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Question 1 of 30
1. Question
Which of the following is included in the procedures for the supervision of the day-to-day performance monitoring for Members in Forex Trading?
I. Reviewing information obtained from the customer and the information provided to customers solicited by the firm and its employees.
II. Reviewing and analyzing the forex activity in customer accounts excluding discretionary customer accounts.
III. Handling customer funds, including accepting the security deposits, if applicable.
IV. Screening prospective Associates to ensure that they are qualified and to determine the extent of supervision the person would require if hired.Correct
Members should review and analyze forex activity in customer accounts as well as discretionary accounts to ensure that the necessary account information has been obtained and appropriate information provided.
Reference: 9053 – FOREX TRANSACTIONS
Incorrect
Members should review and analyze forex activity in customer accounts as well as discretionary accounts to ensure that the necessary account information has been obtained and appropriate information provided.
Reference: 9053 – FOREX TRANSACTIONS
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Question 2 of 30
2. Question
Which of the following standards should a projected performance meet in order for it not to be labeled as a deceptive/misleading promotional material?
I. The projected performance must have a reasonable basis in fact.
II. The risks must be discussed and balanced and must be separate from the discussion of projected profits to be more concise and clear.
III. The promotional material must disclose, and the projected performance must be adjusted for, all relevant costs, including commissions and fees.
IV. Materials made in the projecting performance mut be assumed and identified.Correct
The risks must be discussed and balanced with the discussion of projected profits in accordance with the NFA Compliance Rule 2-29.
Reference: 9043 – NFA COMPLIANCE RULE 2-29: USE OF PAST OR PROJECTED PERFORMANCE; DISCLOSING CONFLICTS OF INTEREST FOR SECURITY FUTURES PRODUCTS
Incorrect
The risks must be discussed and balanced with the discussion of projected profits in accordance with the NFA Compliance Rule 2-29.
Reference: 9043 – NFA COMPLIANCE RULE 2-29: USE OF PAST OR PROJECTED PERFORMANCE; DISCLOSING CONFLICTS OF INTEREST FOR SECURITY FUTURES PRODUCTS
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Question 3 of 30
3. Question
Which of the following situations related to an FCM, IB, CPO or CTA Member’s commodity interest business is prohibited?
Correct
FCMs, IBs, CPOs or CTA Members or Associates shall NOT make any communication related to its commodity interest business that:
-operates as a fraud or deceit
-employes or is part of a high-pressure approach
-makes any statement that commodity interest trading is appropriate for all persons.
Reference: Part 2 – Rules Governing the Business Conduct of Members Registered with the Commission
(RULE 2-29. COMMUNICATIONS WITH THE PUBLIC AND PROMOTIONAL MATERIAL.)Incorrect
FCMs, IBs, CPOs or CTA Members or Associates shall NOT make any communication related to its commodity interest business that:
-operates as a fraud or deceit
-employes or is part of a high-pressure approach
-makes any statement that commodity interest trading is appropriate for all persons.
Reference: Part 2 – Rules Governing the Business Conduct of Members Registered with the Commission
(RULE 2-29. COMMUNICATIONS WITH THE PUBLIC AND PROMOTIONAL MATERIAL.) -
Question 4 of 30
4. Question
Which of the following descriptions allows Members registered as broker-dealers (under Section 15(b)(11) of the Exchange Act) to use any promotional material referring to security futures?
Correct
Past recommendations regarding security futures products should set forth all recommendations as to the same type, kind, grade, or classification of securities (including security futures products or other security derivatives).
Reference: Part 2 – Rules Governing the Business Conduct of Members Registered with the Commission
(RULE 2-29. COMMUNICATIONS WITH THE PUBLIC AND PROMOTIONAL MATERIAL.)Incorrect
Past recommendations regarding security futures products should set forth all recommendations as to the same type, kind, grade, or classification of securities (including security futures products or other security derivatives).
Reference: Part 2 – Rules Governing the Business Conduct of Members Registered with the Commission
(RULE 2-29. COMMUNICATIONS WITH THE PUBLIC AND PROMOTIONAL MATERIAL.) -
Question 5 of 30
5. Question
How can one determine whether an agency relationship between a Member and a third-party system developer exists?
Correct
The more contacts happen between the third-party system developer and the NFA Member, the more likely there is an agency relationship will be found to exist between the parties.
