series 57
all of the following statements are true regarding OTCBB quotes except: A priced quotes for DPPs are never firm B priced quotes for equity securities are only good for 100 shares c priced quotes for foreign equity securities are firm D un-priced indications of interest are permitted
B is the answer. Minimum priced quotes sizes for OTCBB stocks are: 0.0001 - 0.0999 - 10k shares 0.10-0.1999 - 5k shares 0.20-0.5099 - 2500 shares 0.51 - 0.9999 - 1k shares 1.00- 174.99 - 100 shares 175+ - 1 shares
the benchmark indicator offered by NASDAQ is called: A. NASDAQ VWAP B. NASDAQ NOII C. NASDAQ Total view D. NASDAQ Level II
The Answer is A NASDAQ VWAP (volume weighted price) is a service offered by NASDAQ that allows traders to benchmark their trades in a specified NASDAQ security against the VWAP calculated continuously through the trading day. It is determined by dividing the total dollar value of all trades by the total trading volume. the NASDAQ NOII (net order imbalance indicator) shows the top 50 NASDAQ securities with the highest order imbalance prior to the opening cross of closing cross.
When is the first day an option can be exercised that was purchased in a cash settlement A. trade date B. Trade Date +1 C. settlement date D. settlement date +1
The answer is A If an option contract is purcahsed in a cash settlement, then the transaction settles that day, rather than next busness day. in this case, the options clearing corp permits exercise on the same day as trade date.
Under sro rules order tickets must be stamped: A. at time of execution B. within 15 seconds of execution C. within 20 seconds of execution D. at, or prior to, market close on trade date
The answer is A. Order tickets must be stamped at time of order entry, at time of order execution, and the time of order cancellation, if canceled.
Which of the following orders can be accepted during the opening rotation? I market II spread III limit IV Straddle A. I and III B. II and IV C. I II III D. I II III IV
The answer is A. at the opening rotation, each series of option is traded alone for a brief period, followed sequentially by the next option in the series, etc. until the rotation is complete. since all contracts are not being traded at the same time, it would be impossible to fill a spread of straddle order ( since these orders require 2 different contracts to create the position, and only 1 contract is being traded at a time in the rotation).
the OCC does all of the following except: A maintain an orderly trading market in options B. issue options contracts C. assign options exercise notices D. guarantee viability of options contracts
The answer is A. the OCC issues and manages options contracts. Exchanges are in charge or trading markets.
ON the floor of the chicago board options exchange, duties similar to those performed by the NYSE specialist are handled by the: A. Floor broker B. Designated Primary MM C. Order Book Official D. Floor official
The answer is B. The specialist (DMM) On NYSE floor performs two functions. acts as a MM in a specific security for his own account and Keeps a book of Limit and stop orders that are away from the market for other brokers and executes these orders for commission. On CBOE the DPM performs bother functions in adfdition to adding liquidity to the market. in options there is also the OBO who keeps a book of public orders but who do not make markets.
under Sec rules, issuers are prohibited from: A. buying calls on their own stock B. Selling calls on their own stock C. buying puts on their own stock D. selling puts on their own stock
The answer is B. Under SEC and CBOE rules, issuers are prohibited from selling calls against their own stock.
A NASDAQ mm in order to be able to use the reserve size feature in the NASDAQ Market Center, must display a size of at least: A. 100 shares B. 500 shares C. 1000 shares D. 5000 shares
the Answer is A. MM must display round lot to use reserve feature.
a manager wishes to enter a stabilizing bid. the POP of the issue is $20.00. the last reported trade in the issue was at $19.90 and the current bid ask Quote is $19.80 - $19.85. the highest price at which the managet may stabilize is: A. 19.80 B. 19.85 C. 19.90 D. 20.00
the Answer is A. prior to opening a manager may enter a stabilizing bid at or below the pop - never above. once the market is open, if the manager now whish to enter a stablizing bid the rule changes. the bid cantr be entered higher than the last reported trade as long as it is in the current market. if not it cant be entered high the current NBB
Under FINRA rules, all of the following information must be recorded on the order ticket except A. payment for order flow B. Time of execution C. If a sale, whether it was long or short D. whether the trade was solicited or unsolicited
the Answer is A. this is required on the Cust confirm not the ticket.
All of the following transactions taking place in the OTC market are Subject to the 5% policy EXCEPT: A. Agency trades effected by brokers B. Net trades effected by market makers C. Third Market Principal transactions D. Transactions requiring a Prospectus
the Answer is D. The 5% policy applies to secondary market transactions in both exempt and non-exempt securities that take place over the counter, it does not apply to new issues requiring a prospectus (primary market): nor does it apply to secondary market trades that take place on an exchange floor. it also does not apply to secondary market transactions in municipal securities, since these are covered by similar MSRB rules
a customer holds 1 ABC oct 60 call contract. the market price of BC is currently 66. ABC declares a 20% stock div. On ex date, the holder will have: A. 1 contract with a multiplier of 100 B. 1 contract with a multiplier of 120 C. 1.2 contracts with a multiplier of 100 D. 1.2 contracts with a multiplier of 120
the answer is A When a company declares a stock div or a fractional stock split, the option contract is not adjusted. if there is an exercise, then the deliverable is adjusted. so 1 ABC jan 60 call where there is a 20% stock div remains 1 ABC jan 60 call. if there is an exrcise, then the deliverable is adjusted to 100x 1.2 = 120 shares at $60/1.2 =$59 per share.
