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Question 1 of 30
1. Question
A Member must obtain which of the following minimum information before it transacts business with a customer?
I. for U.S. persons, the customer’s social security number or taxpayer identification number
II. for customers that are not individuals, the customer’s name, principal place of business, local office or other physical location
III. for non-U.S. persons, a U.S. taxpayer identification number, a passport number and the issuing country, an alien identification card number
IV. for individuals, the customer’s name, date of birth, and personal or business addressCorrect
A Member must obtain the following minimum information before it transacts business (e.g., introduces or opens an account or acts as counterparty) with a customer:
-for individuals, the customer’s name, date of birth, and personal or business address;
-for customers that are not individuals, the customer’s name, principal place of business, local office or other physical location;
-for U.S. persons, the customer’s social security number or taxpayer identification number; and
-for non-U.S. persons, a U.S. taxpayer identification number, a passport number and the issuing country, an alien identification card number, or the number and issuing country for any other government-issued document that shows nationality or residence and contains a photograph or similar safeguard.Incorrect
A Member must obtain the following minimum information before it transacts business (e.g., introduces or opens an account or acts as counterparty) with a customer:
-for individuals, the customer’s name, date of birth, and personal or business address;
-for customers that are not individuals, the customer’s name, principal place of business, local office or other physical location;
-for U.S. persons, the customer’s social security number or taxpayer identification number; and
-for non-U.S. persons, a U.S. taxpayer identification number, a passport number and the issuing country, an alien identification card number, or the number and issuing country for any other government-issued document that shows nationality or residence and contains a photograph or similar safeguard. -
Question 2 of 30
2. Question
The procedures for verifying the customer’s identity should include the following except?
Correct
In addition to obtaining this minimum information, the Member must take steps to verify the customer’s identity. You do not have to verify the customer’s identity before transacting business with the customer but must do so within a reasonable time before or after the first business transaction. The procedures for verifying the customer’s identity should:
-describe those situations where documents will be used to verify identity and list the documents that will be used (e.g., driver’s license, passport, certified articles of incorporation, government-issued business license);
-explain when non-documentary methods will be used either instead of or in addition to looking at documents and describe those non-documentary methods (e.g., contacting the customer at the telephone number or address provided by the customer, comparing the information provided by the customer with information from a consumer reporting agency, checking references with other financial institutions);
-include a mechanism for identifying customers that may be high money laundering or terrorist financing risks (such as customers from particular geographic locations);
-provide a means for notifying customers that the Member will ask them for information to verify identity; and
-describe what the Member will do if it cannot form a reasonable belief that it knows the customer’s true identityIncorrect
In addition to obtaining this minimum information, the Member must take steps to verify the customer’s identity. You do not have to verify the customer’s identity before transacting business with the customer but must do so within a reasonable time before or after the first business transaction. The procedures for verifying the customer’s identity should:
-describe those situations where documents will be used to verify identity and list the documents that will be used (e.g., driver’s license, passport, certified articles of incorporation, government-issued business license);
-explain when non-documentary methods will be used either instead of or in addition to looking at documents and describe those non-documentary methods (e.g., contacting the customer at the telephone number or address provided by the customer, comparing the information provided by the customer with information from a consumer reporting agency, checking references with other financial institutions);
-include a mechanism for identifying customers that may be high money laundering or terrorist financing risks (such as customers from particular geographic locations);
-provide a means for notifying customers that the Member will ask them for information to verify identity; and
-describe what the Member will do if it cannot form a reasonable belief that it knows the customer’s true identity -
Question 3 of 30
3. Question
Which of the following information with regards to customer identification program is/are accurate?
I. Members are not required to determine whether a document used to verify identity is valid.
II. A discussion of any pending or completed material administrative, civil, enforcement or criminal complaints or actions filed against the FDM
III. If a Member cannot identify a customer that is not an individual using its normal procedures, the Member may need to obtain information about the individual with authority or control over the account.