Reference: 9055 – NFA BYLAW 1101, COMPLIANCE RULES 2-9 AND 2-29: GUIDELINES RELATING TO THE REGISTRATION OF THIRD-PARTY TRADING SYSTEM DEVELOPERS AND THE RESPONSIBILITY OF NFA MEMBERS FOR PROMOTIONAL MATERIAL THAT PROMOTES THIRD-PARTY TRADING SYSTEM DEVELOPERS AND THEIR TRADING SYSTEMS
Incorrect
The more contacts happen between the third-party system developer and the NFA Member, the more likely there is an agency relationship will be found to exist between the parties.
Reference: 9055 – NFA BYLAW 1101, COMPLIANCE RULES 2-9 AND 2-29: GUIDELINES RELATING TO THE REGISTRATION OF THIRD-PARTY TRADING SYSTEM DEVELOPERS AND THE RESPONSIBILITY OF NFA MEMBERS FOR PROMOTIONAL MATERIAL THAT PROMOTES THIRD-PARTY TRADING SYSTEM DEVELOPERS AND THEIR TRADING SYSTEMS
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Question 6 of 30
6. Question
Which of the following is a prohibition imposed by Compliance Rule 2-29 to Members and Associates when it comes to Security Futures?
Correct
Compliance Rule 2-29 prohibits Members and Associates from including anything other than the basic information in promotional material unless it is preceded or accompanied by the risk disclosure statement.
Reference: 9050 – NFA COMPLIANCE RULE 2-30(b): RISK DISCLOSURE STATEMENT FOR SECURITY FUTURES CONTRACT
Incorrect
Compliance Rule 2-29 prohibits Members and Associates from including anything other than the basic information in promotional material unless it is preceded or accompanied by the risk disclosure statement.
Reference: 9050 – NFA COMPLIANCE RULE 2-30(b): RISK DISCLOSURE STATEMENT FOR SECURITY FUTURES CONTRACT
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Question 7 of 30
7. Question
Which of the following is NOT true when it comes to supervisory responsibilities of Members?
Correct
Members are given some degree of flexibility in determining what constitutes “diligent supervision” for each firm as NFA recognizes the differences in size and complexity of the operations.
Reference: 9020 – NFA COMPLIANCE RULES 2-9 and 2-36: SELF-EXAMINATION QUESTIONNAIRES
Incorrect
Members are given some degree of flexibility in determining what constitutes “diligent supervision” for each firm as NFA recognizes the differences in size and complexity of the operations.
Reference: 9020 – NFA COMPLIANCE RULES 2-9 and 2-36: SELF-EXAMINATION QUESTIONNAIRES
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Question 8 of 30
8. Question
Which of the following is/are procedure/s that can be implemented to ensure adequacy in a Member’s sales practice?
I. Listening to phone calls
II. In-person monitoring
III. Interviewing selected customers about the solicitation process
IV. Review of sales generated for the past monthCorrect
A Member’s supervisory procedures for sales practices may be don through making an in-person monitoring or technological means like listening in to phone calls or reviewing electronic communications. When appropriate, a Member firm should consider interviewing selected customers about the solicitation process and the handling of their accounts. These enhanced supervisory procedures are implemented may be solicited due to a potential pattern of wrongdoing or observation of unusual account activity.
Reference: 9019 – COMPLIANCE RULE 2-9: SUPERVISION OF BRANCH OFFICES AND GUARANTEED IBSIncorrect
A Member’s supervisory procedures for sales practices may be don through making an in-person monitoring or technological means like listening in to phone calls or reviewing electronic communications. When appropriate, a Member firm should consider interviewing selected customers about the solicitation process and the handling of their accounts. These enhanced supervisory procedures are implemented may be solicited due to a potential pattern of wrongdoing or observation of unusual account activity.
Reference: 9019 – COMPLIANCE RULE 2-9: SUPERVISION OF BRANCH OFFICES AND GUARANTEED IBS -
Question 9 of 30
9. Question
Which of the following is NOT a step in preparing a written inspection report
I. A written report fully describing the inspection
II. The scope and limitations of the inspection
III. The follow-up procedures conducted
IV. The discussion of the findings identified during the inspectionCorrect
Limitations should not be included in the written inspection report as these reports should cover the scope of the inspection, a summary of the testing performed and any findings or deficiencies should also be discussed with the branch office or guaranteed IB’s managers, principals, and/or supervisory personnel.
