SIE Practice Unit 1
The securities industry's primary regulatory body and created under what act? - Answer SEC,
Securities Exchange Act of 1934
Function under the SEC's oversight and is accountable to the Commission for enforcing federal
securities laws, as well as supervising securities practices within an assigned jurisdiction. -
Answer Self-Regulatory organizations (SRO)
what are the largest SROs - Answer Financial Industry Regulation Authority (FINRA), Chicago
Board Options Exchange (CBOE), Municipal Securities Rulemaking Board (MSRB)
Members pay assessments into a general insurance fund that is used to meet customer claims
in the event of a broker-dealer bankruptcy. - Answer Securities Investor Protection Act and
Corporation (SIPC)
All BD registered with the SEC must be SIPC members except which three? - Answer 1. banks
deal with munis, 2. firms deal with US govt securities 3.firms deal with redeemable investment
co securities
has a net worth of $1 million or more or has had an annual income of $200k or more in each of
the two most recent years - Answer accredited investor
this type of BD offers all types of investment products ie stocks, bonds, mutual funds, options,
and many others - Answer full service BD
this BD incorporates proprietary trading, where they trade in the account of the BD this is
known as what - Answer market making
this firm carries customer accounts and accepts funds and securites from customers - Answer
carrying firm
this type of BD has the ability to do trade executions, clear and settle transactions, take custody
of customer funds and securities, and handle all back office tasks - Answer carrying firm
carrying firms are required to maintain a higher _____ than that of firms who do not accept
custody of funds or securities - Answer net capital
, this type of BD must segregate customer funds and securities held in their custody from the
firms capital and securities - Answer Carrying firms
this type of BD introduces its customers to a clearing firm - Answer fully disclosed or
introducing BD
an introducing firm may receive customer checks but they must be made out to who - Answer
the clearing firm
carrying or clearing firms who clear their own transactions - Answer full service BD
investment advisor act of what year - Answer 1940
Any entity, individual or institution, willing to accept the risk of holding a particular security in
its own account to facilitate trading and provide liquidity in that security is known as - Answer
a market maker or trader
An institution or a person responsible for making all investment, management, and dis-tribution
decisions in an account maintained in the best interests of another is known as - Answer
custodian
an introducing firm may recieve customer checks, but they must be made out to who? - Answer
the clearing firm
firm sometimes referred to as "full service firms" are also know as what? and what do they do
on their own? - Answer carrying or clearing firms, clear their own transactions
this type of account allows a customer, generally an institution, to select one member firm to
provide custody and other services, while other firms handle all trades placed by the customer -
Answer prime account
a member firm for a prime acct that provides custody and other services - Answer prime
broker
a member firm for a prime acct that handles all trades placed by the customer - Answer
executing brokers
for a RR who has been charging commissions for transactions and now wants to charge
separately for investment advice what act would the RR need to register under? and what
exam(s) would need passed? - Answer investment advisor act of 1940 and series 65 or 66
The securities industry's primary regulatory body and created under what act? - Answer SEC,
Securities Exchange Act of 1934
Function under the SEC's oversight and is accountable to the Commission for enforcing federal
securities laws, as well as supervising securities practices within an assigned jurisdiction. -
Answer Self-Regulatory organizations (SRO)
what are the largest SROs - Answer Financial Industry Regulation Authority (FINRA), Chicago
Board Options Exchange (CBOE), Municipal Securities Rulemaking Board (MSRB)
Members pay assessments into a general insurance fund that is used to meet customer claims
in the event of a broker-dealer bankruptcy. - Answer Securities Investor Protection Act and
Corporation (SIPC)
All BD registered with the SEC must be SIPC members except which three? - Answer 1. banks
deal with munis, 2. firms deal with US govt securities 3.firms deal with redeemable investment
co securities
has a net worth of $1 million or more or has had an annual income of $200k or more in each of
the two most recent years - Answer accredited investor
this type of BD offers all types of investment products ie stocks, bonds, mutual funds, options,
and many others - Answer full service BD
this BD incorporates proprietary trading, where they trade in the account of the BD this is
known as what - Answer market making
this firm carries customer accounts and accepts funds and securites from customers - Answer
carrying firm
this type of BD has the ability to do trade executions, clear and settle transactions, take custody
of customer funds and securities, and handle all back office tasks - Answer carrying firm
carrying firms are required to maintain a higher _____ than that of firms who do not accept
custody of funds or securities - Answer net capital
, this type of BD must segregate customer funds and securities held in their custody from the
firms capital and securities - Answer Carrying firms
this type of BD introduces its customers to a clearing firm - Answer fully disclosed or
introducing BD
an introducing firm may receive customer checks but they must be made out to who - Answer
the clearing firm
carrying or clearing firms who clear their own transactions - Answer full service BD
investment advisor act of what year - Answer 1940
Any entity, individual or institution, willing to accept the risk of holding a particular security in
its own account to facilitate trading and provide liquidity in that security is known as - Answer
a market maker or trader
An institution or a person responsible for making all investment, management, and dis-tribution
decisions in an account maintained in the best interests of another is known as - Answer
custodian
an introducing firm may recieve customer checks, but they must be made out to who? - Answer
the clearing firm
firm sometimes referred to as "full service firms" are also know as what? and what do they do
on their own? - Answer carrying or clearing firms, clear their own transactions
this type of account allows a customer, generally an institution, to select one member firm to
provide custody and other services, while other firms handle all trades placed by the customer -
Answer prime account
a member firm for a prime acct that provides custody and other services - Answer prime
broker
a member firm for a prime acct that handles all trades placed by the customer - Answer
executing brokers
for a RR who has been charging commissions for transactions and now wants to charge
separately for investment advice what act would the RR need to register under? and what
exam(s) would need passed? - Answer investment advisor act of 1940 and series 65 or 66