IV. If a document appears to be a forgery or there is other evidence of fraud, however, your firm must decide whether it has enough information to form a reasonable belief that it knows the customer’s true identity.Correct
If a Member cannot identify a customer that is not an individual using its normal procedures, the Member may need to obtain information about the individual with authority or control over the account.
Members are not required to determine whether a document used to verify identity is valid.
If a document appears to be a forgery or there is other evidence of fraud, however, your firm must decide whether it has enough information to form a reasonable belief that it knows the customer’s true identity.
Incorrect
If a Member cannot identify a customer that is not an individual using its normal procedures, the Member may need to obtain information about the individual with authority or control over the account.
Members are not required to determine whether a document used to verify identity is valid.
If a document appears to be a forgery or there is other evidence of fraud, however, your firm must decide whether it has enough information to form a reasonable belief that it knows the customer’s true identity.
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Question 4 of 30
4. Question
The Customer Identification Program (CIP) must include which of the following elements?
I. Customer Notice Procedures
II. Risk-based Procedures
III. Required Identifying Information and Identity Verification Procedures
IV. Recordkeeping ProceduresCorrect
the Customer Identification Program (CIP) must include the following elements:
Required Identifying Information and Identity Verification Procedures
Recordkeeping Procedures
Comparison with Government List Procedures
Customer Notice Procedures
Reliance on Other Financial Institutions Procedures
Incorrect
the Customer Identification Program (CIP) must include the following elements:
Required Identifying Information and Identity Verification Procedures
Recordkeeping Procedures
Comparison with Government List Procedures
Customer Notice Procedures
Reliance on Other Financial Institutions Procedures
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Question 5 of 30
5. Question
Members must also obtain each customer’s written consent or provide each customer with a notice of the assignment or transfer. The notice must give the reason for the assignment or transfer (e.g., the firm is going out of business). The notice must also include the following except?
Correct
Members must also obtain each customer’s written consent or provide each customer with a notice of the assignment or transfer. The notice must give the reason for the assignment or transfer (e.g., the firm is going out of business). The notice must also (at a minimum):
1. inform customers that they are not required to accept the proposed assignment or transfer but can direct the FDM to instead liquidate their positions;
2. include the name and contact information of an individual at your firm to contact with questions or to liquidate positions;
3. provide the name and contact information for the assignee firm, as well as the name of an individual at that firm; and
4. instruct customers that their failure to respond to the notice by a specified date, not less than seven days from the date of the notice, will result in a default action (generally either assignment to the assignee or, if assignment is not permitted under the customer agreement, liquidation of the open positions and return of the remaining funds).Incorrect
Members must also obtain each customer’s written consent or provide each customer with a notice of the assignment or transfer. The notice must give the reason for the assignment or transfer (e.g., the firm is going out of business). The notice must also (at a minimum):
1. inform customers that they are not required to accept the proposed assignment or transfer but can direct the FDM to instead liquidate their positions;
2. include the name and contact information of an individual at your firm to contact with questions or to liquidate positions;
3. provide the name and contact information for the assignee firm, as well as the name of an individual at that firm; and
4. instruct customers that their failure to respond to the notice by a specified date, not less than seven days from the date of the notice, will result in a default action (generally either assignment to the assignee or, if assignment is not permitted under the customer agreement, liquidation of the open positions and return of the remaining funds). -
Question 6 of 30
6. Question
Depending upon the circumstances, FDM assignor/transferor must provide NFA with all pertinent records pertaining to the transaction. Prior to the transaction, the FDM must provide a list of the affected accounts; including which of the following?
