SIE Exam Unit 8 - Issues

A broker-dealer that accepts funds and securities from customers and its correspondent member firms would most likely be which of the following? A) A fully disclosed introducing firm B) An investment company C) A carrying firm D) A depository trust

A Carrying Firm

A broker-dealer that accepts funds and securities from customers and its correspondent member firms would most likely be which of the following? A) An investment company B) A depository trust C) A carrying firm D) A fully disclosed introducing firm

A Depository Trust

A clearing corporation agent or depository for securities transactions A) can be a commercial bank. B) must be a broker-dealer. C) can never be a corporation. D) can be a bank or corporation only if they are also a broker-dealer.

Can be a bank or corporation only if they are also a broker dealer

A Self Clearing Firm is also known as a ______________________ Firm

Carrying

A broker-dealer that accepts funds and securities from customers and its correspondent member firms

Carrying Firm

Firm has the capability to do trade executions, clear and settle transactions, and take custody of customer funds and securities

Carrying Firm

In addition to broker-dealers, commercial banks can act as _________________ ______________ and _____________________

Clearing Agencies, Depositories

Credit Unions cannot serve as a _______________ or ________________ facility for securities transactions

Depository, Clearing

Introducing Broker Dealers are also known as what?

Fully Disclosed

Firm that introduces its customer business to another firm for the purpose of clearing and settling transactions

Fully Disclosed Firm

Firm that introduces its customer business to another firm for the purpose of clearing and settling transactions.

Fully Disclosed Firm

Firm that introduces its customer's business to a clearing firm

Fully Disclosed Introducing Broker Dealer

A fully disclosed broker-dealer is also known as an ____________________ broker-dealer

Introducing

Type of Broker Dealer that introduces its customer's business to a clearing firm

Introducing Broker Dealer

A broker-dealer has a line of business restricted solely to the purchase and sale of securities with trade executions being handled by another member firm. Which of the following would best describe this type of firm? A) Introducing/fully disclosed B) Prime/executing C) Market making D) Clearing/carrying

Introducing/Fully Disclosed

A broker-dealer's business model allows for only the purchase and sale of securities for retail customer accounts. It does not execute, settle, or clear its customer's transactions, nor does it tend to any back-office functions such as sending trade confirmations or forwarding proxies. This broker-dealer would best be described as what type of firm? A) Clearing agent/carrying agent B) Introducing/fully disclosed C) Full service D) Market making

Introducing/Fully Disclosed

A fully disclosed broker-dealer A) is also known as a full-service clearing agent able to process and clear transactions. B) clears all of its retail customer transactions and those of other broker-dealers. C) is one that introduces its business to a carrying firm to clear transactions. D) is like a clearing agent in that it can take custody of funds and securities.

Is one that introduces its business to a carrying firm to clear transactions

Broker-dealer who sell out of their own account in the secondary market

Market Makers

Broker-dealers who incorporate proprietary trading into their business model

Market Makers

Some institutions can function as a depository and intermediary for settling transactions between buyers and sellers of securities. All of the following are acceptable for this purpose except A) Carrying firms. B) the Depository Trust Company (DTC). C) the National Securities Clearing Corporation (NSCC). D) national banks.

National Banks

Underwriters help issuers bring their securities to market in the ___________________ market

Primary

Market Makers incorporate ____________________ trading into their business model

Proprietary

Secondary market transactions would include all of the following except A) sale of $10 million of municipal bonds by a broker-dealer acting as a market maker. B) sale of $10 million of corporate bond by a broker-dealer acting as an underwriter. C) sale of $10 million of U.S. Treasury bonds by a broker-dealer acting as a market maker. D) sale of $10 million of corporate stock by a broker-dealer acting as a market maker.

Sale of $10 million of corporate bond by a broker-dealer acting as an underwriter

Market Makers sell out of their own account in the _______________ market

Secondary

Carrying Firms are also known as ___________________ __________________ Firms

Self Clearing

The ________________________ __________________ for a corporation is responsible for ensuring that its securities are issued in the correct owner's name, canceling old and issuing new certificates, maintaining records of ownership, and handling problems relating to lost, stolen, or destroyed certificates

Transfer Agent

Broker-dealers who help issuers bring their securities to market in the primary market

Underwriters

___________________ ___________________ cannot serve as a depository or clearing facility for securities transactions

Credit Unions

The transfer agent for a corporation is responsible for each of the following except A) ensuring that its securities are issued in the correct owner's name. B) maintaining records of ownership. C) canceling old and issuing new certificates. D) acting as an intermediary between the buy and sell sides of a transaction.

