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Question 1 of 30
1. Question
Members should adopt and enforce written procedures regarding communications with the public. such as which of the following?
I. address oral sales solicitations
II. prevent your firm and its Associates from making any communication with potential or current customers that operates as a fraud or deceit
III. address promotional material
IV. implying that forex transactions are appropriate for all customersCorrect
Members should adopt and enforce written procedures regarding communications with the public. These procedures should address oral sales solicitations as well as promotional material, and they should be reasonably designed to prevent your firm and its Associates from making any communication with potential or current customers that operates as a fraud or deceit, uses a high‑pressure approach, implies that forex transactions are appropriate for all customers, or is not in accordance with the requirements set forth under NFA Compliance Rule 2-29 and the Interpretive Notices related to this rule.
Incorrect
Members should adopt and enforce written procedures regarding communications with the public. These procedures should address oral sales solicitations as well as promotional material, and they should be reasonably designed to prevent your firm and its Associates from making any communication with potential or current customers that operates as a fraud or deceit, uses a high‑pressure approach, implies that forex transactions are appropriate for all customers, or is not in accordance with the requirements set forth under NFA Compliance Rule 2-29 and the Interpretive Notices related to this rule.
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Question 2 of 30
2. Question
Individuals employed by which of the following must register as associated persons (AP) and be approved as forex APs by NFA?
I. an FCM
II. RFED
III. Introducing broker (IB)
IV. Commodity Pool Operator (CPO)Correct
Individuals employed by an FCM, RFED, introducing broker (IB), commodity pool operator (CPO) or commodity trading advisor (CTA) who solicit or accept retail forex customer orders or supervise any person who solicits or accepts retail forex customer orders must register as associated persons (AP) and be approved as forex APs by NFA. No Member may be approved as a forex firm unless at least one of its principals is registered as an AP and approved as a forex AP.
Incorrect
Individuals employed by an FCM, RFED, introducing broker (IB), commodity pool operator (CPO) or commodity trading advisor (CTA) who solicit or accept retail forex customer orders or supervise any person who solicits or accepts retail forex customer orders must register as associated persons (AP) and be approved as forex APs by NFA. No Member may be approved as a forex firm unless at least one of its principals is registered as an AP and approved as a forex AP.
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Question 3 of 30
3. Question
No FCM, IB, CPO or CTA Member or Associate shall make any communication related to its commodity interest business that does which of the following?
I. makes any statement that commodity interest trading is appropriate for all persons
II. employs or is part of a high-pressure approach
III. providing information that poses as an investment risk for the customer
IV. operates as a fraud or deceitCorrect
No FCM, IB, CPO or CTA Member or Associate shall make any communication related to its commodity interest business that:
(1) operates as a fraud or deceit;
(2) employs or is part of a high-pressure approach; or
(3) makes any statement that commodity interest trading is appropriate for all persons.Incorrect
No FCM, IB, CPO or CTA Member or Associate shall make any communication related to its commodity interest business that:
(1) operates as a fraud or deceit;
(2) employs or is part of a high-pressure approach; or
(3) makes any statement that commodity interest trading is appropriate for all persons. -
Question 4 of 30
4. Question
A person or entity exercising trading authority over a customer’s forex account must register as a CTA except for the following except?
Correct
Except for otherwise regulated U.S.-based financial institutions, registered broker-dealers and certain affiliates, and financial holding companies, a person or entity exercising trading authority over a customer’s forex account must register as a CTA. A person exercising trading authority over a customer’s account may not receive or hold the customer’s funds. Those funds must be held by the FCM or RFED counterparty.
Incorrect
Except for otherwise regulated U.S.-based financial institutions, registered broker-dealers and certain affiliates, and financial holding companies, a person or entity exercising trading authority over a customer’s forex account must register as a CTA. A person exercising trading authority over a customer’s account may not receive or hold the customer’s funds. Those funds must be held by the FCM or RFED counterparty.
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Question 5 of 30
5. Question
No FCM, IB, CPO or CTA Member or Associate shall use any promotional material that includes any specific numerical or statistical information about the past performance of any actual accounts (including rate of return) unless any of the following occurs with the exception of?