I. Customer names
II. Account numbers
III. Customer address
IV. Account values as of the end of the previous dayCorrect
Depending upon the circumstances, FDM assignor/transferor must provide NFA with all pertinent records pertaining to the transaction. Prior to the transaction, the FDM must provide a list of the affected accounts; including:
-Customer names
-Account numbers
-Account values as of the end of the previous dayIncorrect
Depending upon the circumstances, FDM assignor/transferor must provide NFA with all pertinent records pertaining to the transaction. Prior to the transaction, the FDM must provide a list of the affected accounts; including:
-Customer names
-Account numbers
-Account values as of the end of the previous day -
Question 7 of 30
7. Question
Which of the following is the process of extending the settlement date on an open position by rolling it over to the next settlement date?
Correct
Rollover – The process of extending the settlement date on an open position by rolling it over to the next settlement date.
Incorrect
Rollover – The process of extending the settlement date on an open position by rolling it over to the next settlement date.
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Question 8 of 30
8. Question
A forex dealer member (FDM) is an entity that acts, or offers to act, as a counterparty to an off-exchange foreign currency transaction with a person who is not an eligible contract participant and the transaction is either which of the following?
I. Offered or entered into, on a leveraged or margined basis, or financed by the offeror, counterparty or person acting in concert with the offeror or counterparty on a similar basis.
II. A futures contract, an option on a futures contract or an option contract (including options traded on a securities exchange)
III. A futures contract, an option on a futures contract or an option contract (except options traded on a securities exchange)
IV. Offered or entered into, on a leveraged or margined basis, but financed by the offeror with counterparty or person acting in concert with the offeror on the same basisCorrect
A forex dealer member (FDM) is an entity that acts, or offers to act, as a counterparty to an off-exchange foreign currency transaction with a person who is not an eligible contract participant and the transaction is either:
a futures contract, an option on a futures contract or an option contract (except options traded on a securities exchange); or
offered or entered into, on a leveraged or margined basis, or financed by the offeror, counterparty or person acting in concert with the offeror or counterparty on a similar basis.
Incorrect
A forex dealer member (FDM) is an entity that acts, or offers to act, as a counterparty to an off-exchange foreign currency transaction with a person who is not an eligible contract participant and the transaction is either:
a futures contract, an option on a futures contract or an option contract (except options traded on a securities exchange); or
offered or entered into, on a leveraged or margined basis, or financed by the offeror, counterparty or person acting in concert with the offeror or counterparty on a similar basis.
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Question 9 of 30
9. Question
A futures commission merchant (FCM) is an entity that solicits or accepts orders to buy or sell which of the following?
I. futures contracts
II. options on futures
III. retail off-exchange forex contracts or swaps
IV. future commoditiesCorrect
A futures commission merchant (FCM) is an entity that solicits or accepts orders to buy or sell futures contracts, options on futures, retail off-exchange forex contracts or swaps, and accepts money or other assets from customers to support such orders.
Incorrect
A futures commission merchant (FCM) is an entity that solicits or accepts orders to buy or sell futures contracts, options on futures, retail off-exchange forex contracts or swaps, and accepts money or other assets from customers to support such orders.
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Question 10 of 30
10. Question
Which of the following best describes Tom Next?
Correct
Tomorrow next (tom next), is a short-term foreign exchange transaction where a currency is simultaneously bought and sold over two separate business days, those being tomorrow (one business day) and the following day (two business days from today), otherwise known as the spot date.
Incorrect
Tomorrow next (tom next), is a short-term foreign exchange transaction where a currency is simultaneously bought and sold over two separate business days, those being tomorrow (one business day) and the following day (two business days from today), otherwise known as the spot date.
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Question 11 of 30
11. Question
Which of the following describes what a Pip is?
Correct
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
Which of the following is the process of extending the settlement date on an open position by rolling it over to the next settlement date?
Correct
The process of extending the settlement date on an open position by rolling it over to the next settlement date.
Incorrect
The process of extending the settlement date on an open position by rolling it over to the next settlement date.
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Question 13 of 30
13. Question
Credit Risk shall take into account, among other things, for all counterparties to do which of the following?