Reference: 9019 – COMPLIANCE RULE 2-9: SUPERVISION OF BRANCH OFFICES AND GUARANTEED IBS
Incorrect
Limitations should not be included in the written inspection report as these reports should cover the scope of the inspection, a summary of the testing performed and any findings or deficiencies should also be discussed with the branch office or guaranteed IB’s managers, principals, and/or supervisory personnel.
Reference: 9019 – COMPLIANCE RULE 2-9: SUPERVISION OF BRANCH OFFICES AND GUARANTEED IBS
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Question 10 of 30
10. Question
Which of the following themes many problematic audio and video advertisements have in common?
Correct
The consistent theme that the Board pointed out with problematic audio and video advertisements is that customers are likely to make substantial profits by following the sponsoring firm’s recommendations. Although, content and method may vary. These advertisements hurt both customers naive enough to believe the claims and reputation of the industry.
Reference: 9039 – NFA COMPLIANCE RULES 2-29 AND 2-9: NFA’S REVIEW AND APPROVAL OF CERTAIN AUDIO AND VIDEO ADVERTISEMENTSIncorrect
The consistent theme that the Board pointed out with problematic audio and video advertisements is that customers are likely to make substantial profits by following the sponsoring firm’s recommendations. Although, content and method may vary. These advertisements hurt both customers naive enough to believe the claims and reputation of the industry.
Reference: 9039 – NFA COMPLIANCE RULES 2-29 AND 2-9: NFA’S REVIEW AND APPROVAL OF CERTAIN AUDIO AND VIDEO ADVERTISEMENTS -
Question 11 of 30
11. Question
Which of the following is the best definition of a blind ad?
Correct
One issue that the Board pointed out relating to advertising occurs when a Member benefits from the use of “blind ad”. Members who attempt to evade NFA’s advertising requirements by purchasing leads from non-Members who run deceptive/misleading ads are still subject to NFA Compliance Rule 2-29.
Blind ads are advertisements done by non-Members. In these ads, Member firms are not identified. The ads invite viewers to call a toll-free number or subscribe online to obtain information. Non-Members will sell these leads to Member firms who will claim they have no responsibility for the content of the advertisement.
Reference: 9039 – NFA COMPLIANCE RULES 2-29 AND 2-9: NFA’S REVIEW AND APPROVAL OF CERTAIN AUDIO AND VIDEO ADVERTISEMENTSIncorrect
One issue that the Board pointed out relating to advertising occurs when a Member benefits from the use of “blind ad”. Members who attempt to evade NFA’s advertising requirements by purchasing leads from non-Members who run deceptive/misleading ads are still subject to NFA Compliance Rule 2-29.
Blind ads are advertisements done by non-Members. In these ads, Member firms are not identified. The ads invite viewers to call a toll-free number or subscribe online to obtain information. Non-Members will sell these leads to Member firms who will claim they have no responsibility for the content of the advertisement.
Reference: 9039 – NFA COMPLIANCE RULES 2-29 AND 2-9: NFA’S REVIEW AND APPROVAL OF CERTAIN AUDIO AND VIDEO ADVERTISEMENTS -
Question 12 of 30
12. Question
Which of the following steps should a Member firm must do to ensure they are still complying with Compliance Rule 2-29 with regard to purchasing leads from a provider?
I. A Member firm must purchase leads from a provider generating leads solely incidental to some other businesses.
II. A Member firm may or may not have a direct knowledge of the source of leads.
III. A Member firm must ensure that the lead provider complies with Compliance Rule 2-29.
IV. A Member firm has to inquire from the lead provider the source of the leads.Correct
Member firms, in many instances, have direct knowledge of the source of leads that the Member purchases. However, in some cases where the Member firm does not have direct knowledge, the Member firm has the duty to inquire as to the source of the leads. Also, if a Member firm purchases leads from such providers, then the Member must ensure that the advertisement utilized by the lead provider complies with NFA Compliance Rule 2-29 prior to soliciting any customer.
9039 – NFA COMPLIANCE RULES 2-29 AND 2-9: NFA’S REVIEW AND APPROVAL OF CERTAIN AUDIO AND VIDEO ADVERTISEMENTS
Incorrect
Member firms, in many instances, have direct knowledge of the source of leads that the Member purchases. However, in some cases where the Member firm does not have direct knowledge, the Member firm has the duty to inquire as to the source of the leads. Also, if a Member firm purchases leads from such providers, then the Member must ensure that the advertisement utilized by the lead provider complies with NFA Compliance Rule 2-29 prior to soliciting any customer.