a customer enters an order to sell 100 shares of ABC 1t 40 stop limit when the market price of ABC is $40.88. the tape the follows 39.88...40.25...40.00...40.13 the order will be elected at A. 39.88 B. 40.25 C. 40.00 D 40.13
the answer is A sell stop orders are placed lower than the current market price of the stock and are triggered when the market hits of goes through the stop price. just prior to entering the order, the last trade in ABC stock was at 40.88. the stop price is set at 40.00. If the market trades at 40.00 or lower, the stop is activated. the next trade that takes place in ABC stock is at 39.88. the market has fallen right through the stop price, so this trade actives the order.
the trade reporting facility for NASDAQ reports trades for which of the following securities I NASDAQ global market stocks II NASDAQ capital market stocks III third Market trades of exchange listed stocks IV trades of exchange listed stocks effected of the floor of the exchange A. I and II only B. III and IV only C. I II III D. I II III IV
the answer is A the trade reporting facility for NASDAQ (NASDAQ TRF) reports trades of all NASDAQ issues. Trades of NYSE listed issues are reported through the NYSE TRF. this reports trades of NYSE listed issues effecting OCT (both third market and fourth market). Reports of the trades of OTCBB and Pink Sheet issues are made the ORF (OCT Reporting Facility
the NASDAQ system that has the tools to asses and manage credit risk is: A. ACT B. ACES C. FQCS D. TRF
the answer is A. ACT has risk manegment tools such as single trade limit, gross dollar threshold pre-alert and super cap. helps clearing brokers ACES pass through allows NASDAQ order entry firms to contract with MM for limit order entry and maintence in NASDAQ market center. FQCS is the firm quote system that allows memeber frims to complain to NASDAQ about a member firn that is backing away. TRF is an automated trade reporting and reconiliation serviece operated on the act platform. reports price and volume for third marker trades of exchange listed stocks.
who issues an escrow receipt? A. Bank B. Brokerage firm C. American depository trust D. options clearing Corporation
the answer is A. the OCC would accept an escrow receipt for stock to cover a short call positions or an escrow receipt for cash to cover a short put position. an escrow receipt is a receipt from a bank showing that the stock is being help on deposit be the bank and that the bank will deliver the shares if there is an exercise of the short call or that it will deliver cash of there is an exercise of a short put.
whichstatement is true regarding the NASDAQ closing cross? A. the latest time that a market on close (MOC) order is accepted is 3:50 B. The latest time that an Imbalance only (IO) order is accepted is 3:50 C. Moth MOC and IO orders and not accepted after 3:50 D. both MOC and IO orders are accepted until 4:00
the answer is A. NASDAQ closing cross procedures prohibit the plakcement of MOC orders after 3:50. on the other had IO orders can be places until the market close at 4:00
the NBBO for XYZZ stock listed in the capital market is 0.97 - 0.98. which of the following orders cannot be accepted for XYZZ stock? A. sell at 1.011 B. Sell at 0.978 Buy at 0.976 Buy at 0.981
the answer is A. Rule 612 of Reg NMS prohibits sub-penny pricing for NMS stocks trading at $1 or more.
Under SEC Rule 605 of reg NMS, market centers, in their monthly reports on order execution, must disclose all of the following information except A. Quoted spreads B. Speed of executions C. Rates of price improvements D. Fill rates
the answer is A. SEC rule 605 Of reg NMS requires market centers prepare and make available to the public, monthly standardized reports summarizing theiur order execuctions. Including in the report is data on: Effective spreads: How market orders of various sizes were executed relative to the public quote: speed of execution: fill rates: price improvement or dis-improvement
options order tickets must be written: A. prior to order entry B. prior to order execution C. promptly after order execution D. prior to order confirmation
the answer is A. all order tickets must be put into written form prior to order entry. if the order is later changed, it must either be canceled and a new one entered, or if there is a change after execution, the principal must approve (initial) the change.
After reviewing a clearly erroneous stock trade, NASDAQ Market Watch makes a written determination to nullify the trade. which statements are true regarding the written determination? I either side can appeal to the market operations review committee II appeals must be made within 1 hour of receiving written documentation III any decision made by the market operations review committee if final and binding IV any decision made by the market operations review committee can be submitted to arbitration A I and III B I and IV C II and IV D I II III
the answer is A. either party or market watch can can make the appeal any appeals must be made within 30 minutes the decision is binding
Unless exemption is available, a Form 211 filing is required prior to publishing or disseminating quotations in which of the following media A. OTCBB B. NASDAQ Market center C. NYSE Display book D. CQS
the answer is A. form 211 must be filed with FINRA by any market maker that wishes to make a market in OTCBB issues attesting that the market maker obtained a copy of the issuers latest finical filings with the SEC and performed due diligence on them.
