Series 24
Markup/Markdown - correct answer ✔When acting as a dealer. Difference
between price customer gets when buying/selling stock compared to price
another dealer would get
-Markup: When Customer is buying stock from a dealer.
-Markdown- When customer is selling stock to dealer.
Inside Market - correct answer ✔Lowest Ask/Offer and Highest bid
The (Limit Order) Display Rule - correct answer ✔-If customer limit order is
accepted by a MM & price would improve MM's quote, MM must change his
quote immediately (within 30 seconds) to reflect customers interest.
-Must also change size of quote if MM is at inside market order & accepts
customer order on the inside. UNLESS order is 10% or less of MM's size)
Exceptions to the Display Rule - correct answer ✔1.) Customer requests
order not be displayed
2.) Block Size orders (at least 10,000 shares or $200,000 in market value)
3.) Odd lot orders
4.) All or none orders
5.) Orders sent to another market or BD that complies with the Display Rule
6.) Orders sent to ECN that agrees to display the order
7.)Orders executed immediately upon receipt
Risks/Disadvantages of trading during extended trading hours - correct
answer ✔1.) Lower liquidity
,2.) Higher volatility
3.) Changing prices
4.) Unlinked markets
5.) News announcements
6.) Wider spreads
Circuit Breakers: Value, Time & Action - correct answer ✔Level 1
-7% Decline
-9:30 am - 3:25 pm
-15 minute trading halt
Level 2
-7% Decline
-9:30 am - 3:25 pm
-15 minute trading halt
Level 3
-20% Decline
-Any time
-Trading halts for remainder of day
Where are trades reported to through Automated Confirmation Transaction
(ACT) for:
-OTC Equities
-Exchange listed securities - correct answer ✔OTC: OTC Reporting Facility
(ORF)
Nasdaq listed & other Exchange listed (NYSE or AMEX): FINRA/Nasdaq
Trade Reporting Facility (TRF)
,Which firm reports transactions to the TRF or ORF? - correct answer ✔1.)
Transaction between 2 member firms: Executing party
2.) Transaction between member and nonmember firm: Member firm
What info must be included in a trade report to the TRF? - correct answer
✔1.) Nasdaq Symbol
2.) # of shares (round lots only)
3.) Price
4.) Buy/Sell/ or cross
5.) Time of Execution
6.) If applicable, sell short or sell short exempt
Trade reports for clearing purposes must include the following information IN
ADDITION TO info mentioned above:
1.) Symbol indicating principal, agency, or riskless principal transaction
2.) Whether submitting party is a MM or on the order-entry side
3.) Contraside executing BD
4.) Contraside introducing BD in case of a give-up trade
A 13D filer is required to provide certain information such as: - correct answer
✔-The security and issuer
-The identity and background of the filer, which may be an individual or a
group
-The source and amount of funds, or considerations that were used for the
purchase. -This section will indicate if the funds used to purchase the
securities were borrowed, or came from an existing cash position of the filer.
-The purpose of the transaction. This important section indicates if the filer
wants to acquire the company, or is purchasing the shares as an investment.
, -The number of shares and the percentage ownership of the filer
-Contracts or relationships regarding the securities of the issuer, e.g., a
standstill agreement
-Any material to be filed as exhibits, e.g., a merger agreement or a tender
offer agreement
-Although the source of the funds is disclosed, the name of the financial
institution providing the funds is not a required disclosure. The filer is required
to update the schedule promptly for material changes.
A registered investment company may suspend an investor's right of
redemption or postpone the date of payment if: - correct answer ✔-The
NYSE is closed for other than weekend and holiday closings, or trading on the
NYSE has been restricted.
-An emergency exists that makes it impractical for the investment company to
sell the securities it owns.
-An emergency exists that makes it impossible to fairly determine the NAV of
the fund.
-The SEC issues an order for the protection of investors of the investment
company.
The SEC determines when an emergency exists and what constitutes trading
being restricted on the NYSE. (99254)
Accredited Investor - correct answer ✔-$200,000 Annual income ($300,000
for couple) OR
-$1,000,000 Net worth
The following products are eligible for portfolio margining: - correct answer
✔1.) All margin equity securities (Nasdaq- and NYSE-listed securities)
Markup/Markdown - correct answer ✔When acting as a dealer. Difference
between price customer gets when buying/selling stock compared to price
another dealer would get
-Markup: When Customer is buying stock from a dealer.
