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Question 1 of 10
1. Question
Which is not included when Market-Maker bids and offers are firm for all orders and Regulation NMS under the Exchange Act for the number of contracts specified in the bid or offer?
I. A system malfunction or other circumstance impairs the Exchange’s ability to disseminate or update market bids and offers in a timely and accurate manner
II. The level of trading activities or the existence of unusual market conditions is such that the Exchange is incapable of collecting, processing, and making available to quotation vendors the data for the option in a manner that accurately reflects the current state of the
market on the Exchange
III. Trading in such security has been halted in one or more of the markets trading such security
IV. Prior to the conclusion of the Opening Auction ProcessCorrect
According to CBOE Rule 5.52. Market-Maker Quotes (a) Firm Quotes. Market-Maker bids and offers are firm for all orders under this Rule and Rule 602 of Regulation NMS under the Exchange Act (“Rule 602”) for the number of contracts specified in the bid or offer, except if:
(a) A system malfunction or other circumstance impairs the Exchange’s ability to
disseminate or update market bids and offers in a timely and accurate manner;
(b) The level of trading activities or the existence of unusual market conditions is such that the Exchange is incapable of collecting, processing, and making available to quotation vendors the data for the option in a manner that accurately reflects the current state of the market on the Exchange;
(c) Prior to the conclusion of the Opening Auction ProcessIncorrect
According to CBOE Rule 5.52. Market-Maker Quotes (a) Firm Quotes. Market-Maker bids and offers are firm for all orders under this Rule and Rule 602 of Regulation NMS under the Exchange Act (“Rule 602”) for the number of contracts specified in the bid or offer, except if:
(a) A system malfunction or other circumstance impairs the Exchange’s ability to
disseminate or update market bids and offers in a timely and accurate manner;
(b) The level of trading activities or the existence of unusual market conditions is such that the Exchange is incapable of collecting, processing, and making available to quotation vendors the data for the option in a manner that accurately reflects the current state of the market on the Exchange;
(c) Prior to the conclusion of the Opening Auction Process -
Question 2 of 10
2. Question
What do you call if any person who is in good standing as a representative with the Financial Conduct Authority in the United Kingdom or with a Canadian stock exchange or securities regulator shall be exempt from the requirement to pass the SIE?
Correct
According to CBOE Rule 3.37. Registration and Termination of Representatives
(e) Exemption. Any person who is in good standing as a representative with the Financial Conduct Authority in the United Kingdom or with a Canadian stock exchange or securities
regulator shall be exempt from the requirement to pass the SIE.
(a) Registration. No TPH organization shall be approved to transact business with the public until those persons associated with it who are designated as Representatives have been approved by and registered with the Exchange.
(b) Termination – Filing of U-5’s. The discharge or termination of employment of any registered person, together with the reasons therefor, shall be electronically reported to Web CRD by a TPH organization immediately following the date of termination, but in no event later than 30 days following termination, on a Uniform Termination Notice for Securities Industry Registration (Form U-5). A copy of the Form U-5 shall be provided concurrently to the person whose association has been terminated.
(c) Termination – Filing of amended U-5’s. The TPH organization shall electronically report to Web CRD, by means of an amendment to the Form U-5 filed pursuant to paragraph (b) above, in the event that the TPH organization learns of facts or circumstances causing any information set forth in the Form U-5 to become inaccurate or incomplete.Incorrect
According to CBOE Rule 3.37. Registration and Termination of Representatives
(e) Exemption. Any person who is in good standing as a representative with the Financial Conduct Authority in the United Kingdom or with a Canadian stock exchange or securities
regulator shall be exempt from the requirement to pass the SIE.
(a) Registration. No TPH organization shall be approved to transact business with the public until those persons associated with it who are designated as Representatives have been approved by and registered with the Exchange.
(b) Termination – Filing of U-5’s. The discharge or termination of employment of any registered person, together with the reasons therefor, shall be electronically reported to Web CRD by a TPH organization immediately following the date of termination, but in no event later than 30 days following termination, on a Uniform Termination Notice for Securities Industry Registration (Form U-5). A copy of the Form U-5 shall be provided concurrently to the person whose association has been terminated.
(c) Termination – Filing of amended U-5’s. The TPH organization shall electronically report to Web CRD, by means of an amendment to the Form U-5 filed pursuant to paragraph (b) above, in the event that the TPH organization learns of facts or circumstances causing any information set forth in the Form U-5 to become inaccurate or incomplete. -
Question 3 of 10
3. Question
What is any location where one or more associated persons of a Trading Permit Holder or TPH organization regularly conduct the business of effecting any transactions in, or inducing or attempting to induce the purchase or sale of any security?
Correct
According to CBOE Rule 3.40. Branch Offices of TPH Organizations
(c) Definition of Branch Office. A “branch office” is any location where one or more associated
persons of a Trading Permit Holder or TPH organization regularly conduct the business of
effecting any transactions in, or inducing or attempting to induce the purchase or sale of any security
(a) Branch Office List. Every TPH organization approved to do options business with the public under this Chapter shall file with the Exchange and keep current a list of each of its branch offices showing the location of each such office and the name of the manager of each such office.