Correct
No FCM, IB, CPO or CTA Member or Associate shall use any promotional material that includes any specific numerical or statistical information about the past performance of any actual accounts (including rate of return) unless:
(i) such information is and can be demonstrated to NFA to be representative of the actual performance for the same time period of all reasonably comparable accounts;
(ii) the performance is presented net of all commissions, fees and expenses (see Interpretive Notice 9003 for a limited exception); and
(iii) in the case of rate of return figures, such figures are calculated in a manner consistent with CFTC Regulation 4.25 for commodity pools and with CFTC Regulation 4.35, as modified by NFA Compliance Rule 2-34(a), for figures based on separate accounts
Incorrect
No FCM, IB, CPO or CTA Member or Associate shall use any promotional material that includes any specific numerical or statistical information about the past performance of any actual accounts (including rate of return) unless:
(i) such information is and can be demonstrated to NFA to be representative of the actual performance for the same time period of all reasonably comparable accounts;
(ii) the performance is presented net of all commissions, fees and expenses (see Interpretive Notice 9003 for a limited exception); and
(iii) in the case of rate of return figures, such figures are calculated in a manner consistent with CFTC Regulation 4.25 for commodity pools and with CFTC Regulation 4.35, as modified by NFA Compliance Rule 2-34(a), for figures based on separate accounts
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Question 6 of 30
6. Question
In developing its forex requirements, NFA’s primary concern is to do which of the following?
I. To establish specific requirements for forex transactions, Forex Dealer Members and their Associates.
II. Set out the general standards that apply to Forex Dealer Members
III. Ensure that they provide adequate protection for retail customers without imposing undue burdens on NFA Members.
IV. Provide assistance to customer inquiriesCorrect
In developing its forex requirements, NFA’s primary concern was to ensure that they provide adequate protection for retail customers without imposing undue burdens on NFA Members.
Incorrect
In developing its forex requirements, NFA’s primary concern was to ensure that they provide adequate protection for retail customers without imposing undue burdens on NFA Members.
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Question 7 of 30
7. Question
Members registered as broker-dealers under Section 15(b)(11) of the Exchange Act and their Associates shall not use any promotional material that specifically refers to security futures products unless the promotional material includes current recommendations regarding security futures products only if the following occurs except?
Correct
Members registered as broker-dealers under Section 15(b)(11) of the Exchange Act and their Associates shall not use any promotional material that specifically refers to security futures products unless the promotional material:
includes current recommendations regarding security futures products only if: (i) the Member has a reasonable basis for the recommendation; (ii) the material discloses all material conflicts of interest created by the Member’s or Associate’s activities in the underlying security; and (iii) the material contains contact information for obtaining the list of prior recommendations regarding security futures products, the underlying securities, or a derivative thereof only if it sets forth all recommendations as to the same type, kind, grade, or classification of securities made by the Member or Associate within the last year
Incorrect
Members registered as broker-dealers under Section 15(b)(11) of the Exchange Act and their Associates shall not use any promotional material that specifically refers to security futures products unless the promotional material:
includes current recommendations regarding security futures products only if: (i) the Member has a reasonable basis for the recommendation; (ii) the material discloses all material conflicts of interest created by the Member’s or Associate’s activities in the underlying security; and (iii) the material contains contact information for obtaining the list of prior recommendations regarding security futures products, the underlying securities, or a derivative thereof only if it sets forth all recommendations as to the same type, kind, grade, or classification of securities made by the Member or Associate within the last year
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Question 8 of 30
8. Question
NFA Compliance Rule 2-36 subsection (d) sets out which of the following in regards to the general standards that apply to Forex Dealer Members and their Associates?
I. Prohibits Members from accepting forex orders or accounts from handling a forex transaction for or on behalf of, receiving compensation for forex transactions from, or paying compensation for forex transactions to any non-Member of NFA that is required to be registered with the Commission as a FCM, RFED, IB, CPO, or CTA in connection with its forex activities
II. Requires Forex Dealer Members and their Associates to observe high standards of commercial honor and just and equitable principles of trade in connection with their forex business
III. Prohibits Forex Dealer Members and their Associates from engaging in fraudulent activities
IV. Provides that communication with the public and promotional material used by a Forex Dealer Member or its Associate must comply with all of the requirements of NFA Compliance Rule 2-29 and the Interpretive Notices related to this ruleCorrect
NFA Compliance Rule 2-36 sets out the general standards that apply to Forex Dealer Members and their Associates in connection with forex transactions.