I. Monitoring and reporting violations of counterparty customer credit limits performed by persons independent of the business trading unit
II. The firm’s process for monitoring and adjusting security deposit requirements imposed upon all counterparty customers
III. Regular valuation of collateral used to cover credit exposures and safeguarding of collateral
IV. The daily measurement of overall credit exposure to comply with forex counterparty credit limitsCorrect
Credit Risk shall take into account, among other things, for all counterparties the daily measurement of overall credit exposure to comply with forex counterparty credit limits; monitoring and reporting violations of counterparty customer credit limits performed by persons independent of the business trading unit; the firm’s process for monitoring and adjusting security deposit requirements imposed upon all counterparty customers; and regular valuation of collateral (including appropriate haircuts) used to cover credit exposures and safeguarding of collateral.
Incorrect
Credit Risk shall take into account, among other things, for all counterparties the daily measurement of overall credit exposure to comply with forex counterparty credit limits; monitoring and reporting violations of counterparty customer credit limits performed by persons independent of the business trading unit; the firm’s process for monitoring and adjusting security deposit requirements imposed upon all counterparty customers; and regular valuation of collateral (including appropriate haircuts) used to cover credit exposures and safeguarding of collateral.
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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 such as?
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 risks takes into account, among other things, the daily measurement of the amount of capital exposed to fluctuations in the value of foreign currency to comply with applicable limits and the establishment of safeguards against adverse currency fluctuations?
Correct
Foreign Currency Risk shall take into account, among other things, the daily measurement of the amount of capital exposed to fluctuations in the value of foreign currency to comply with applicable limits and the establishment of safeguards against adverse currency fluctuations.
Incorrect
Foreign Currency Risk shall take into account, among other things, the daily measurement of the amount of capital exposed to fluctuations in the value of foreign currency to comply with applicable limits and the establishment of safeguards against adverse currency fluctuations.
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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 have which of the following?
I. account opening documents are properly completed
II. a sound legal basis
III. account opening documents have adequate risk disclosure provided
IV. an evaluation of what impact any potential litigation may have upon firm capitalCorrect
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
Operational Risk shall take into account the following except?
Correct
Operational Risk shall take into account, among other things, secure and reliable operating and information systems with adequate, scalable capacity and independence from the business trading unit; safeguards to detect, identify and promptly correct deficiencies in the operating and information systems; automated financial and risk management controls reasonably designed to prevent the placing of erroneous trades, including those that exceed pre-set capital, credit or volume thresholds; and reconciliation of all data and information in operating and information systems.
Incorrect
Operational Risk shall take into account, among other things, secure and reliable operating and information systems with adequate, scalable capacity and independence from the business trading unit; safeguards to detect, identify and promptly correct deficiencies in the operating and information systems; automated financial and risk management controls reasonably designed to prevent the placing of erroneous trades, including those that exceed pre-set capital, credit or volume thresholds; and reconciliation of all data and information in operating and information systems.
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Question 18 of 30
18. Question
Counterparty Risk shall take into account which of the following risks?
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
Liabilities to Retail Forex Customers Risk shall take into account, among other things, the process to ensure that the FDM has sufficient assets to cover the amount owed to retail forex customers on a daily basis. This process must include the following except?