(b) Registered Branch Office Manager. No branch office of a TPH organization shall transact options business with the public unless the manager of such branch office has been qualified as a Registered Options Principal
(d) Business Day. For purposes of this Rule, the term “business day” shall not include any partial business day provided that the associated person spends at least four hours on such business day at his or her designated branch office during the hours that such office is normally open for business.Incorrect
According to CBOE Rule 3.40. Branch Offices of TPH Organizations
(c) Definition of Branch Office. A “branch office” is any location where one or more associated
persons of a Trading Permit Holder or TPH organization regularly conduct the business of
effecting any transactions in, or inducing or attempting to induce the purchase or sale of any security
(a) Branch Office List. Every TPH organization approved to do options business with the public under this Chapter shall file with the Exchange and keep current a list of each of its branch offices showing the location of each such office and the name of the manager of each such office.
(b) Registered Branch Office Manager. No branch office of a TPH organization shall transact options business with the public unless the manager of such branch office has been qualified as a Registered Options Principal
(d) Business Day. For purposes of this Rule, the term “business day” shall not include any partial business day provided that the associated person spends at least four hours on such business day at his or her designated branch office during the hours that such office is normally open for business. -
Question 4 of 10
4. Question
What are the factors that may be considered in making the foregoing determinations in the case of an option on a security?
I. Trading in the underlying security has been
halted in the one or more of the markets trading the underlying security
II. The opening of such underlying security has been delayed because of unusual circumstances
III. Trading experience of and observance of generally accepted standards of conduct by the applicant
IV. The lending arrangement is based on a business relationship outside of the broker/customer relationshipCorrect
According to CBOE Rule 5.20. Trading Halts
Halts. Among the factors that may be considered in making the foregoing determinations are whether:
(1) In the case of an option on a security:
(a) Trading in the underlying security has been
halted in the one or more of the markets trading the underlying security; or
(b) The opening of such underlying security has been delayed because of unusual circumstancesIncorrect
According to CBOE Rule 5.20. Trading Halts
Halts. Among the factors that may be considered in making the foregoing determinations are whether:
(1) In the case of an option on a security:
(a) Trading in the underlying security has been
halted in the one or more of the markets trading the underlying security; or
(b) The opening of such underlying security has been delayed because of unusual circumstances -
Question 5 of 10
5. Question
Which factors that may be considered in making the foregoing determinations in the case of an index option?
I. Willingness and ability of the applicant to promote the Exchange as a marketplace.
II. The extent to which trading is not occurring in the stocks or options underlying the index.
III. The current calculation of the index derived from the current market prices of the stocks is not available.
IV. The “current index level,” which is the implied forward level based on volatility index (security) futures prices, for a volatility index is not available or the cash (spot) value for a volatility index is not available.Correct
According to CBOE Rule 5.20. Trading Halts
Halts. Among the factors that may be considered in making the foregoing determinations are whether:(3) in the case of an index option:
(a) The extent to which trading is not occurring in the stocks or options underlying the index;
(b) The current calculation of the index derived from the current market prices of the stocks is not available; or
(c) The “current index level,” which is the implied forward level based on volatility index (security) futures prices, for a volatility index is not available or the cash (spot) value for a volatility index is not availableIncorrect
According to CBOE Rule 5.20. Trading Halts
Halts. Among the factors that may be considered in making the foregoing determinations are whether:(3) in the case of an index option:
(a) The extent to which trading is not occurring in the stocks or options underlying the index;
(b) The current calculation of the index derived from the current market prices of the stocks is not available; or
(c) The “current index level,” which is the implied forward level based on volatility index (security) futures prices, for a volatility index is not available or the cash (spot) value for a volatility index is not available -
Question 6 of 10
6. Question
What term means in respect of any Trading Permit Holder shall include the Trading Permit Holder, any general or special partner of the Trading Permit Holder, any officer or director of the Trading Permit Holder, or any participant, as such, in any joint, group or syndicate account with the Trading Permit Holder or with any partner, officer or director thereof?
Correct
According to CBOE Rule 8.43. Reports Related to Position Limits
(d) Customer Definition. For purposes of this Rule, the term “customer” in respect of any Trading Permit Holder shall include the Trading Permit Holder, any general or special partner of the Trading Permit Holder, any officer or director of the Trading Permit Holder, or any participant, as such, in any joint, group or syndicate account with the Trading Permit Holder or with any partner, officer or director thereof.
Market Makers, Floor Manager and Clerks are not in the RuleIncorrect
According to CBOE Rule 8.43. Reports Related to Position Limits
(d) Customer Definition. For purposes of this Rule, the term “customer” in respect of any Trading Permit Holder shall include the Trading Permit Holder, any general or special partner of the Trading Permit Holder, any officer or director of the Trading Permit Holder, or any participant, as such, in any joint, group or syndicate account with the Trading Permit Holder or with any partner, officer or director thereof.