9039 – NFA COMPLIANCE RULES 2-29 AND 2-9: NFA’S REVIEW AND APPROVAL OF CERTAIN AUDIO AND VIDEO ADVERTISEMENTS
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Question 13 of 30
13. Question
Which of the following situations could pass as high-pressure sales tactics?
I. An AP telling their customer to fill out the form within the day.
II. An AP telling soliciting customers frequently at unusual hours.
III. An AP shouting at a customer to open an account.
IV. An AP sending out emails at certain hours in the day for a follow-up.Correct
High-pressure sales tactics are practices where APs convey a sense of undue urgency to the customer. NFA’s rules ensure customers are well-informed and have carefully considered every factor in making a decision. Any tactics like bullying (shouting at a customer), harrassment (barraging emails/texts/calls) or attempting to convery false urgency to the customer are violations of NFA’s rules.
Reference: 9038 – NFA COMPLIANCE RULES 2-29: HIGH PRESSURE SALES TACTICS
Incorrect
High-pressure sales tactics are practices where APs convey a sense of undue urgency to the customer. NFA’s rules ensure customers are well-informed and have carefully considered every factor in making a decision. Any tactics like bullying (shouting at a customer), harrassment (barraging emails/texts/calls) or attempting to convery false urgency to the customer are violations of NFA’s rules.
Reference: 9038 – NFA COMPLIANCE RULES 2-29: HIGH PRESSURE SALES TACTICS
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Question 14 of 30
14. Question
Which of the following is a/are determination/s that Members are required to make as stated in NFA Bylaw 1101?
I. Members are required to have a non-Member be registered first with NFA before conducting customer business.
II. Members can check the BASIC system to receive current and accurate information concerning the membership status of a person.
III. Members should determine if a customer is required to be registered as an FCM, IB, CPO or CTA.
IV. Members should determine if a customer has past disciplinary actions.Correct
NFA Bylaw 1101 requires Members to make two determinations:
1. Transacting with a non-Member that is required to be registered
2. Check on NFA’s website to receive current and accurate membership status of any person.
Bylaw 1101, if imposed strictly, does not require proof that a Member firm was at fault or failed to excercise due diligence. By simplye transacting with a non-Member that is required to be registered is already a technical violation of the liability terms of NFA Bylaw 1101.Reference: 9007 – COMPLIANCE WITH NFA BYLAW 1101
Incorrect
NFA Bylaw 1101 requires Members to make two determinations:
1. Transacting with a non-Member that is required to be registered
2. Check on NFA’s website to receive current and accurate membership status of any person.
Bylaw 1101, if imposed strictly, does not require proof that a Member firm was at fault or failed to excercise due diligence. By simplye transacting with a non-Member that is required to be registered is already a technical violation of the liability terms of NFA Bylaw 1101.Reference: 9007 – COMPLIANCE WITH NFA BYLAW 1101
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Question 15 of 30
15. Question
Which of the following reduce/s the possibility of a violation of NFA Bylaw 1101?
I. FCMs/IB Members should inquire as to the basis of any exemption of an account controlled by a third party that is not registered as a CTA.
II. Members should ensure that their branch offices are not separately incorporated entities.
III. Each Member should review its list of customers.
IV. If any customer is operating a commodity pool but claims to be exempt from registration as a CPO, the Member should verify that the customer has made the required filings with the CFTC and NFA.Correct
Despite best efforts, Members may still be transacting customer business with a person who is actually required to be registered. However, there are some steps that may be taken to prevent such violation.
Reference: 9007 – COMPLIANCE WITH NFA BYLAW 1101
Incorrect
Despite best efforts, Members may still be transacting customer business with a person who is actually required to be registered. However, there are some steps that may be taken to prevent such violation.
Reference: 9007 – COMPLIANCE WITH NFA BYLAW 1101
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Question 16 of 30
16. Question
Which of the following is an exception/are exceptions on why a Member may be allowed to carry an account, accept an order or handle a transaction for or on behalf of any non-Member of NFA or suspended Member?
I. A suspended Member was exempted by the prohibition by the Appeals Committee.
II. Non-Member of NFA is a member of another futures association registered with the Commission under Section 17 of the Act.
