified Public Accountants and the Information Systems Audit and Control Association.
Incorrect
In the FINRA Rule 11860 (COD Orders), a written “Auditor’s Report” prepared by competent, independent, external audit personnel in accordance with the standards of the American Institute of Certified Public Accountants and the Information Systems Audit and Control Association.