-Markdown- When customer is selling stock to dealer.
Inside Market - correct answer ✔Lowest Ask/Offer and Highest bid
The (Limit Order) Display Rule - correct answer ✔-If customer limit order is
accepted by a MM & price would improve MM's quote, MM must change his
quote immediately (within 30 seconds) to reflect customers interest.
-Must also change size of quote if MM is at inside market order & accepts
customer order on the inside. UNLESS order is 10% or less of MM's size)
Exceptions to the Display Rule - correct answer ✔1.) Customer requests
order not be displayed
2.) Block Size orders (at least 10,000 shares or $200,000 in market value)
3.) Odd lot orders
4.) All or none orders
5.) Orders sent to another market or BD that complies with the Display Rule
6.) Orders sent to ECN that agrees to display the order
7.)Orders executed immediately upon receipt
Risks/Disadvantages of trading during extended trading hours - correct
answer ✔1.) Lower liquidity
,2.) Higher volatility
3.) Changing prices
4.) Unlinked markets
5.) News announcements
6.) Wider spreads
Circuit Breakers: Value, Time & Action - correct answer ✔Level 1
-7% Decline
-9:30 am - 3:25 pm
-15 minute trading halt
Level 2
-7% Decline
-9:30 am - 3:25 pm
-15 minute trading halt
Level 3
-20% Decline
-Any time
-Trading halts for remainder of day
Where are trades reported to through Automated Confirmation Transaction
(ACT) for:
-OTC Equities
-Exchange listed securities - correct answer ✔OTC: OTC Reporting Facility
(ORF)
Nasdaq listed & other Exchange listed (NYSE or AMEX): FINRA/Nasdaq
Trade Reporting Facility (TRF)
,Which firm reports transactions to the TRF or ORF? - correct answer ✔1.)
Transaction between 2 member firms: Executing party
2.) Transaction between member and nonmember firm: Member firm
What info must be included in a trade report to the TRF? - correct answer
✔1.) Nasdaq Symbol
2.) # of shares (round lots only)
3.) Price
4.) Buy/Sell/ or cross
5.) Time of Execution
6.) If applicable, sell short or sell short exempt
Trade reports for clearing purposes must include the following information IN
ADDITION TO info mentioned above:
1.) Symbol indicating principal, agency, or riskless principal transaction
2.) Whether submitting party is a MM or on the order-entry side
3.) Contraside executing BD
4.) Contraside introducing BD in case of a give-up trade
A 13D filer is required to provide certain information such as: - correct answer
✔-The security and issuer
-The identity and background of the filer, which may be an individual or a
group
-The source and amount of funds, or considerations that were used for the
purchase. -This section will indicate if the funds used to purchase the
securities were borrowed, or came from an existing cash position of the filer.
-The purpose of the transaction. This important section indicates if the filer
wants to acquire the company, or is purchasing the shares as an investment.
, -The number of shares and the percentage ownership of the filer
-Contracts or relationships regarding the securities of the issuer, e.g., a
standstill agreement
-Any material to be filed as exhibits, e.g., a merger agreement or a tender
offer agreement
-Although the source of the funds is disclosed, the name of the financial
institution providing the funds is not a required disclosure. The filer is required
to update the schedule promptly for material changes.
A registered investment company may suspend an investor's right of
redemption or postpone the date of payment if: - correct answer ✔-The
NYSE is closed for other than weekend and holiday closings, or trading on the
NYSE has been restricted.
-An emergency exists that makes it impractical for the investment company to
sell the securities it owns.
-An emergency exists that makes it impossible to fairly determine the NAV of
the fund.
-The SEC issues an order for the protection of investors of the investment
company.
The SEC determines when an emergency exists and what constitutes trading
being restricted on the NYSE. (99254)
Accredited Investor - correct answer ✔-$200,000 Annual income ($300,000
for couple) OR
-$1,000,000 Net worth
The following products are eligible for portfolio margining: - correct answer
✔1.) All margin equity securities (Nasdaq- and NYSE-listed securities)