UNder rule 103 of reg M, A UAR request to act as a passive market maker is: I Made By the Syndicate manager II Made by each syndicate members III signed by the syndicate manager IV signed but each of the Syndicate members A. I and III B. I and IV C. II and III D. II and IV
the answer is A. rule 103 of SEC reg M requires that the manager and the syndicate member of a secondary offering that happen to be market makers in that issue either resign from MM during the 20 day cooling off period or act solely as a passive MM FINRA requires that written notice be given on a UAR (underwriting activity report) at least 1 business day prior to the start of the 20 day cooling off period. it is done by the manager on behalf of the members.
A NASDAQ MM may Negotiate special terms with regard to which of the folowing limit orders A. Institrutional orders B. Retail orders for 5K shares or more C non-proprietary orders entered by memeber firms D
the answer is A. since handling institutional-size orders often involves a substantial capital comitment on the part of the MM they are allowed to negotiate special terms and conditions for their handling that would allow them to trade along side of, or ahead of, these orders. there is a two tiered definition as to what constitutes an institutional limit order. If it is a bank, savings and loan, insurance comapny or regestiered investment company or regestered investment advisor or any entity with total assets of 50 million or more for investment.
the OCC assigns exercise notices on a: A. random basis B. FIFO basis C. either a random or FIFO basis D. any method that is fair and reasonable
the answer is A. the OCC assignes exercise notices randomly. the member firm once it receives the notices can choose the assignment method - FIFO, random, or any method that is fair and reasonable.
the FQCS was established by FINRA to deal with member complaints regarding: A. backing away B. Interpositioning C. front running D. Underwriting allocations
the answer is A. the firm quote compliance system (FQCS) was created to investigate complaints regarding backing away. members are advised to contact the FQCS within 5 minutes of the alleged violation.
the Manning rule requires that: A. cust limit orders for OTC securities be protected B. Cust limit orders for OTC securities be displayed C. Execution of cust limit orders for OTC securities orders be reported to the network C tape D. cust limit orders for OTC securities be segregates from proprietary orders for the firms trading account
the answer is A. the manning rule is the cust limit order protection rule it prohibits NASDAQ and OTC mms from front running cust limit orders
NASDAQ market center is open for quote and ordewr entry at: A 4 AM ET B 8 AM ET C 9 AM ET D 9:30 AM ET
the answer is A. the market center opens at 4AM for quote and order entry. pre market hours are from 4 to 9 am et. reg session is 9:30 to 4 after market is from 4 to 8 PM ET
under NASDAQ rules, the opening price quoted on NASDAQ for an IPO: I must be reported to NASDAQ by the lead underwriter by 6:45 PM on the evening before trading II Must be reported to NASDAQ by the lead underwriter by 9:25 AM the morning before trading III will show the P.O.P as the opening Bid IV will show the P.O.P as the opening ask A. I and III B. I and IV C. II and III D. I and IV
the answer is A. the opening price quoted in NASDAQ for an IPO is the issuer's POP - Shown as the first bid. the lead underwriter must call NASDAQ by 6:45 the night before so they can open the stock with the POP as its opening bid
If as a syndicate is underwriting a secondary offering of XYZZ common stock, the trading restrictions of rule 101 of reg M would apply to which of the following: I XYZZ common stock II XYZZ convertible bonds III Warrents to purchase common stock A. I B. I and II C. II and III D. I II III
the answer is A. the trading resticiotns of rule 101 apply to Covered securities. these include the subject security and any reference securities. Rule 101 does not restrict trading in derivative securities, which include converts options and warrants
50which of the following is Not permitted to participate in tthe NASDAQ Market Center. A. third MM's B. ECNs C. MM in global market stocks D. MM in capitasl Market stocks
the answer is A. third MM trade NYSE issues OTC. NASDAQ Market center only handles NASDAQ listed stocks. ECNS can post their orders in the System.
In the Absence of other dona fide evidence of the market price ofg a security, which of the following is the best indicator of the prevailing market price? A. last trade B. Contemporaneous cost C. cost of security at the time of placement into Inventory D. Price of similar issues
the answer is B this question deals with the precailiung martket price to be used for calculating mark-up or mark-down percentages. If these were no other bona fide evidence as to the market price of the stock, this implies that the firm is the sole market maker in the issue, since there is no other trading occurring. in that instance, the basis for the computation is contemporaneous cost.
the SEC penny stock rule applies to which of the following? I capital market stocks trading at $4 a share II OTCBB stock ttrading at $4 a share III Global market stock trading at $4 a share IV pick sheet stock trading at $4 a share A. I and III B. II and IV C. I II III D. I II III IV
the answer is B a pent stock is one that is not NASDAQ listed trading at less that $5 per share. subject to penny stock rule. protects investing public from shady OTCBB pink sheet names by making signature of documents required for the trade.
all of the following statements are true regarding the OTCBB except: A. there are no formal listeing standards B.foreign equity are not quoted C. priced quotes for equity are not quoted D. priced quoted for Dpps are never firm
the answer is B the OTBB lists foreign equity securities as well as ADRS on foreign securities no listing standards but must be current w/ sec filings quotes can be firm or unfirm DPP are always unfirm
Under regulation M, Passive MM is permitted if: A. there are no independent mm's in that stock B. there are independent MM in that stock C. There are independent MM and any passive bid entered is higher than the independent bid D. syndicate manager allows
the answer is B there must be an independent mm in the issue and it the bid can not be higher than the NBB
Under SEC rule 15c2-11 if a member firm wants to piggyback on another member's quotes, the member currently quoting the stock: I must have published quotations in the subject security on at least 12 business days during the preceding 30 calendar days II cannot have had more than 4 consecutrive buysiness days without quotations in the preceding 20 dalendar days III must have filed for 211 prior to initiating its quotes A. I only B. I and II C. II and III D. I II III
the answer is B.
