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Question 1 of 10
1. Question
Which conditions are TRUE about the filing requirements contained in Regulatory Circular apply to TPHs?
I. The TPH is not a FINRA member.
II. The TPH’s Designated Examining Authority is Cboe Options.
III. The TPH documents the content of the training and maintains a list of the participants.
IV. The TPH is not required to file monthly FOCUS reports.Correct
According to CBOE Rule 8.12 Anti-Money Laundering Compliance Program, the filing requirements contained in this Regulatory Circular apply to TPHs for which ALL of the following conditions are TRUE:
(a) The TPH is not a FINRA member
(b) The TPH’s Designated Examining Authority is Cboe Options; and
(c) The TPH is not required to file monthly FOCUS reports.Incorrect
According to CBOE Rule 8.12 Anti-Money Laundering Compliance Program, the filing requirements contained in this Regulatory Circular apply to TPHs for which ALL of the following conditions are TRUE:
(a) The TPH is not a FINRA member
(b) The TPH’s Designated Examining Authority is Cboe Options; and
(c) The TPH is not required to file monthly FOCUS reports. -
Question 2 of 10
2. Question
What should a Trading Permit Holder do on or before the date of the initial transaction in a portfolio margin account?
I. Furnish the customer with a special written disclosure statement describing the nature and risks of portfolio margining and which includes an acknowledgement for all portfolio margin account owners to sign, attesting that they have read and understood the disclosure statement, and agree to the terms under which a portfolio margin account is provided.
II. Delegate to qualified principals responsibility and authority for supervision and control of each office and provide for appropriate written procedures of supervision and control.
III. Establish a separate system of follow-up and review to determine that the delegated authority is being properly exercised.
IV. Obtain a signed acknowledgement from the customer and record the date of receipt.Correct
According to CBOE Rule 10.4(c)—Portfolio Margin: Opening of Accounts, on or before the date of the initial transaction in a portfolio margin account, a Trading Permit Holder shall:
(a)Furnish the customer with a special written disclosure statement describing the nature and risks of portfolio margining and which includes an acknowledgement for all portfolio margin account owners to sign, attesting that they have read and understood the disclosure statement, and agree to the terms under which a portfolio margin account is provided
(b)Obtain a signed acknowledgement from the customer and record the date of receiptIncorrect
According to CBOE Rule 10.4(c)—Portfolio Margin: Opening of Accounts, on or before the date of the initial transaction in a portfolio margin account, a Trading Permit Holder shall:
(a)Furnish the customer with a special written disclosure statement describing the nature and risks of portfolio margining and which includes an acknowledgement for all portfolio margin account owners to sign, attesting that they have read and understood the disclosure statement, and agree to the terms under which a portfolio margin account is provided
(b)Obtain a signed acknowledgement from the customer and record the date of receipt -
Question 3 of 10
3. Question
What local time does Trading Permit Holder or associated person shall make an outbound telephone call to any person’s residence?
Correct
According to CBOE Rule 9.18. Telemarketing
(a) Telemarketing Restrictions. No Trading Permit Holder or associated person shall make an outbound telephone call to:
(1) any person’s residence at any time other than between 8:00 a.m. and 9:00 p.m. local time at the called person’s location6:00 a.m. and 7:00 a.m.,
10:00 p.m. and 11:00 p.m.,
7:00 a.m and 6:00 p.m. are not in the rule.Incorrect
According to CBOE Rule 9.18. Telemarketing
(a) Telemarketing Restrictions. No Trading Permit Holder or associated person shall make an outbound telephone call to:
(1) any person’s residence at any time other than between 8:00 a.m. and 9:00 p.m. local time at the called person’s location6:00 a.m. and 7:00 a.m.,
10:00 p.m. and 11:00 p.m.,
7:00 a.m and 6:00 p.m. are not in the rule. -
Question 4 of 10
4. Question
What does a TPH organization should seek to obtain the following information at a minimum with respect to options customers that are natural persons?