III. A non-Member was exempted from the prohibition by Board resolution
IV. A non-Member handles only security futures productsCorrect
A non-Members is exempt from the prohibition if they are registered as an FFCM or an IB under Section 4f(a) (2) of the Act and the account, order or transaction involves only security futures products.
Reference: BYLAW 1101. PROHIBITION.
Incorrect
A non-Members is exempt from the prohibition if they are registered as an FFCM or an IB under Section 4f(a) (2) of the Act and the account, order or transaction involves only security futures products.
Reference: BYLAW 1101. PROHIBITION.
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Question 17 of 30
17. Question
Which of the following is/are necessary information to understand the fundamental characteristics of a pool or to keep the Disclosure Document from being misleading?
I. A brief description of the investment objectives, policies, and principal strategies of the pool, including a brief discussion of the circumstances under which these objectives or policies are irrevocable
II. A description of how participant inquiries should be made
III. The minimum initial or subsequent investment amount.
IV. For a pool that has not been in operation for a full fiscal year, a general statement of what the major CTA’s fees will be as a percentage of average net assets.Correct
Objectives or policies can be changed as necessary. As part of a disclosure document, circumstances, where change may occur, should also be made known to customers.
Reference: 9035 – RULE 2-35. CPO/CTA DISCLOSURE DOCUMENTS
Incorrect
Objectives or policies can be changed as necessary. As part of a disclosure document, circumstances, where change may occur, should also be made known to customers.
Reference: 9035 – RULE 2-35. CPO/CTA DISCLOSURE DOCUMENTS
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Question 18 of 30
18. Question
Which of the following is a non-institutional customer?
Correct
In customer information and risk disclosure, FCMs or IB Members and Associates are prohibited to recommend a transaction in security futures products or a particular trading strategy relating to such products to a non-institutional customer without obtaining first their current information (customer’s financial status and investment objectives).
With that said, an FCM or IB Member or Associate must also be able to identify if a customer is non-institutional. A customer who is not a bank, savings, and loan association insurance company or a registered investment company is one example.Reference: Part 2 – Rules Governing the Business Conduct of Members Registered with the Commission (RULE 2-30. CUSTOMER INFORMATION AND RISK DISCLOSURE.)
Incorrect
In customer information and risk disclosure, FCMs or IB Members and Associates are prohibited to recommend a transaction in security futures products or a particular trading strategy relating to such products to a non-institutional customer without obtaining first their current information (customer’s financial status and investment objectives).
With that said, an FCM or IB Member or Associate must also be able to identify if a customer is non-institutional. A customer who is not a bank, savings, and loan association insurance company or a registered investment company is one example.Reference: Part 2 – Rules Governing the Business Conduct of Members Registered with the Commission (RULE 2-30. CUSTOMER INFORMATION AND RISK DISCLOSURE.)
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Question 19 of 30
19. Question
How frequently should an FCM carrying a customer account required to request updated information from any active customer?
Correct
An FCM carrying an account of an active customer must at least request updated information annually.
Reference:9004 – NFA COMPLIANCE RULE 2-30: CUSTOMER INFORMATION AND RISK DISCLOSURE
Incorrect
An FCM carrying an account of an active customer must at least request updated information annually.
Reference:9004 – NFA COMPLIANCE RULE 2-30: CUSTOMER INFORMATION AND RISK DISCLOSURE
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Question 20 of 30
20. Question
Which of the following is the best description of an active customer?
Correct
The term active customer means any customer who was entitled to a monthly account statement under the provisions of CFTC Regulation 1.33(a) at any time during the preceding year.
Reference: 9004 – NFA COMPLIANCE RULE 2-30: CUSTOMER INFORMATION AND RISK DISCLOSURE
Incorrect
The term active customer means any customer who was entitled to a monthly account statement under the provisions of CFTC Regulation 1.33(a) at any time during the preceding year.
Reference: 9004 – NFA COMPLIANCE RULE 2-30: CUSTOMER INFORMATION AND RISK DISCLOSURE
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Question 21 of 30
21. Question
Which of the following should be included in the specific written procedures regarding the approval process of accounts that trade security futures principal?
I. A requirement that the designated security futures principal explain, in writing, why s/he has approved an account that does not meet the specific criteria and standards set forth in the procedures.
II. Specific criteria and standards to be used in evaluating the suitability of a customer to engage in security futures transactions.