subsection (d) prohibits Members from accepting forex orders or accounts from, handling a forex transaction for or on behalf of, receiving compensation for forex transactions from, or paying compensation for forex transactions to any non-Member of NFA that is required to be registered with the Commission as a FCM, RFED, IB, CPO, or CTA in connection with its forex activitiesIncorrect
NFA Compliance Rule 2-36 sets out the general standards that apply to Forex Dealer Members and their Associates in connection with forex transactions.
subsection (d) prohibits Members from accepting forex orders or accounts from, handling a forex transaction for or on behalf of, receiving compensation for forex transactions from, or paying compensation for forex transactions to any non-Member of NFA that is required to be registered with the Commission as a FCM, RFED, IB, CPO, or CTA in connection with its forex activities -
Question 9 of 30
9. Question
An FDM has responsibility for the following with regards to communications with the Public and Promotional Materials except?
Correct
an FDM has direct responsibility for misleading promotional material if the FDM prepares or distributes it; has agency responsibility if the trading system developer is an agent of the FDM under established principles of agency law; and has supervisory responsibility if the Member fails to supervise its own employees in its activities with a third-party system developer.
Incorrect
an FDM has direct responsibility for misleading promotional material if the FDM prepares or distributes it; has agency responsibility if the trading system developer is an agent of the FDM under established principles of agency law; and has supervisory responsibility if the Member fails to supervise its own employees in its activities with a third-party system developer.
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Question 10 of 30
10. Question
The Interpretive Notice has the following sections except?
I. section providing additional guidance about the requirements in Compliance Rule 2-36
II. section explaining who qualifies as a Forex Dealer Member under NFA Bylaw 306
III. section covering other miscellaneous requirements
IV. section requiring Members and Associates to obtain specific customer informationCorrect
The Interpretive Notice has three sections. The first section explains who qualifies as a Forex Dealer Member under NFA Bylaw 306, the second section provides additional guidance about the requirements in Compliance Rule 2-36, and the third section covers other miscellaneous requirements.
Incorrect
The Interpretive Notice has three sections. The first section explains who qualifies as a Forex Dealer Member under NFA Bylaw 306, the second section provides additional guidance about the requirements in Compliance Rule 2-36, and the third section covers other miscellaneous requirements.
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Question 11 of 30
11. Question
The following describes what a Pip is except for?
I. The smallest unit of trading in a foreign currency price
II. The smallest umargin of trading in a foreign currency price
III. The smallest spot of trading in a foreign currency price
IV. The largest unit of trading in a foreign currency priceCorrect
Pip – The smallest unit of trading in a foreign currency price
Incorrect
Pip – The smallest unit of trading in a foreign currency price
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Question 12 of 30
12. Question
Market Risk shall take into account which of the following?
I. The daily measurement of market liability
II. Volatility of prices
III. Basis and correlation risks
IV. The sensitivity of option positionsCorrect
Market Risk shall take into account, among other things, for all counterparties (i.e., ECP and Non-ECP) the daily measurement of market exposure, volatility of prices, basis and correlation risks, leverage, sensitivity of option positions (if applicable), and position concentration to comply with market risk tolerance limits
Incorrect
Market Risk shall take into account, among other things, for all counterparties (i.e., ECP and Non-ECP) the daily measurement of market exposure, volatility of prices, basis and correlation risks, leverage, sensitivity of option positions (if applicable), and position concentration to comply with market risk tolerance limits
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Question 13 of 30
13. Question
The following best described a forward transaction except for?
I. An agreement that expects actual delivery of and full payment for the currency to occur on a future date.
II. A firm in the business of acting as a counterparty to foreign currency transactions.
III. A loose network of currency transactions negotiated between financial institutions and other large companies.
IV. The ability to control large dollar amount of a commodity with a comparatively small amount of capital.Correct
A true forward transaction is an agreement that expects actual delivery of and full payment for the currency to occur on a future date.
Incorrect
A true forward transaction is an agreement that expects actual delivery of and full payment for the currency to occur on a future date.
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Question 14 of 30
14. Question
Liquidity Risk shall take into account, among other things, the daily measurement of liquidity needs including the following except?