A customer sells short and fails to deliver on settlement date. Mandatory close-out is required in which two of the following circumstances? I the stock was on the threshold list as of trade date II the stock was not on the threshoold list as of trade date III the stock remains on the threshold list for 5 consecutive settlement days IV the stock remains on the threshold list for 13 consecutive settlement days A. I and III B. I and IV C. II and III D. II and IV
the answer is B. Cust short sales of securities on the threshold list not resulting in delivery on settlements must be bought in after 13 consecutive settlement days. these are hard to borrow and the SEC does not want large outstanding short positions that are unconverted to build in these securities.
If the writer of an equity call option is exercised, the writer: A. Must deliver the stock in 1 business day B. Must deliver the stock in 2 business days C. can effect an offsetting closing trade the same day D. can effect an offsetting closing trade in 2 business days
the answer is B. Exercise settlement of equity options results in a regular way delivery of the stock, 2 business days after exercise date.
SEC order handling rules require that NASDAQ MM's: A. accept cust limit orders B. Display cust limit orders C. accept cust stop orders D. display cust stop orders
the answer is B. MMs do not have to accept cust limit orders but if they do they must display the order. this is know and rule 604 of reg NMS.
under the provisions of rule 204 of reg SHO; I short sales not resulting in delivery must be bought in the morning of T+3 II short sales not resulting in the delivery must be bought in the morning of T+5 III long sales not resulting in delivery must be bought in the morning of T+3 IV long sale not resulting in delivery must be bought in the morning of t+5 A. I and III B. I and IV C. II and III D. II and IV
the answer is B. Rule 204 of REG SHO requires that short sales not resulting in delivery be bought in at the opening on T + 3 while long sales not resulting in delivery must be bought at the opening on T + 5
A t.3 indicatior over work station II displays the Time: I a news announcement will be made II a news announcement has been made III MM can begin quoting the stock IV MM can begin tradign the stock A. I and II B. III and IV C, I and IV D. II and III
the answer is B. T.1 = trading halt news pending T.2 = trading halt news release T.3 = trading is halted, news has been released, two times are shown.
Under SEC rule 10b - 18 an issuer purchasing its own securities in the market can pay no more than the: I highest current independent bid II lowest independent offer III last Reported sale price A I only B I or III whichever is higher C II or III whichever is lower D III only
the answer is B. Under rule 10b-18 in an issuer wishes to buy its stock in the open market, it cannot do so in a manner that will influence the stock's price. it cannot buy stock in the open market within 30 minutes to the close. and can pay no more thanthe highest bid or last price whichever is higher.
a market peg order to buy tracks the: A. National best Bid B. National best offer C opening bid D. opening Offer
the answer is B. a market peg order (reverse peg) to buy would track the NBO minus at least $0.01. a market peg to sell would be at least $0.01 higher than the NBB.
A customer owns 100 shares of ABC stock and purchases 1 ABC jan 50 put for $4 as a hedge. the market declines, and the customer wishes to exercise the put. ABC has declared a cash div that the customer wishes to receive. What is the first day that the customer can exercise the put and still receive the Div? A. one day prior to Ex. Date B. Ex date C. One business day after Ex date D. Record date
the answer is B. if a customer exercuses a stock option contract, the settlement occurs "regular way" 2 business days after trade date. to receive a div. a cust must be on the record books on record date. the ex date is set by the exchange, based from the record date. The ex date is set by the exchange, dased from the record date. this is the first date that any purchaser of the stock in a reg way will settle after the record date, and, thus will not receive the div. thus to receive the div the holder of a put must exercise on or after to the ex date. since the exercise of a put will result in a regular way sale of the stock.
which order is not exempt from the Limit order display rule A. de minimis order B. institutional orders C. odd lot orders D. Block orders
the answer is B. institutional orders unless the are block orders are not exempt from the limit order display rule
trades of NASDAQ securities executed on an unlinked ECN are reported by: A. CAES B. TRACS C. ACT D. TRACE
the answer is B. linked ones report to the TRF. trades executed on ADF are reported to TRACS - trade reporting and compariso service.
an order that is placed above the current market that allows a client to sell at the market if the price rises to a specific level is a: A. SELL ORDER AT THE MARKET b. SELL LIMIT ORDER C. sell stop order D. sell stop limit order
the answer is B. orders that are placed abover the current market are OSLOBS - open sell limits and open buy stops. the only way to sell above the current market is with a limit order.