III. Specific procedures for approving accounts to engage in security futures transactions, including requiring written approval by a designated security futures principal.
IV. Specific final requirements for initial approval and maintenance of customer accounts that engage in security futures transactions.Correct
Members must adopt and enforce specific written procedures regarding the approval process that include such procedures.
Reference: 9042 – COMPLIANCE RULE 2-9: SPECIAL SUPERVISORY REQUIREMENTS FOR MEMBERS REGISTERED AS BROKER-DEALERS UNDER SECTION 15(b)(11) OF THE SECURITIES EXCHANGE ACT OF 1934
Incorrect
Members must adopt and enforce specific written procedures regarding the approval process that include such procedures.
Reference: 9042 – COMPLIANCE RULE 2-9: SPECIAL SUPERVISORY REQUIREMENTS FOR MEMBERS REGISTERED AS BROKER-DEALERS UNDER SECTION 15(b)(11) OF THE SECURITIES EXCHANGE ACT OF 1934
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Question 22 of 30
22. Question
With the principles of just and equitable principles of trade, which of the following is a/are violation/s when it comes to the use and disclosure of the Member’s name?
I. Failure for the Member to use their legal name when dealing with the public
II. Failure for the Member to disclose their affiliation when dealing with the public
III. Branch offices using the name of the firm for all purposes
IV. Members using their bona fide degrees connected with their security futures activitiesCorrect
Members should use their legal name and should disclose their affiliation when dealing with the public to avoid misleading the public.
Reference: 9042 – COMPLIANCE RULE 2-9: SPECIAL SUPERVISORY REQUIREMENTS FOR MEMBERS REGISTERED AS BROKER-DEALERS UNDER SECTION 15(b)(11) OF THE SECURITIES EXCHANGE ACT OF 1934
Incorrect
Members should use their legal name and should disclose their affiliation when dealing with the public to avoid misleading the public.
Reference: 9042 – COMPLIANCE RULE 2-9: SPECIAL SUPERVISORY REQUIREMENTS FOR MEMBERS REGISTERED AS BROKER-DEALERS UNDER SECTION 15(b)(11) OF THE SECURITIES EXCHANGE ACT OF 1934
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Question 23 of 30
23. Question
Which of the following is required from a Member when it comes to the meetings with Associated Persons?
Correct
Employees registered as APs under the Commodity Exchange Act must participate in meetings (whether individual interviews or group meetings) no less than once a year, at which compliance matters relevant to the APs security futures activities are discussed. The interview or meeting may include other matters
Reference: 9042 – COMPLIANCE RULE 2-9: SPECIAL SUPERVISORY REQUIREMENTS FOR MEMBERS REGISTERED AS BROKER-DEALERS UNDER SECTION 15(b)(11) OF THE SECURITIES EXCHANGE ACT OF 1934
Incorrect
Employees registered as APs under the Commodity Exchange Act must participate in meetings (whether individual interviews or group meetings) no less than once a year, at which compliance matters relevant to the APs security futures activities are discussed. The interview or meeting may include other matters
Reference: 9042 – COMPLIANCE RULE 2-9: SPECIAL SUPERVISORY REQUIREMENTS FOR MEMBERS REGISTERED AS BROKER-DEALERS UNDER SECTION 15(b)(11) OF THE SECURITIES EXCHANGE ACT OF 1934
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Question 24 of 30
24. Question
Which of the following was the focal point around which to structure a sound customer protection rule?
Correct
It is for customer protection rule that the customer provides personal data and that the Member provides disclosure about the risks of futures trading.
Reference: 9004 – NFA COMPLIANCE RULE 2-30: CUSTOMER INFORMATION AND RISK DISCLOSURE
Incorrect
It is for customer protection rule that the customer provides personal data and that the Member provides disclosure about the risks of futures trading.
Reference: 9004 – NFA COMPLIANCE RULE 2-30: CUSTOMER INFORMATION AND RISK DISCLOSURE
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Question 25 of 30
25. Question
How many years is the given time limit for a person to file a Demand for Arbitration?
Correct
In the proposed amendments to NFA’s Arbitration Rules, a person has a two-year time limit under Section 4 of these Rules.
Reference: PROPOSED AMENDMENTS TO NFA’S ARBITRATION RULES
Incorrect
In the proposed amendments to NFA’s Arbitration Rules, a person has a two-year time limit under Section 4 of these Rules.