Acting as an intermediary between the buy and sell sides of a transaction

Essentially, the clearing firm acts as the introducing firm's _____________ _________________

Back Office

All of the following are associated with being a carrying firm except A) accepting customer funds. B) accepting customer securities. C) being able to clear customer transactions. D) being a fully disclosed firm.

Being a fully disclosed firm

All of the following are associated with being a carrying firm except A) accepting customer securities. B) being able to clear customer transactions. C) being a fully disclosed firm. D) accepting customer funds.

Being a fully disclosed firm

Firm that has the capability to do trade executions, clear and settle transactions, and take custody of customer funds and securities

Carrying Firm

Firm that holds funds and securities of the fully disclosed or introducing firm's customers and performs related functions, such as sending confirmations and statements for them

Carrying Firm

Firms that can do trade executions, clear and settle transactions, and handle all back-office tasks, such as sending trade confirmations and statements

Carrying Firms

A firm that functions for the purpose of receiving and delivering payments and securities on behalf of both buyer and seller in a securities transaction is

Clearing Agent

Most firms choose to introduce their customers to another member firm known as a ________________ or _______________ firm to handle back-office tasks, such as clearing trades, sending trade confirmations, settlement and reporting compliance, trade execution, and custody of customer funds and securities

Clearing, Carrying

While Carrying Firms can take custody of customer funds and securities, they may not __________________ them with those belonging to the firm

Commingle

Firms for whom carrying firms perform services for

Correspondents

All of the following are benefits of using a prime broker except A) cost savings. B) research. C) consolidation of records. D) multiple executing brokers.

Cost Savings

A broker-dealer's business model allows for only the purchase and sale of securities for retail customer accounts. It does not execute, settle, or clear its customer's transactions, nor does it tend to any back-office functions such as sending trade confirmations or forwarding proxies. This broker-dealer would best be described as what type of firm? A) Clearing agent/carrying agent B) Market making C) Introducing/fully disclosed D) Full service

Introducing/Fully Disclosed

A fully disclosed broker-dealer A) is also known as a full-service clearing agent able to process and clear transactions. B) is like a clearing agent in that it can take custody of funds and securities. C) is one that introduces its business to a carrying firm to clear transactions. D) clears all of its retail customer transactions and those of other broker-dealers.

Is one that introduces its business to a carrying firm to clear transactions

Correspondent firms would be likely to have relationships with which of the following types of broker-dealers? A) Fully disclosed B) Market maker C) Introducing D) Self-clearing

Self Clearing

Correspondent firms would be likely to have relationships with which of the following types of broker-dealers? A) Introducing B) Self-clearing C) Fully disclosed D) Market maker

Self Clearing

Firm that holds funds and securities of the fully disclosed or introducing firm's customers and performs related functions, such as sending confirmations and statements for them

Self Clearing Firm

A market in which exchange-listed securities are traded in the over-the-counter (OTC) market would best be described as A) the First Market. B) the Fourth Market. C) the Third Market. D) the Second Market.

The Third Market

A firm that functions for the purpose of receiving and delivering payments and securities on behalf of both buyer and seller in a securities transaction is A) a broker-dealer. B) a depository. C) a clearing agent. D) a transfer agent.

A Clearing Agent

A broker-dealer that accepts funds and securities from customers and its correspondent member firms would most likely be which of the following? A) a market maker. B) a clearing agent. C) a fully disclosed broker-dealer. D) an executing for commissions only.

A Market Maker

Carrying firms may not A) mix customer funds and securities with their own. B) execute transactions for their customers. C) clear and settle transactions for their customers. D) send trade confirmations and statements to customers.

Clear and settle transactions for their customers

An intermediary between the buy and sell sides of a transaction that receives and delivers payments and securities on behalf of both parties

Clearing Agent

Essentially, the _______________ _____________ acts as the introducing firm's Back Office

Clearing Firm

Firms that hold funds and securities and settle transactions (clear and process) for their correspondent introducing firms

Clearing Firm

Type of Firm that hold funds and securities and settle transactions (clear and process) for their correspondent introducing firm

Clearing Firm

All of the following are acceptable choices to function as a depository and intermediary for transactions between buyers and sellers of securities except A) the Depository Trust Company (DTC). B) the National Securities Clearing Corporation (NSCC). C) carrying firms. D) credit unions.

Credit Unions