The FINRA 5% policy applies to which of the following transactions? I a member purchases an OTC stock to fill a cust buy order II A member buys a mutual fund shares to fill a cust order III a member sells a cust 100 shares of a new issue of common stock IV A member performs a riskless transaction in the same stock between two different customers A. I B. I and IV C II and III D III and IV
the answer is B. the Finra 5% policy applies to OTC and Exchange transactions in the secondary market (with exception of Muni's which are covered by MSRB rules) It does not apply to new offerings that require a prospectus. Mutual funds fall under that category.
the Modifier E. appended to the stock symbol of an OTCBB company indicates: A. security is eligible for piggybanking B. issuer is delinquent in its regulatory filings C. security has at least 2 MM'S D. the issuer has a related security quoted in the pink sheets
the answer is B. the Modifer E. means that the issuer is delinquent in its regulatory filings. once deliquent there is a 30 day grace period for SEC filing and 90 days for reporting to other regulators.
under rule 104 of Reg M, stablizing bids: i are only permitted if an indepndent market exists II must be identified as such on NASDAQ III if commended, must be discontinued after 30 days A. I B. I and II C. II and III D. I II III
the answer is B. there is no time limit on stabilizing bids. stabilization must be stopped when the syndicate is disbanded.
A MM acting on a passive basis during the busines day prior to effective date, has a daily net purchase limit of 12k shares. at 2:10 PM its new purchases total 11,600 shares. the MM recieves a cust market order to sell 500 shares. which is true? A. the MM is premitted to execute 400 shares of the order B. the MM may execute the entire order. C. the MM may execute the entire order only if it has an offsetting cust buy order D. the MM must refuse the order
the answer is B. under rule 103 of Reg M, if a passive MM is near daily limit. and order which puts it over will require them to seek withdraw for the rest of the day. the MM can execute the order that puts it over in its entirety.
which of the following designatiopns are applicable to an inter-dealer trade of a NASDAQ security executed at 9:00 PM et I T II as/of III was/is A I B II C I and II D I and III
the answer is B. time of trade - reporting - designation 12 - 8 am - 8:00 - 8:15 -T 8-9:30 - 10 seconds - T 9:30-4 - 10 seconds - none 4-8 - 10 seconds - T 8 - 12 -8 - 8:15 next day - as/of
the system that allows order entry firms to contract with a MM for order entry and maintenance is the NASDAQ market center is: A. ADF B. ACES C. OATS D. ACT
the answer is B. ACES - advance computerized execution system is a volentary execution service which lets order entry firms send orders to ceritan MM to help manage there limit for execution
Rule 606 of reg NMS requires: A. each market center to prepare monthly eletronic reports about its quality of executions and effective spreads B. each BD to prepare quarterly reports on its routing of non-directed ortders, including the 10 largest venues where orders were routed C. MM in OTC sstocks to display any cust limit orders that are better-priced than the dealer's own quote D. any order execution facility to execute the order at the NBBO, even if that execution facility is posting an inferior quote.
the answer is B. Rule 606 requires memeber firms to prepare a quarterly report on the routing of their non-directed cust orders. the report, which is publicly available, details the percentage of cust orders that were non-directed. the idenity of the 10 largest Markets or MM's to whom non-directed orders were rought and any arrangement of payment for order flow or profit sharing.
the 5-minute window between entry of quotes and the resumption of trading is shown by which trading halt code? A T.1 B T.2 C T.3 D T.4
the answer is C T.1 trade is halted news pending T.2 Trading is halted. news is released T.3 Trading is halted. news is released with 2 times showing. time quotes will resume and time trading will resume. this is the 5 minute window.
Options trade confirms include which of the following information? I opening or closing II exercise price III whether the trade was effected on an agency or principal basis IV whether or not the trade was discretionary A. I and II B. III and IV C. I II III D I II III IV
the answer is C it is not noted on the on the trade confirm that a trade was discretionaryty - however this is noted on the trade ticket.
Fails to deliver resulting from short sales may be closed by: A. purchasing shares B. Borrowing the shares C A or B D. canceling the trade
the answer is C. Short sales not resulting in delivery must be closed on S + 1 under reg SHO rule 204. this can be done By either buying in the position or by borrowing the shares
A broker-dealer that is a MM in XYZZ shares buys 5000 shares of XYZZ subject to rule 144 restrictions into its inventory as a bona-fide MM. the shares have been registered by the transfter agent and are no longer subject to 144 restrictions. the MM then sells the shares in 3 SEPARATE trds of 1000 1500 and 2500 shares each. the MM is: A. Only required to report the 5000 share purchase. B. only required to report the 3 seperate sales C. required to report both the 5000 share purachase and the 3 seperate sales D. Not required to report any of the transactions
the answer is C. rule 144 does not permit a MM to buy 144 shares unto its inventory unless the firm is a bona-fide MM in the stock,which is the case here. the shares must be purchases at the prevailing Market price and the purchase into inventory would be reported normally, since these shares are no longer restricted. when the securities are sold each sale is reported which is 3 times in this case
the designation "P" in a reported trade means that the trades was: A. reported late B.effected by a passive MM C. executed late D. made under the market makers primary MPID
the answer is C. .p is the modifier for a late execution
FINRA rules require that OATS reports be transmitted: A. within 10 seconds of execution B. within 30 minutes of execution C. daily D. weekly
the answer is C. FINRA requires that OATS reports be transmitted daily finra does not give a specific time. OATS trade info is done after the fact to match the ACT reporting that is done through out the day.
