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SIE Chapter 10: Self-Regulatory Organizations (SROs) Questions
with 100% Correct Answers UPDATED!!!
SEC — Securities and Exchange Commission - ANSWER is the
federal regulator of the securities industry. Its main purpose is
to protect investors, maintain fair, orderly, and efficient markets
and facilitate capital formation. All securities exchanges, certain
regulators (such as FINRA)' and financial firms that conduct a
securities business and their employees are under the
jurisdiction of the SEC. The SEC also has an enforcement arm to
prosecute firms or individuals who violate SEC rules
Definition of Self-Regulatory Organizations (SROs) include
FINRA, CBOE, and the MSRB as well as all National Exchanges in
the U.S. - ANSWER 1. A Self-Regulatory Organization:
a. is supported by its own members
b. sets rules, regulations, and penalties
c. allows its members to vote
2. FINRA- Financial Industry Regulatory Authority
3. MRSRB- Municipal Securities Rulemaking Board
4. NASAA- North American Securities Administrators
Association
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5. Stock and Options Exchanges
SROs - ANSWER are not Government Agencies and do not set
minimum commission rates.
FINRA — Financial Industry Regulatory Authority - ANSWER is a
non-profit self-regulatory organization whose members include
virtually all securities firms doing business in the US. When a
securities firm is part of FINRA, the firm is referred to as a
"member firm."
a. The basic purposes of FINRA are to standardize practices in
the industry, establish and enforce fair and equitable rules for
securities trading, and to establish a disciplinary body to
enforce the rules to protect investors.
b. FINRA is now the largest self-regulatory organization (SRO) in
the securities industry.
c. FINRA's main rule that underpins all of its regulations is this:
"A member, in the conduct of its business, shall observe high
standards Of commercial honor and just and equitable
principles of trade." It's a rule that can apply to any facet of a
registered representative's behavior.
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MSRB — Municipal Securities Rulemaking Board - ANSWER is a
self-regulatory organization, consisting of representatives of
securities firms, bank dealers, municipal advisors, issuers,
investors and the public, that is charged with primary
rulemaking authority over municipal securities dealers and
municipal advisors in connection with their municipal securities
and municipal advisory activities. MSRB rules are approved by
the SEC, and enforced by the SEC, FINRA and the federal
banking regulators depending on the regulated entity.
NASAA — North American Securities Administrators Association
- ANSWER is a voluntary association whose membership
consists of 67 state, provincial, and territorial securities
administrators in the 50 states, the District of Columbia, Puerto
Rico, the U.S. Virgin Islands, Canada, and Mexico. In the United
States, NASAA represents the concerns of the state securities
agencies responsible for efficient capital formation and
protection of investors. Financial firms and their employees
who are members of the NASAA must be licensed. Lastly, the
NASAA investigates violations of state and provincial law,
pursues enforcement actions, and seeks to educate the public
about investment fraud.
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Stock and Options Exchanges - ANSWER are an auction
marketplace where securities are bought and sold by brokerage
firms acting on behalf of investors. Some of the larger National
Securities Exchanges include:
a. NYSE — New York Stock Exchange
b. American Stock Exchange (now part of NYSE)
c. Boston Stock Exchange (now part of NASDAQ)
d. Philadelphia Stock Exchange (now part of NASDAQ)
e. CBOE- Chicago Board Options Exchange
SEC review - ANSWER All disciplinary actions taken by SROs are
subject to _________________.
Securities Industry Essentials (SIE) examination - ANSWER is a
co-requisite qualification exam that must be taken either before
or with a Specialized Knowledge Licensing exam such as the
Series 6, 7 or 99.
4 - ANSWER The SIE must be passed within ____ years prior to
passing the specialized knowledge licensing exam.
SIE Chapter 10: Self-Regulatory Organizations (SROs) Questions
with 100% Correct Answers UPDATED!!!
SEC — Securities and Exchange Commission - ANSWER is the
federal regulator of the securities industry. Its main purpose is
to protect investors, maintain fair, orderly, and efficient markets
and facilitate capital formation. All securities exchanges, certain
regulators (such as FINRA)' and financial firms that conduct a
securities business and their employees are under the
jurisdiction of the SEC. The SEC also has an enforcement arm to
prosecute firms or individuals who violate SEC rules
Definition of Self-Regulatory Organizations (SROs) include
FINRA, CBOE, and the MSRB as well as all National Exchanges in
the U.S. - ANSWER 1. A Self-Regulatory Organization:
a. is supported by its own members
b. sets rules, regulations, and penalties
c. allows its members to vote
2. FINRA- Financial Industry Regulatory Authority
3. MRSRB- Municipal Securities Rulemaking Board
4. NASAA- North American Securities Administrators
Association
,2|Page
5. Stock and Options Exchanges
SROs - ANSWER are not Government Agencies and do not set
minimum commission rates.
FINRA — Financial Industry Regulatory Authority - ANSWER is a
non-profit self-regulatory organization whose members include
virtually all securities firms doing business in the US. When a
securities firm is part of FINRA, the firm is referred to as a
"member firm."
a. The basic purposes of FINRA are to standardize practices in
the industry, establish and enforce fair and equitable rules for
securities trading, and to establish a disciplinary body to
enforce the rules to protect investors.
b. FINRA is now the largest self-regulatory organization (SRO) in
the securities industry.
c. FINRA's main rule that underpins all of its regulations is this:
"A member, in the conduct of its business, shall observe high
standards Of commercial honor and just and equitable
principles of trade." It's a rule that can apply to any facet of a
registered representative's behavior.
,3|Page
MSRB — Municipal Securities Rulemaking Board - ANSWER is a
self-regulatory organization, consisting of representatives of
securities firms, bank dealers, municipal advisors, issuers,
investors and the public, that is charged with primary
rulemaking authority over municipal securities dealers and
municipal advisors in connection with their municipal securities
and municipal advisory activities. MSRB rules are approved by
the SEC, and enforced by the SEC, FINRA and the federal
banking regulators depending on the regulated entity.
NASAA — North American Securities Administrators Association
- ANSWER is a voluntary association whose membership
consists of 67 state, provincial, and territorial securities
administrators in the 50 states, the District of Columbia, Puerto
Rico, the U.S. Virgin Islands, Canada, and Mexico. In the United
States, NASAA represents the concerns of the state securities
agencies responsible for efficient capital formation and
protection of investors. Financial firms and their employees
who are members of the NASAA must be licensed. Lastly, the
NASAA investigates violations of state and provincial law,
pursues enforcement actions, and seeks to educate the public
about investment fraud.
, 4|Page
Stock and Options Exchanges - ANSWER are an auction
marketplace where securities are bought and sold by brokerage
firms acting on behalf of investors. Some of the larger National
Securities Exchanges include:
a. NYSE — New York Stock Exchange
b. American Stock Exchange (now part of NYSE)
c. Boston Stock Exchange (now part of NASDAQ)
d. Philadelphia Stock Exchange (now part of NASDAQ)
e. CBOE- Chicago Board Options Exchange
SEC review - ANSWER All disciplinary actions taken by SROs are
subject to _________________.
Securities Industry Essentials (SIE) examination - ANSWER is a
co-requisite qualification exam that must be taken either before
or with a Specialized Knowledge Licensing exam such as the
Series 6, 7 or 99.
4 - ANSWER The SIE must be passed within ____ years prior to
passing the specialized knowledge licensing exam.