I. Risks presented by prime brokers and/or liquidity providers
II. Procedures for liquidating all non-cash collateral in a timely manner
III. Procedures for liquidating all non-cash collateral without significant effect on price and application of appropriate collateral haircuts that accurately reflect market and credit risk
IV. Position concentration to comply with market risk tolerance limitsCorrect
Liquidity Risk shall take into account, among other things, the daily measurement of liquidity needs, risks presented by prime brokers and/or liquidity providers, and, if applicable, procedures for liquidating all non-cash collateral in a timely manner and without significant effect on price and application of appropriate collateral haircuts that accurately reflect market and credit risk.
Incorrect
Liquidity Risk shall take into account, among other things, the daily measurement of liquidity needs, risks presented by prime brokers and/or liquidity providers, and, if applicable, procedures for liquidating all non-cash collateral in a timely manner and without significant effect on price and application of appropriate collateral haircuts that accurately reflect market and credit risk.
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Question 15 of 30
15. Question
Which of the following best describes what an Interbank market is?
I. The process of extending the settlement date on an open position by rolling it over to the next settlement date
II. A firm in the business of acting as a counterparty to foreign currency transactions.
III. A loose network of currency transactions negotiated between financial institutions and other large companies
IV. A market of immediate delivery of and payment for the productCorrect
Interbank market – A loose network of currency transactions negotiated between financial institutions and other large companies
Incorrect
Interbank market – A loose network of currency transactions negotiated between financial institutions and other large companies
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Question 16 of 30
16. Question
Legal Risk shall take into account, among other things, the determination that any transaction and netting arrangements entered into having the following except?
Correct
Legal Risk shall take into account, among other things, the determination that any transaction and netting arrangements entered into have a sound legal basis, account opening documents are properly completed and adequate risk disclosure provided, and an evaluation of what impact any potential litigation may have upon firm capital.
Incorrect
Legal Risk shall take into account, among other things, the determination that any transaction and netting arrangements entered into have a sound legal basis, account opening documents are properly completed and adequate risk disclosure provided, and an evaluation of what impact any potential litigation may have upon firm capital.
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Question 17 of 30
17. Question
The following firms has to register with the Commodity Futures Trading Commission except?
Correct
Firms required to register with the Commodity Futures Trading Commission includes:
– Commodity Trading Advisor (CTA)
– Commodity Pool Operator (CPO)
– Introducing Broker (IB)
– Futures Commission Merchant (FCM)Incorrect
Firms required to register with the Commodity Futures Trading Commission includes:
– Commodity Trading Advisor (CTA)
– Commodity Pool Operator (CPO)
– Introducing Broker (IB)
– Futures Commission Merchant (FCM) -
Question 18 of 30
18. Question
Counterparty Risk must take into account the following risks with the exception of?
I. Settlement risks
II. Pricing risks associated with offsetting the FDM’s forex positions with counterparties
III. Operational risks
IV. Credit risksCorrect
Counterparty Risk shall take into account, among other things, all risks including but not limited to, settlement risks, pricing risks associated with offsetting the FDM’s forex positions with counterparties, including different prime brokers, banks and other FDMs.
Incorrect
Counterparty Risk shall take into account, among other things, all risks including but not limited to, settlement risks, pricing risks associated with offsetting the FDM’s forex positions with counterparties, including different prime brokers, banks and other FDMs.
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Question 19 of 30
19. Question
A firm may not act as a counterparty, or offer to act as a counterparty, to any forex transaction unless the firm is one of the regulated entities listed in the CEA. These entities (authorized counterparties) include the following except?
Correct
A firm may not act as a counterparty, or offer to act as a counterparty, to any forex transaction unless the firm is one of the regulated entities listed in the CEA. These entities (authorized counterparties) are:
-U.S.-based financial institutions (e.g., banks and savings associations);
-financial holding companies;
-registered FCMs that are primarily or substantially engaged in on-exchange futures activities; and
-RFEDs.Incorrect
A firm may not act as a counterparty, or offer to act as a counterparty, to any forex transaction unless the firm is one of the regulated entities listed in the CEA. These entities (authorized counterparties) are:
-U.S.-based financial institutions (e.g., banks and savings associations);
-financial holding companies;
-registered FCMs that are primarily or substantially engaged in on-exchange futures activities; and
-RFEDs. -
Question 20 of 30
20. Question
The following statements with regards to the Risk Management Program are true with the exception of?