exercise settlement of index options is based on the: A. Premium at the moment of exercise B. Value of the underlying index at the moment of exercise verus the strike price of the index option C. value of the underlying index at the end of the settlement day verus the strike price of the option D. delivery of the underlying securities included in the index
the answer is C. In an index option is exercised its based on the closing price of that index on that day vs the strike price.
in order to participate in the opening cross, MOO and LOO orders must be received by: A 9:00 am ET B 9:25 am ET C 9:28 am ET D 9:30 am ET
the answer is C. MOO and LOO are accepted till 9:28 OIO are accepted till 9:30
11Broker-dealer reports of lost or stolen U.S Government securities must be filed with: A. Securities Investor Protection Corporation B. FinCEN C. Securities Information Center D. Federal Deposit Insurance Corporation
the answer is C. Reoprts of any lost securities must be made to the SIC and to the transfer agent. If the security is believed to be stolen, the FBI must be notified as well.
Stabilizing bids may be entered: I above the POP II Below the POP III Below the POP but above the current independent market IV at the public offering price A. I and IV B. II and III C. II and IV D. II III IV
the answer is C. SEC rules on stabilization state bids may only be entered at or below the POP in no current independent bids exists for that security. if a current independent bid exists stabilization can only be done at or below this quote.
in an inter-dealer trade of a global Market stock between a mm quoting that stock in the NASDAQ market center and a non-MM that accesses the quote system. who is required to report the trade to the NASDAQ TRF? A. buy side B. Sell side C. market maker D. Non-market maker
the answer is C. Under ACT reporting rules for NASDAQ TRF trhe executing member reports the trade. the MM posting the quote to the market center received the order from the Non-MM and executed it. so the MM reports with in 10 seconds
Which of the following statements are true regarding limit orders I NASDAQ MM must accpet limit orders II NASDAQ MM are not required to accept limit orders III if a limit order is accepted NASDAQ mm mar impose separate charges for limit order handling IV if a limit order is a accepted MASDAQ mm may not imposed separate charges A. I and III B. I and IV C. II and III D. II and IV
the answer is C. Under SEC rules, OTC MM are not required to accept limit orders - they can do so if they wish. since these orders require speical handling extra charges can be imposed for processing these orders
A Chinese wall must be maintained by a broker dealer between investment banking and which of the following departments? I Research II Trading III retail sales IV Mergers and acquisitions A I and II B III and IV C I II and III D I II III IV
the answer is C. a wall must be kept between reseach and investment banking trading and investment banking sales and investment banking M and A and ivestment banking are part of the same department at most BD's so no wall required
trades executed at the opening cross are reported with: A. no modifier B. the .O modifier C. the .T modifier D. the .N modifier
the answer is C. all trades in the opening cross are reported with the .T modifier because the technically take place just before the market opens. .O is override for when the trade was reported in 10 seconds but the market has moved away from the price. .N stands for next day settlement
.U appended to a reported trade indicates that the: A.security was a new issue sold in an underwriter's transaction B. trade occurred during regular market house but was reported late. C.trade occurred outside of regular market hours but was reported late. D. trade of an underlying security as the result of an options exercise.
the answer is C. all trades that occur during ACT hours of opperation must be reported within 10 seconds of execution. late reports of NASDAQ and OTC issues are designated with either the symbol .Z (occurred during market hours) or .U (occurred outside of market hours)
a discretionary order to buy at $10.50 is entered into the NASDAQ market Center with a discretionary price of $11.00. A limit order to sell at $10.75 is reveived by NASDAQ. this order will: A. not be executed B. be executed at $10.50 C. Be executed at $10.75 D. Be executed at $11.00
the answer is C. because it is in the discretionary range the order is executed at 10.75 against the limit.
the ORF reports OTC trades of all of the following sdecurities except: A. pink sheet stocks B. foreign stocks C. capital market stocks D. OTCBB stocks
the answer is C. capital market stocks are reported to the TRF.
if a put is exercied just prior to the ex-div date for the underlying stock, which statement is true: I the holder of the put gets the div II the holder of the put does not get the div III the writer of the put gets the div IV the writer of the put does not get the div A. I and III B. I and IV C. II and III D. II and IV
the answer is C. if a put is exercised prior to ex date they do not get the div because they no longer own the shares the writer does.
All of the follwoign would cause options trading to be halted except: A. a trading half on the primary exchange listing that issue B. an SEC-directed trading halt on the primary exchange listing that issue C. a trading halt on a regional exchange listing that issue D. a delayed opening on the primary exchange listing that issue
the answer is C. if trading is halted on a regonal exchange the primary exchange making trading the issue would continue so there would be no reason to halt.