Correct
Liabilities to Retail Forex Customers Risk shall take into account, among other things, the process to ensure that the FDM has sufficient assets to cover the amount owed to retail forex customers on a daily basis. This process must include:
a separation of duties among individuals responsible for advising customers on trading activities, approving or overseeing customer cash receipts and disbursements and recordkeeping and reporting financial transactions;
a method for ensuring the firm is accurately computing its liability to retail forex customers and accurately monitoring and valuing the funds used to cover the liability to retail forex customers;
a method for evaluating on a continued basis the depositories used to hold funds used to cover the amount owed to retail forex customers including ensuring that the depositories meet specified criteria relating to the depository’s capitalization, creditworthiness, operational reliability and access to liquidity, as well as the requirements of CFTC Regulation 5.8 and NFA Financial Requirements Section 14;
a method for assessing the appropriateness of specific investments of funds used to cover the liability to retail forex customers in permitted investments under CFTC Regulation 1.25; and
the timely recording of all transactions, including transactions impacting retail forex customers’ accounts, in the FDM’s books and records.Incorrect
Liabilities to Retail Forex Customers Risk shall take into account, among other things, the process to ensure that the FDM has sufficient assets to cover the amount owed to retail forex customers on a daily basis. This process must include:
a separation of duties among individuals responsible for advising customers on trading activities, approving or overseeing customer cash receipts and disbursements and recordkeeping and reporting financial transactions;
a method for ensuring the firm is accurately computing its liability to retail forex customers and accurately monitoring and valuing the funds used to cover the liability to retail forex customers;
a method for evaluating on a continued basis the depositories used to hold funds used to cover the amount owed to retail forex customers including ensuring that the depositories meet specified criteria relating to the depository’s capitalization, creditworthiness, operational reliability and access to liquidity, as well as the requirements of CFTC Regulation 5.8 and NFA Financial Requirements Section 14;
a method for assessing the appropriateness of specific investments of funds used to cover the liability to retail forex customers in permitted investments under CFTC Regulation 1.25; and
the timely recording of all transactions, including transactions impacting retail forex customers’ accounts, in the FDM’s books and records. -
Question 20 of 30
20. Question
NFA Bylaw 1301(e) requires Forex Dealer Members to do wich of the following?
Correct
NFA Bylaw 1301(e) requires Forex Dealer Members to pay annual dues that are graduated according to the firm’s gross annual revenue from customers for its forex activities
Incorrect
NFA Bylaw 1301(e) requires Forex Dealer Members to pay annual dues that are graduated according to the firm’s gross annual revenue from customers for its forex activities
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Question 21 of 30
21. Question
Financial Requirements Section 11(b) states which of the following?
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 22 of 30
22. Question
Financial Requirements Section 13 states the following except?
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 23 of 30
23. Question
FDMs must also file quarterly reports containing the most updated performance disclosures required by CFTC Regulation 5.5(e)(1)(i) – (iii). This report must include which of the following?
I. the FDM’s capital position, its operations or any other information which NFA deems relevant
II. the percentage of non-discretionary retail forex customer accounts that were profitable during the quarter
III. the percentage of accounts that were not profitable during the quarter
IV. the total number of non-discretionary retail forex customer accounts maintained by the FDM for the prior quarterCorrect
FDMs must also file quarterly reports containing the most updated performance disclosures required by CFTC Regulation 5.5(e)(1)(i) – (iii). This report must include the total number of non-discretionary retail forex customer accounts maintained by the FDM for the prior quarter, the percentage of such accounts that were profitable during the quarter and the percentage of accounts that were not profitable during the quarter.
Incorrect
FDMs must also file quarterly reports containing the most updated performance disclosures required by CFTC Regulation 5.5(e)(1)(i) – (iii). This report must include the total number of non-discretionary retail forex customer accounts maintained by the FDM for the prior quarter, the percentage of such accounts that were profitable during the quarter and the percentage of accounts that were not profitable during the quarter.
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Question 24 of 30
24. Question
Members or their Associates are required to obtain certain personal and financial information from a customer. These include which of the following?
I. Customer’s address
II. Name
III. Previous investments
IV. Personal lifestyleCorrect
At a minimum, Members or their Associates must obtain the customer’s true name, address, principal occupation or business, and previous investment, futures trading and forex trading experience
Incorrect
At a minimum, Members or their Associates must obtain the customer’s true name, address, principal occupation or business, and previous investment, futures trading and forex trading experience
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Question 25 of 30
25. Question
With regards to individual customer information, the Member or Associate must obtain which of the following information?