I. Employment status (name of employer, self-employed or retired)
II. Estimated annual income from all sources
III. Age
IV. Marital status; number of dependentsCorrect
According to CBOE rule 9.1(b)—Opening of Accounts: Diligence in Opening Account with respect to options customers that are natural persons, a TPH organization shall seek to obtain the following information at a minimum (information shall be obtained for all participants in a joint account):
(a) Employment status (name of employer, self-employed or retired)
(b) Estimated annual income from all sources
(c) Marital status; number of dependents
(d) AgeIncorrect
According to CBOE rule 9.1(b)—Opening of Accounts: Diligence in Opening Account with respect to options customers that are natural persons, a TPH organization shall seek to obtain the following information at a minimum (information shall be obtained for all participants in a joint account):
(a) Employment status (name of employer, self-employed or retired)
(b) Estimated annual income from all sources
(c) Marital status; number of dependents
(d) Age -
Question 5 of 10
5. Question
What does the central file should include if any has been taken by the TPH organization with respect to the complaint?
I. Identification of complainant
II. Date complaint was received
III. Identification of Registered Representative servicing the account
IV. General description of the matter complained ofCorrect
According to CBOE Rule 9.17. Customer Complaints At a minimum, the central file shall include:
(a) Identification of complainant
(b) Date complaint was received
(c) Identification of Registered Representative servicing the account
(d) General description of the matter complained ofIncorrect
According to CBOE Rule 9.17. Customer Complaints At a minimum, the central file shall include:
(a) Identification of complainant
(b) Date complaint was received
(c) Identification of Registered Representative servicing the account
(d) General description of the matter complained of -
Question 6 of 10
6. Question
What term defines the net position of the account in such option at the opening of business of the day of such exercise instruction, plus the total number of such options purchased that day in opening purchase transactions up to the time of exercise, less the total number of such options sold that day in closing sale transactions up to the time of exercise?
Correct
According to CBOE RULE 6.20 (e) —Exercise of American-style Index Options
The term “net long position” shall mean the net position of the account in such option at the opening of business of the day of such exercise instruction, plus the total number of such options purchased that day in opening purchase transactions up to the time of exercise, less the total number of such options sold that day in closing sale transactions up to the time of exercise.
The term “account” shall be the individual account of the particular customer, market-maker or “non-customer” (as that term is defined in the By-Laws of the Clearing Corporation) who wishes to exercise, and
The term Netting. Unless otherwise permitted by paragraph (f), when effecting an off-floor transfer
pursuant to paragraph (a), no position may net against another position (“netting”), and no position
transfer may result in preferential margin or haircut treatment.
The term Credit Options shall not be subject to the hedge exemption to the standard position limits.Incorrect
According to CBOE RULE 6.20 (e) —Exercise of American-style Index Options
The term “net long position” shall mean the net position of the account in such option at the opening of business of the day of such exercise instruction, plus the total number of such options purchased that day in opening purchase transactions up to the time of exercise, less the total number of such options sold that day in closing sale transactions up to the time of exercise.
The term “account” shall be the individual account of the particular customer, market-maker or “non-customer” (as that term is defined in the By-Laws of the Clearing Corporation) who wishes to exercise, and
The term Netting. Unless otherwise permitted by paragraph (f), when effecting an off-floor transfer
pursuant to paragraph (a), no position may net against another position (“netting”), and no position
transfer may result in preferential margin or haircut treatment.
The term Credit Options shall not be subject to the hedge exemption to the standard position limits. -
Question 7 of 10
7. Question
What should the designated supervisor by Trading Permit Holder do?
I. Delegate to qualified principals responsibility and authority for supervision and control of each office, location, department, business activity, trading system, and internal surveillance system and provide for appropriate written procedures of supervision and control
II. Give any compensation or gratuity in any one year in excess of $50.00 to any employee of the Exchange.
III. Establish a separate system of follow-up and review to determine that the delegated authority and responsibility is being properly exercised.