Under TRF for NASDAQ rules, all of the following transactions are exempt from last sale reporting purposes except: A the purchase of shares of a registered offering at the public offering price B the purchase of shares of an unregistered offering under reg D C dual agency trades D trades resulting from the exercise of listed options
the answer is C. not reported to the TRF for last sale purposes are: Odd lots; trades where the buyer and seller have negotiated a prices that is unrelated to the current market price(gifts) trades resulting from exercise of listed options (OTC options must be reported) Private placements of unregistered shares of companies IPOS trades reported through other NASDAQ systems
under rule 144, which two of the following statements are true regarding control stock purchased in the open market: I control stock must be held fully paid for 6 months prior to sale II control stock is not subject to any holding period requirement prior to sale III control stock sales are subject to volume restrictions IV control stock sales are not subject to volume restrictions A I and III B I and IV C II and III D II and IV
the answer is C. rule 144 requires that sellers of restricted stock give public notice of the intended sale. the are subject to volume limits as well. kk
The OCC does all of the following except: A. standardize listed options contracts B. Guarantee the performance of the writer of listed options contracts C. adjust listed options contracts for cash divs. D. issue listed options contracts when a report of an opening transaction is received
the answer is C. the OCC does not adjust strikes for cash divs. only adjusts for 2:1 or 4:1 stock splits and for special cash divs.
"a market or limit order which is to be executed in whole or in part as soon as such order is represented in the trading crowd. any portion not so executed is to be treated as canceled." this is the description of an: A. Fill or kill order B. All or none order C. Immediate or cancel order D. one cancels the other
the answer is C. this is the description of an IOC order
A RR is bearish on ABC stock and Buys 10 ABC Jul 10 puts. the RR then contacts each of his largest custs to explain his bearish sentiment and recommends that they buy puts on ABC. which statement is true? A. there is no rules violation based upon the actions of the RR B. the is a potention insider trading violation C. this is a potential front running violation D. this is a potential free riding violation
the answer is C. the RR has positioned his PA prior to recommending the same strategy to his customers. if the cust takes the recommended action, it could give the RR a nice profit in his PA. this is a front running violation
the initial strike price of an option is determined by the: A. OCC B SEC C market value of the underlying stock D Length of time until expiration of the contract
the answer is C. the basic rule for setting of options strike prices at issuance is that the strike is baserd on the current market price of the stock.
Under Reg M if there is no independent market for a subject security, which statements are TRUE: I stabilization is permitted II stabilization is not permitted III passive market making is permitted IV passive market making is not permitted A.I and III B. I and IV C. II and III D. II and IV
the answer is D
THE Trade report facility for NASDAQ: I requires reports of trades of NASDAQ listed issues within 10 seconds during ACT operating hours II Immediately disseminates reported last sale information to the NASDAQ ticker tape III Provierds on-line access to real-time trade reporting information A. I B. I and II C. II and III D. I II III
the answer is D NASDAQ TRF is operated on the ACT platform trades must be reported to it within 10 seconds of execution. this info is put on the ticket and is disseminated by the TDDS
The retention period for an options trade blotter is: A. 1 year B. 3 years C. 5 years D. 6 years
the answer is D Unlike the majority of records related to options that must be kept for 3 years, certain records must be kept for 6 years. these include daily transaction records and customer account statements.
a trade cancellation is a NASDAQ stock that occurs during the after-market trading session: a. is not required to be reported to ACT/TRF B. must be reported to ACT/TRF within 10 seconds of the cancellation C. must be reported to ACT/TRF by 4:00PM that day C. Must be reported to ACT/TRF by 8:00PM that day
the answer is D.
which two of the following statements are true regarding cust limit orders? I tyhey must be displayed within 15 seconds or receipt II they must be displayed within 30 seconds of receipt III they must be protected at a price inclusive of any mark up or mark down IV they must be protected at a price exclusive or any mark up or mark down A I and III B I and IV C II and III D II And IV
the answer is D. under SEC rules, cust limit orders must be displayed immediate (defined as 30 seconds after receiving them) and must be protected at net price exclusive of any commissions marks or other charges.
a Cust enders a limit order to buy 800 shares of ABCD at 21.50 which includes an agreed upon mark up of 0.25. the last sale was reported at 21.43. under SEC rules, the order must be protected at. A. 21.25 B. 21.43 C. 2150 D the next trade of 800 shares or more
the answer is a. limit orders are protected at the net price since the limit to buy included a market the order is protected at the price minus the mark up amount.
all of the following are true statements about MMPOs ( MM peg order) except: A. the order assures that the MM maintains a fair and orderly market. B. the order is a one-sided limit order that is attributable C. the order is pegged to the movement of the MBBO D. once the order is filled, NASDAQ does not auto renew the quote
the best answer is A.
In order for a security to be eligible for the delisteing exemption given under SEC rule 15c2-11, Which of the following statements are true? I the security's removal from NASDAQ was due to its failure to meet listing standards II the security must have been quoted continuously on NASDAQ during the 30 calendar days preceding the delisting III the issuer must be current in its SEC filings IV The issuer must not be subject to any bankruptcy proceedings
the best answer is D.