I. customer’s net worth
II. customer’s current estimated annual income
III. customer’s net assets
IV. customer’s previous year’s annual incomeCorrect
For customers who are individuals, the Member or Associate must obtain the customer’s net worth or net assets and current estimated annual income or the previous year’s annual income.
Incorrect
For customers who are individuals, the Member or Associate must obtain the customer’s net worth or net assets and current estimated annual income or the previous year’s annual income.
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Question 26 of 30
26. Question
Which of the following information with regards to risk disclosure is accurate?
I. Members or their Associates must determine the appropriate risk disclosure to provide the customer.
II. The written risk disclosure must include the disclosure language prescribed in CFTC Regulation 5.5(b).
III. The risk disclosure statement must be provided on a weekly basis with every transaction.
IV. FDMs and IBs must provide retail customers with understandable and timely written risk disclosure on essential features and risks of forex trading prior to opening the account.Correct
Members or their Associates must determine the appropriate risk disclosure to provide the customer.
FDMs and IBs must provide retail customers with understandable and timely written risk disclosure on essential features and risks of forex trading prior to opening the account.
The written risk disclosure must include the disclosure language prescribed in CFTC Regulation 5.5(b).
Incorrect
Members or their Associates must determine the appropriate risk disclosure to provide the customer.
FDMs and IBs must provide retail customers with understandable and timely written risk disclosure on essential features and risks of forex trading prior to opening the account.
The written risk disclosure must include the disclosure language prescribed in CFTC Regulation 5.5(b).
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Question 27 of 30
27. Question
Immediately following the prescribed disclosure in CFTC Regulation 5.5(b), the risk disclosure statement must also include which the following except?
Correct
In addition, immediately following the prescribed disclosure, the risk disclosure statement must also include: (1) the total number of non-discretionary retail forex customer accounts maintained by the FDM, (2) the percentage of such accounts that were profitable in the quarter and (3) the percentage of such accounts that were not profitable during the quarter.
Incorrect
In addition, immediately following the prescribed disclosure, the risk disclosure statement must also include: (1) the total number of non-discretionary retail forex customer accounts maintained by the FDM, (2) the percentage of such accounts that were profitable in the quarter and (3) the percentage of such accounts that were not profitable during the quarter.
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Question 28 of 30
28. Question
CFTC Regulation 5.10 states Each retail foreign exchange dealer registered with the Commission pursuant to section 2(c)(2)(B)(i)(II)(ff) of the Act shall prepare, maintain and preserve which of the following information?
I. An organizational chart which includes the retail foreign exchange dealer and each of its affiliated persons.
II. Written policies, procedures, or systems concerning the retail foreign exchange dealer’s
III. Fiscal year-end consolidated and consolidating balance sheets for the highest level Material Affiliated Person within the retail foreign exchange dealer’s organizational structure
IV. Fiscal year-end consolidated and consolidating income statements and consolidated cash flow statements for the highest level Material Affiliated Person within the retail foreign exchange dealer’s organizational structureCorrect
CFTC Regulation 5.10 – Risk assessment recordkeeping requirements for retail foreign exchange dealers.
Requirement to maintain and preserve information. (1) Each retail foreign exchange dealer registered with the Commission pursuant to section 2(c)(2)(B)(i)(II)(ff) of the Act shall prepare, maintain and preserve the following information:(i) An organizational chart which includes the retail foreign exchange dealer and each of its affiliated persons.
(ii) Written policies, procedures, or systems concerning the retail foreign exchange dealer’s
(iii) Fiscal year-end consolidated and consolidating balance sheets for the highest level Material Affiliated Person within the retail foreign exchange dealer’s organizational structure
(iv) Fiscal year-end consolidated and consolidating income statements and consolidated cash flow statements for the highest level Material Affiliated Person within the retail foreign exchange dealer’s organizational structureIncorrect
CFTC Regulation 5.10 – Risk assessment recordkeeping requirements for retail foreign exchange dealers.