I. The Risk Management Program must also set risk tolerance limits for each of the risk elements above and discuss the underlying methodology used in setting these limits
II. The Risk Management Program must include policies and procedures for detecting breaches of risk tolerance limits set by the FDM and alerting supervisors within the risk management unit and senior management
III. As part of the Risk Management Program, the FDM must conduct stress tests under extreme on various conditions that may cause employee morale and the indecency of potential insider trading.
IV. The Risk Management Program must also consider all risks posed by the FDM’s affiliates, including the risks affiliates pose when the FDM functions as the primary risk manager and/or liquidity provider for affiliates, the FDM’s other business lines and any other trading activity engaged in by the FDM.Correct
The Risk Management Program must also set risk tolerance limits for each of the risk elements above and discuss the underlying methodology used in setting these limits
The Risk Management Program must include policies and procedures for detecting breaches of risk tolerance limits set by the FDM and alerting supervisors within the risk management unit and senior management
As part of the Risk Management Program, the FDM must conduct stress tests under extreme but plausible conditions of all positions in the proprietary account and in each counterparty account at least on a semi-monthly basis.
The Risk Management Program must also consider all risks posed by the FDM’s affiliates, including the risks affiliates pose when the FDM functions as the primary risk manager and/or liquidity provider for affiliates, the FDM’s other business lines and any other trading activity engaged in by the FDM.Incorrect
The Risk Management Program must also set risk tolerance limits for each of the risk elements above and discuss the underlying methodology used in setting these limits
The Risk Management Program must include policies and procedures for detecting breaches of risk tolerance limits set by the FDM and alerting supervisors within the risk management unit and senior management
As part of the Risk Management Program, the FDM must conduct stress tests under extreme but plausible conditions of all positions in the proprietary account and in each counterparty account at least on a semi-monthly basis.
The Risk Management Program must also consider all risks posed by the FDM’s affiliates, including the risks affiliates pose when the FDM functions as the primary risk manager and/or liquidity provider for affiliates, the FDM’s other business lines and any other trading activity engaged in by the FDM. -
Question 21 of 30
21. Question
Financial Requirements Section 13 states which of the following in regards to FDMs?
I. Obligates FDMs to file daily reports regarding an FDM’s capital position and its ability to meet its obligation to retail Forex customers.
II. FDMs must also file quarterly reports containing the most updated performance disclosures required by CFTC Regulations.
III. DMs must indicate the net aggregate notional value for all open futures and options Forex positions.
IV. NFA requires FDMs to provide operational information on a weekly basis.Correct
Financial Requirements Section 13
Section 13 obligates FDMs to file daily reports regarding an FDM’s capital position and its ability to meet its obligation to retail Forex customers. Among other daily reporting obligations, FDMs must indicate the net aggregate notional value for all open futures and options Forex positions.
In addition, NFA requires FDMs to provide operational information on a monthly basis. These monthly reports must specify the number of retail and ECP Forex customers as well as how many customers are active, US domiciled or foreign domiciled. Also, FDMs must file monthly reports with respect to the FDM’s risk management of its market exposure.
FDMs must also file quarterly reports containing the most updated performance disclosures required by CFTC Regulation 5.5(e)(1)(i) – (iii).
Incorrect
Financial Requirements Section 13
Section 13 obligates FDMs to file daily reports regarding an FDM’s capital position and its ability to meet its obligation to retail Forex customers. Among other daily reporting obligations, FDMs must indicate the net aggregate notional value for all open futures and options Forex positions.
In addition, NFA requires FDMs to provide operational information on a monthly basis. These monthly reports must specify the number of retail and ECP Forex customers as well as how many customers are active, US domiciled or foreign domiciled. Also, FDMs must file monthly reports with respect to the FDM’s risk management of its market exposure.
FDMs must also file quarterly reports containing the most updated performance disclosures required by CFTC Regulation 5.5(e)(1)(i) – (iii).
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Question 22 of 30
22. Question
Financial Requirements Section 11(b) states which of the following in relation to the Forex Dealer Members?