Under SEC rule 10b-10, all of the following information must be on a customer confirmation EXCEPT: A. whether the firm acted as agent or principal B. dual agency, if applicable C. difference between the reported trade price and the price to the customer D. whether the trade was solicited or Unsolicited
the answer is D. Under SEC rule 10b-10, confirms disclosure must include, Among other things: Customer Name and adress; First name, address and telephone number; Name of security purchased; size of trade and price of trade; trade date and settlement; if the trade is agency coms must be disclosed. also the time and the contra must be available on request if the trade is principal the mark up is not disclosed exept for pincipal transations in NASDAQ stocks. if the MM paid a fee to the inro broker that must be disclosed as well -payment for order flow if the firm is a MM in the security that must be disclosed if there is a control relationship between the Member firm and the issuer that must be disclosed.
Under SEC rule 606 fo regulation NMS, customers must be notified in writing of their right to request order routing information: A. monthly B. quarterly C. Semi-annually D. annually
the answer is D. Under SEC rule 606 Of reg NMS, customers must be notified, in writing, at least once per year, if their right to request information on how and where their orders were routed for execution. thew information providided to a requesting customer must cover the prior six month trades
A cust shorts stock which is on the NASDAQ'S "threshold list" (restricted) list. the following day, the stock is removed from the list. if there is a failure to deliver on settlement, which statement is TRUE? A. Mandatory buy-in is required after 13 consecutive settlement days B. mandatory buy-in is required after 35 consecutive settlement days. C. mandatory buy-in is required only at the specific direction of NASDAQ D. Mandatory buy-in is not required
the answer is D. Reg sho requires buy in of threshold securities after 13 days of fail to deliver. if the security is removed from that list during that time mandatory buy in is no longer required, the window is restarted if the security goes back on the list
the limit order protection rule is in effectr: A. during premarket and market hours B. during market hours only C. During market hours and after market hours D. whenever a trade is executed per the custs instructions
the answer is D. Limits must be protected at whatever time they are executed, as long as the order is being filled during the TIF specified by the client
NASDAQ Market watch has the authority to declare a clearly erroneous stock trade null and void on: I Its own motion II the cmplaint of the buying dealer III the cmplaint of the selling dealer A I B II C II or III D I II III
the answer is D. NASDAQ Marketwatch has the authoritiy to delcare an interdeal stock trade null and void or the can adjustr the terms of the trade. it can do it on its own or at the request or either trading party
A NASDAQ Listed issuer places an order to buy its common stock within 1/2 hour of the close of the market. which statement is true regarding the handling of this order? A. this order can be accepted with no further action necessary B. this order cant be accepted C. this order can only be accepted with the permission of FINRA D. this order can only accepted if the issuer is informed that this transaction may be viewed as "manipulative"
the answer is D. Rule 10b- 18 sets grounds for issuers or affiliates who wish to buy their shares in the open market. buy shares agressively at the end of the can manipulate the price upward.
a MM quoting 11.50 - 11.75 10 x 10 receives a cust limit order to buy 1500 shares for 11.56 the MM immediately delivers the order to an eligible ECN. which statement is true? A. the MM must update its NASDAQ bid for price, but is not required to show size B. the MM must update its NASDAQ bid for size, but is not required to adjust the price C. the MM must update its NASDAQ bid for both price and size D. the MM is not required to adjust its NASDAQ quote.
the answer is D. SECX rules stay that and Eligible ECN must distribute its best price orders not only through the ECN but also to NASDAQ and trade with NON-SUBS who wish to trade at these quotes through NASDAQ. thus, the ECN will be posting the better price bid in NASDAQ, so the MM doesnt need to
A block under reg NMS is defiened as a trade of: I 1000 shares or more II 10000 shares or more III $100,000 or more IV $200,000 or more A. I and III B. I and IV C. II and III D. II and IV
the answer is D. a block trade is 10k shares or a value of 200k
discretionary orders entered into the NASDAQ Market Center: I must be attributable II can Be non-attributable III cannot be pegged IV mat be pegged A I and III B I and IV C II and III D II and IV
the answer is D. discretionary orders can be Pegged to the NBBO and can be non-attributable
A broker-dealer hols a limit order to buy 100 shares of ABCD stock at $20.00 for a cust. which of the following trades are acceptable I buy 100 shares of ABCD for the firm's trading account at $19.50 prior to executing the cust order II buy 100 shares of ABCD for the firms acct at $20.50 prior to executing the cust order III the long sale of 100 shares of ABCD out of the fimes trading acount to the cust at $20.00 IV the short sale of 100 shares of ABCD out of the firms trading account to the customer at $20.00 A. I B. I and II C. III and IV D. II III IV
the answer is D. if a dealer holds a cust order he cant execute an order for the firm that competes with that order unless the cust is does first.
under the uniform practice code, the ex-date for stock divs or splits which represent 25% or more of the value of the security is 1 business day: A. before the record date B. after the record date C. before payable date D after payable date
the answer is D. the ex date for stock divs or splits is totally different. it is set at 1 busines day aftert the payable date. (which is typically 2 weeks after record date). at that time the price of the issue is adjusted based of the split or stock div.
under SEC rule 15g-1, a member firm is exempt from the penny stock disclosure rule if its business from pennyt stock transactions accounts for less than: A. 20% of revenue B. 15% of revenue C. 10% of revenue D. 5% of revenue
the answer is D. the rule is step up to apply to firms that specialize in reccomending speculative penny stocks to unsuspecting investors. 5% or less is a firm that does not push these types of transactions.