IV. Circulate, in any manner, rumors of a character which might affect market conditionsCorrect
According to CBOE Rule 8.16. Supervision (b) Designation of Supervisor by Trading Permit Holder The person designated shall:
(a) Delegate to qualified principals responsibility and authority for supervision and control of each office, location, department, business activity, trading system, and internal surveillance system and provide for appropriate written procedures of supervision and control;
(b) Establish a separate system of follow-up and review to determine that the delegated authority and responsibility is being properly exercised.Incorrect
According to CBOE Rule 8.16. Supervision (b) Designation of Supervisor by Trading Permit Holder The person designated shall:
(a) Delegate to qualified principals responsibility and authority for supervision and control of each office, location, department, business activity, trading system, and internal surveillance system and provide for appropriate written procedures of supervision and control;
(b) Establish a separate system of follow-up and review to determine that the delegated authority and responsibility is being properly exercised. -
Question 8 of 10
8. Question
Which of the following code corresponds to the given capacity type, for the account of a market-maker on another options exchange?
Correct
According to CBOE rule 1.1 Definition, Code N For the account of a market-maker on another options exchange.
Coce B For the account of a broker or dealer, including a Foreign Broker-Dealer
Code L For the account of a non-Trading Permit Holder affiliate
Code M For the account of a Market-MakerIncorrect
According to CBOE rule 1.1 Definition, Code N For the account of a market-maker on another options exchange.
Coce B For the account of a broker or dealer, including a Foreign Broker-Dealer
Code L For the account of a non-Trading Permit Holder affiliate
Code M For the account of a Market-Maker -
Question 9 of 10
9. Question
Which of the following conditions where the lending or borrowing arrangement meets?
I. The customer receives a product or service for free for an initial period.
II. The customer and the registered person are both registered persons of the same member organization.
III. The customer is a member of such person’s immediate family.
IV. The customer with information about, or attempting to sell, anything promoted in the same marketing materials that prompted the customer’s call.Correct
according to CBOE Rule 9.19.Borrowing From or Lending to Customers (2) the lending or borrowing arrangement meets one of the following conditions:
(a) The customer is a member of such person’s immediate family;
(b) The customer and the registered person are both registered persons of the same member organization;Incorrect
according to CBOE Rule 9.19.Borrowing From or Lending to Customers (2) the lending or borrowing arrangement meets one of the following conditions:
(a) The customer is a member of such person’s immediate family;
(b) The customer and the registered person are both registered persons of the same member organization; -
Question 10 of 10
10. Question
Which of the following where no TPH organization shall execute any transaction in securities or carry a position in any security?
I. An officer or employee of the Exchange, or an officer or employee of a corporation in which the Exchange owns the majority of the capital stock is directly or indirectly interested, without the prior written consent of the Exchange
II. A partner, officer, director, principal shareholder or employee of another TPH organization is directly or indirectly interested, without the consent of such other TPH organization.
III. A partner, officer, director, principal shareholder or employee prioritizing the Floor Broker’s agency business over the Floor Broker’s liquidation orders
IV. An officer or employee of the Exchange, or an officer or employee of a corporation in any security determined by the Exchange to be related to such a security.Correct
According to CBOE Rule 9.11. Transactions of Certain Customers No TPH organization shall execute any transaction in securities or carry a position in any security in which:
(a) An officer or employee of the Exchange, or an officer or employee of a corporation in which the Exchange owns the majority of the capital stock is directly or indirectly interested, without the prior written consent of the Exchange, or
(b) A partner, officer, director, principal shareholder or employee of another TPH organization is directly or indirectly interested, without the consent of such other TPH organization.Incorrect
According to CBOE Rule 9.11. Transactions of Certain Customers No TPH organization shall execute any transaction in securities or carry a position in any security in which:
(a) An officer or employee of the Exchange, or an officer or employee of a corporation in which the Exchange owns the majority of the capital stock is directly or indirectly interested, without the prior written consent of the Exchange, or
(b) A partner, officer, director, principal shareholder or employee of another TPH organization is directly or indirectly interested, without the consent of such other TPH organization.