Requirement to maintain and preserve information. (1) Each retail foreign exchange dealer registered with the Commission pursuant to section 2(c)(2)(B)(i)(II)(ff) of the Act shall prepare, maintain and preserve the following information:(i) An organizational chart which includes the retail foreign exchange dealer and each of its affiliated persons.
(ii) Written policies, procedures, or systems concerning the retail foreign exchange dealer’s
(iii) Fiscal year-end consolidated and consolidating balance sheets for the highest level Material Affiliated Person within the retail foreign exchange dealer’s organizational structure
(iv) Fiscal year-end consolidated and consolidating income statements and consolidated cash flow statements for the highest level Material Affiliated Person within the retail foreign exchange dealer’s organizational structure -
Question 29 of 30
29. Question
CTFC regulation 5.10 states Each retail foreign exchange dealer registered with the Commission pursuant to section 2(c)(2)(B)(i)(II)(ff) of the Act shall prepare, maintain and preserve Written policies, procedures, or systems concerning the retail foreign exchange dealer’s such as the following except?
Correct
CTFC regulation 5.10 states Each retail foreign exchange dealer registered with the Commission pursuant to section 2(c)(2)(B)(i)(II)(ff) of the Act shall prepare, maintain and preserve Written policies, procedures, or systems concerning the retail foreign exchange dealer’s such as:
(A) Method(s) for monitoring and controlling financial and operational risks to it resulting from the activities of any of its affiliated persons;(B) Financing and capital adequacy, including information regarding sources of funding, together with a narrative discussion by management of the liquidity of the material assets of the retail foreign exchange dealer, the structure of debt capital, and sources of alternative funding;
(C) Establishing and maintaining internal controls with respect to market risk, credit risk, and other risks created by the retail foreign exchange dealer’s trading activities
Incorrect
CTFC regulation 5.10 states Each retail foreign exchange dealer registered with the Commission pursuant to section 2(c)(2)(B)(i)(II)(ff) of the Act shall prepare, maintain and preserve Written policies, procedures, or systems concerning the retail foreign exchange dealer’s such as:
(A) Method(s) for monitoring and controlling financial and operational risks to it resulting from the activities of any of its affiliated persons;(B) Financing and capital adequacy, including information regarding sources of funding, together with a narrative discussion by management of the liquidity of the material assets of the retail foreign exchange dealer, the structure of debt capital, and sources of alternative funding;
(C) Establishing and maintaining internal controls with respect to market risk, credit risk, and other risks created by the retail foreign exchange dealer’s trading activities
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Question 30 of 30
30. Question
CTFC Regulation 5.10 (ii.c) states that FDMs must establish and maintain internal controls with respect to market risk, credit risk, and other risks created by the retail foreign exchange dealer’s trading activities including systems and policies for supervising, monitoring, reporting and reviewing trading activities in which of the following?
I. securities
II. forex transactions
III. futures contracts
IV. commodity optionsCorrect
CTFC Regulation 5.10 (ii.c) – establishing and maintaining internal controls with respect to market risk, credit risk, and other risks created by the retail foreign exchange dealer’s trading activities, including systems and policies for supervising, monitoring, reporting and reviewing trading activities in forex transactions, securities, futures contracts, commodity options, forward contracts and financial instruments; policies for hedging or managing risks created by trading activities or supervising accounts carried for affiliates, including a description of the types of reviews conducted to monitor positions; and policies relating to restrictions or limitations on trading activities
Incorrect
CTFC Regulation 5.10 (ii.c) – establishing and maintaining internal controls with respect to market risk, credit risk, and other risks created by the retail foreign exchange dealer’s trading activities, including systems and policies for supervising, monitoring, reporting and reviewing trading activities in forex transactions, securities, futures contracts, commodity options, forward contracts and financial instruments; policies for hedging or managing risks created by trading activities or supervising accounts carried for affiliates, including a description of the types of reviews conducted to monitor positions; and policies relating to restrictions or limitations on trading activities