Reference: PROPOSED AMENDMENTS TO NFA’S ARBITRATION RULES
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Question 26 of 30
26. Question
Where the arbitration claims do not exceed $50, 000 or less, within how many days shall the Answer be served following service of the Arbitration Claim?
Correct
For Claims of $50, 000 or less, the Answer shall be served within 20 days following service of the Arbitration Claim by NFA.
Reference: Code of Arbitration
Incorrect
For Claims of $50, 000 or less, the Answer shall be served within 20 days following service of the Arbitration Claim by NFA.
Reference: Code of Arbitration
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Question 27 of 30
27. Question
Which of the following are the requirements for a temporary license?
I. Fingerprints of the applicant of a fingerprint card provided by NFA for that purpose
II. A Form 8-R completed and filed in accordance with all pertinent instructions
III. Registration Fee
IV. Evidence that the applicant has been granted trading privileges by a contract market or SEF that has filed with NFA a certification signed by a Member with respect to the review of an applicant’s employment, credit, and other history in connection with the granting of trading privileges.Correct
The evidence granting the applicant trading privileges by a contract market that has filed with NFA should be signed by its chief operating officer.
Reference: Part 300. Temporary Licenses (RULE 303. TEMPORARY LICENSING FOR FLOOR BROKERS AND FLOOR TRADERS)
Incorrect
The evidence granting the applicant trading privileges by a contract market that has filed with NFA should be signed by its chief operating officer.
Reference: Part 300. Temporary Licenses (RULE 303. TEMPORARY LICENSING FOR FLOOR BROKERS AND FLOOR TRADERS)
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Question 28 of 30
28. Question
Which of the following is NOT true when it comes to the timeliness in the filing of an Answer or Reply to NFA for the arbitration?
Correct
NFA may still accept late notice of intervention if the party filing the late notice explains in writing its reason for the lateness and obtaining the Panel’s consent to file the late notice.
Reference: Code of Arbitration
Incorrect
NFA may still accept late notice of intervention if the party filing the late notice explains in writing its reason for the lateness and obtaining the Panel’s consent to file the late notice.
Reference: Code of Arbitration
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Question 29 of 30
29. Question
Which of the following are necessary with regard to the CPO conducting a risk assessment for the internal controls system?
I. Check where every single possible critical risk that may arise and make a plan for each first
II. Design and implement controls based on the critical risks
III. Monitor the effectiveness of implemented control
IV. Complete the risk assessment periodically to take into account new risks that may arise with any changes in the firm’s business or operationsCorrect
It is important for a CPO Member to conduct its own risk assessment to see where its most critical risks arise. Additional risks may only arise through changes in the firm’s business or operations and cannot be pointed out at all in the beginning.
Reference: 9074 – NFA COMPLIANCE RULE 2-9: CPO INTERNAL CONTROLS SYSTEM
Incorrect
It is important for a CPO Member to conduct its own risk assessment to see where its most critical risks arise. Additional risks may only arise through changes in the firm’s business or operations and cannot be pointed out at all in the beginning.
Reference: 9074 – NFA COMPLIANCE RULE 2-9: CPO INTERNAL CONTROLS SYSTEM
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Question 30 of 30
30. Question
Which of the following is NOT true when it comes to terminating a temporary license?
I. Failure of an applicant’s sponsor to respond to NFA’s request for clarification of application.
II. Five days after service of a notice by NFA pursuant to Rule 504 that the applicant may be disqualified from registration under Sections 8a(2) through 8a (4) of the Act.
III. Revocation or withdrawal of the applicant’s sponsor wherein the termination shall be immediate
IV. Upon loss of trading privileges on all contract markets and termination shall be within 5 daysCorrect
Upon loss of trading privileges on all contract markets or SEFs hat filed the certification described in Commission Regulation 3.40(a)(2)(iv) that granted such privileges. Termination of license for this kind of scenario is immediate.
Reference: Part 300. Temporary Licenses (RULE 303. TEMPORARY LICENSING FOR FLOOR BROKERS AND FLOOR TRADERS)
Incorrect
Upon loss of trading privileges on all contract markets or SEFs hat filed the certification described in Commission Regulation 3.40(a)(2)(iv) that granted such privileges. Termination of license for this kind of scenario is immediate.
Reference: Part 300. Temporary Licenses (RULE 303. TEMPORARY LICENSING FOR FLOOR BROKERS AND FLOOR TRADERS)