I. Forex Dealer Members must indicate the net aggregate notional value for all open futures and options Forex positions.
II. Prohibits a Forex Dealer Member from including assets held by an affiliate or an unregulated person in the firm’s current assets for purposes of determining its adjusted net capital under CFTC Regulation 5.7(b)(2)(v)(A).
III. Obligates Forex Dealer Members to file daily reports regarding an FDM’s capital position and its ability to meet its obligation to retail Forex customers.
IV. Forex Dealer Members must maintain adjusted net capital equal to or in excess of the greatest amount specified in subsections (a)(ii) which applies to Forex Dealer Members that execute any customer transactions and that also have liabilities to customers of more than $10 million.Correct
Financial Requirements Section 11(b)
Section 11(b) prohibits a Forex Dealer Member from including assets held by an affiliate or an unregulated person in the firm’s current assets for purposes of determining its adjusted net capital under CFTC Regulation 5.7(b)(2)(v)(A).Incorrect
Financial Requirements Section 11(b)
Section 11(b) prohibits a Forex Dealer Member from including assets held by an affiliate or an unregulated person in the firm’s current assets for purposes of determining its adjusted net capital under CFTC Regulation 5.7(b)(2)(v)(A). -
Question 23 of 30
23. Question
If your firm does not disclose non-public personal information to non-affiliated third parties, or does so in very limited circumstances, a piece of additional information must be included in the privacy notice which is?
I. A privacy notice when the customer first establishes a relationship with the Member and annually after that.
II. A statement that the firm shares non-public personal information with third parties as permitted by law.
III. A Member’s policies for disclosing non-public, personally identifiable financial information
IV. A privacy notice that identifies the categories of non-public personal informationCorrect
If your firm does not disclose non-public personal information to non-affiliated third parties, or does so in very limited circumstances, the only additional information you must include in the privacy notice is a statement that the firm shares non-public personal information with third parties as permitted by law.
Incorrect
If your firm does not disclose non-public personal information to non-affiliated third parties, or does so in very limited circumstances, the only additional information you must include in the privacy notice is a statement that the firm shares non-public personal information with third parties as permitted by law.
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Question 24 of 30
24. Question
The following must be included in the privacy notice if your firm discloses non-public personal information to non-affiliated third parties for other reasons except for?
Correct
If your firm discloses non-public personal information to non-affiliated third parties for other reasons, the notice must inform the customer that the firm discloses or reserves the right to disclose non-public personal information to non-affiliated third parties and that the customer has the right to opt out of that disclosure. The notice must identify the categories of non-public personal information that your firm discloses and the categories of affiliates and non-affiliates that your firm will disclose the information to. The notice must inform the customer that it may opt out of the disclosure and must provide a reasonable means for the customer to exercise its opt-out right.
Incorrect
If your firm discloses non-public personal information to non-affiliated third parties for other reasons, the notice must inform the customer that the firm discloses or reserves the right to disclose non-public personal information to non-affiliated third parties and that the customer has the right to opt out of that disclosure. The notice must identify the categories of non-public personal information that your firm discloses and the categories of affiliates and non-affiliates that your firm will disclose the information to. The notice must inform the customer that it may opt out of the disclosure and must provide a reasonable means for the customer to exercise its opt-out right.
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Question 25 of 30
25. Question
Your firm’s business continuity plan should address the following areas except for?
Correct
Your firm’s business continuity plan should address the following areas:
- establishing back-up facilities, systems, and personnel in locations that are geographically separated from the firm’s primary facilities, systems, and personnel;
- backing up or copying essential documents and storing the information off-site;
- considering the impact of third-party business interruptions and identifying ways to minimize that impact; and
- developing a communication plan to contact essential parties such as employees, customers, counterparties, vendors, and disaster recovery specialists.
Incorrect
Your firm’s business continuity plan should address the following areas:
- establishing back-up facilities, systems, and personnel in locations that are geographically separated from the firm’s primary facilities, systems, and personnel;
- backing up or copying essential documents and storing the information off-site;
- considering the impact of third-party business interruptions and identifying ways to minimize that impact; and
- developing a communication plan to contact essential parties such as employees, customers, counterparties, vendors, and disaster recovery specialists.
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Question 26 of 30
26. Question
Each Member must update its plan when necessary and must periodically review the plan and keep a record of the review. Your firm should distribute and explain the following except?