Market Makers, Floor Manager and Clerks are not in the Rule -
Question 7 of 10
7. Question
What is a person’s interest as the holder of one or more option contracts?
Correct
According to CBOE Rule 1.1. Definitions Long Position
The term “long position” means a person’s interest as the holder of one or more option contracts.
Lead Market-Maker and LMM
The terms “Lead Market-Maker” and “LMM” have the meaning set forth in Rule 3.55.
Limit Up-Limit Down State
The term “limit up-limit down state” has the meaning set forth in Rule 5.
Market Close
The term “market close” means the time the Exchange specifies for the end of a trading session on the Exchange on that trading day.Incorrect
According to CBOE Rule 1.1. Definitions Long Position
The term “long position” means a person’s interest as the holder of one or more option contracts.
Lead Market-Maker and LMM
The terms “Lead Market-Maker” and “LMM” have the meaning set forth in Rule 3.55.
Limit Up-Limit Down State
The term “limit up-limit down state” has the meaning set forth in Rule 5.
Market Close
The term “market close” means the time the Exchange specifies for the end of a trading session on the Exchange on that trading day. -
Question 8 of 10
8. Question
What do you call a particular combination of components and their ratios to one another?
Correct
According to CBOE Rule 5.33. Complex Orders
Complex Strategy
The term “complex strategy” means a particular combination of components and their ratios to one another.
Complex Order Auction and COA
The terms “Complex Order Auction” and “COA” mean an auction of a complex order
Complex Order Book and COB
The terms “Complex Order Book” and “COB” mean the Exchange’s electronic book of complex orders maintained by the System, which single book is used during both the RTH and GTH trading sessions.
Regular Trading
The term “regular trading” means trading of complex orders that occurs during a trading session other than: (1) at the opening of the COB or re-opening of the COB for trading following a halt (described in paragraph (c) below) or (2) during the COA processIncorrect
According to CBOE Rule 5.33. Complex Orders
Complex Strategy
The term “complex strategy” means a particular combination of components and their ratios to one another.
Complex Order Auction and COA
The terms “Complex Order Auction” and “COA” mean an auction of a complex order
Complex Order Book and COB
The terms “Complex Order Book” and “COB” mean the Exchange’s electronic book of complex orders maintained by the System, which single book is used during both the RTH and GTH trading sessions.
Regular Trading
The term “regular trading” means trading of complex orders that occurs during a trading session other than: (1) at the opening of the COB or re-opening of the COB for trading following a halt (described in paragraph (c) below) or (2) during the COA process -
Question 9 of 10
9. Question
Which factors that may be considered in making the foregoing determinations in the case of any security other than an option?
I. The opening of such security has
been delayed due to order imbalances.
II. The Exchange has been advised that the issuer of the security is about to make an important announcement affecting such issue.
III. Trading in such security has been halted in one or more of the markets trading such security.
IV. Trading experience of and observance of generally accepted standards of conduct by the applicant.Correct
According to CBOE Rule 5.20. Trading Halts
Halts. Among the factors that may be considered in making the foregoing determinations are whether:(4) in the case of any security other than an option,
(a) The opening of such security has been delayed due to order imbalances,
(b) The Exchange has been advised that the issuer of the security is about to make an important announcement affecting such issue, or
(c) trading in such security has been halted in one or more of the markets trading such security.Incorrect
According to CBOE Rule 5.20. Trading Halts
Halts. Among the factors that may be considered in making the foregoing determinations are whether:(4) in the case of any security other than an option,
(a) The opening of such security has been delayed due to order imbalances,
(b) The Exchange has been advised that the issuer of the security is about to make an important announcement affecting such issue, or
(c) trading in such security has been halted in one or more of the markets trading such security. -
Question 10 of 10
10. Question
Which are the factors to be considered in making such a selection but are not limited?
I. Adequacy of capital
II. Willingness and ability of the applicant to promote the Exchange as a marketplace
III. Operational capacity
IV. Number and experience of support personnel of the applicant who will be performing functions related to the applicant’s DPM businessCorrect
According to CBOE Rule 3.53. DPMs Factors to be considered in making such a selection may include, but are not limited to, any one or more
of the following:
(a) Adequacy of capital;
(b) Operational capacity;
(c) Number and experience of support personnel of the applicant who will be performing functions related to the applicant’s DPM business;
(d) Willingness and ability of the applicant to promote the Exchange as a marketplace;Incorrect
According to CBOE Rule 3.53. DPMs Factors to be considered in making such a selection may include, but are not limited to, any one or more
of the following:
(a) Adequacy of capital;
(b) Operational capacity;
(c) Number and experience of support personnel of the applicant who will be performing functions related to the applicant’s DPM business;
(d) Willingness and ability of the applicant to promote the Exchange as a marketplace;