I. maintain copies of the plan at one or more off-site locations that are readily accessible to key employees
II. communicate the essential parts of the plan to all employees
III. the contact essential parties for identifying ways to minimize financial impact
IV. the plan to key employeesCorrect
Each Member must update its plan when necessary and must periodically review the plan and keep a record of the review. Your firm should distribute and explain the plan to key employees, communicate the essential parts of the plan to all employees, and maintain copies of the plan at one or more off-site locations that are readily accessible to key employees.
Incorrect
Each Member must update its plan when necessary and must periodically review the plan and keep a record of the review. Your firm should distribute and explain the plan to key employees, communicate the essential parts of the plan to all employees, and maintain copies of the plan at one or more off-site locations that are readily accessible to key employees.
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Question 27 of 30
27. Question
Each FCM’s and IB’s written procedures must require the firm to identify the beneficial owner(s) by obtaining certain required information from the following except for?
Correct
Each FCM’s and IB’s written procedures must require the firm to identify the beneficial owner(s) by obtaining certain required information from the natural person opening the account on behalf of the legal entity customer, along with the natural person’s certification regarding the accuracy of the information provided. The information required includes the name and title of the person opening the account and the name and address of the legal entity for which the account is being opened.
Incorrect
Each FCM’s and IB’s written procedures must require the firm to identify the beneficial owner(s) by obtaining certain required information from the natural person opening the account on behalf of the legal entity customer, along with the natural person’s certification regarding the accuracy of the information provided. The information required includes the name and title of the person opening the account and the name and address of the legal entity for which the account is being opened.
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Question 28 of 30
28. Question
FCMs and IBs must establish procedures for making and maintaining a record of all information obtained during the identification and verification of beneficial owners. These procedures must require that a record be kept for the following except?
I. A description of the digital software for locating investment opportunities
II. For verification, a description of any document relied on (noting the type, any identification number, place of issuance and expiration)
III. All identifying information obtained from a customer, including without limitation the certification
IV. A description of the resolution of each substantive discrepancy discovered when verifying the identifying information obtainedCorrect
Recordkeeping Procedures – FCMs and IBs must establish procedures for making and maintaining a record of all information obtained during the identification and verification of beneficial owners. At a minimum, these procedures must require that a record be kept for: (1) all identifying information obtained from a customer, including without limitation the certification (if obtained); (2) for verification, a description of any document relied on (noting the type, any identification number, place of issuance and expiration); (3) a description of the non-documentary verification methods or additional verification methods used and the results; and (4) a description of the resolution of each substantive discrepancy discovered when verifying the identifying information obtained.
Incorrect
Recordkeeping Procedures – FCMs and IBs must establish procedures for making and maintaining a record of all information obtained during the identification and verification of beneficial owners. At a minimum, these procedures must require that a record be kept for: (1) all identifying information obtained from a customer, including without limitation the certification (if obtained); (2) for verification, a description of any document relied on (noting the type, any identification number, place of issuance and expiration); (3) a description of the non-documentary verification methods or additional verification methods used and the results; and (4) a description of the resolution of each substantive discrepancy discovered when verifying the identifying information obtained.
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Question 29 of 30
29. Question
The CFTC’s regulations restrict a Member’s right to disclose non-public, personally identifiable financial information about customers and other consumers. These restrictions apply to the following except for?
Correct
The CFTC’s regulations restrict a Member’s right to disclose non-public, personally identifiable financial information about customers and other consumers. These restrictions only apply to information about individuals who obtain financial products or services from the Member primarily for personal, family, or household purposes.
Incorrect
The CFTC’s regulations restrict a Member’s right to disclose non-public, personally identifiable financial information about customers and other consumers. These restrictions only apply to information about individuals who obtain financial products or services from the Member primarily for personal, family, or household purposes.
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Question 30 of 30
30. Question
Members must have policies and procedures that describe the following information except for?
Correct
Members must have policies and procedures that describe their administrative, technical, and physical safeguards for protecting customer records and information. The procedures should also address the Member’s policies for disclosing non-public, personally identifiable financial information and for notifying customers of those policies.
Incorrect
Members must have policies and procedures that describe their administrative, technical, and physical safeguards for protecting customer records and information. The procedures should also address the Member’s policies for disclosing non-public, personally identifiable financial information and for notifying customers of those policies.