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Series 53 > chapter five > Flashcards

chapter five Flashcards

1
Q

When as if issued

settlement explination

A

Bonds are announced but not available for trading yet.

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2
Q

Early Delivery

A

If delivered before settlement buyer can reject.

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3
Q

SEttlement expenses

A

Delivery is paid for by seller and delivery occurs at the buyers office.

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4
Q

Cusip applicatoin

A

Must be done no later then the award date (not the delivery date)

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5
Q

Inter dealer transactions

trade confirms

A

If ineligible for automated comparison it must generate a confirm.
Almost all transactions clear electronically

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6
Q

Inter Dealer Paper Confirmation Delivery

times

A

regular way = trade date
Cash settlement = Exchanged by telephone on trade date follow up is t+1
Whan as and if issued = No later then t+1 final confirm at least 3 business days prior to settlement.

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7
Q

dealer confirmation data

A 
both parties name address phone
accrued interest
par
security description
cusip
trade & settlement date
yield and price
if concession amount per 1K
identity of executing broker, clearing firm and time of trade
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8
Q

Dealer confirmation Comparison

A

If discrepancy party in errors sends a corrected confirm within 1 business day.
Each party must send the other dealer a written DK if unresolved.

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9
Q

dk response rules

A

Dealer concludes trade did occur -must immediately phone confirming dealer and send written notice in 1 business day

Dealer confirms trade didn’t occur - phone immediately and send written nonrecognition notice with return receipt in 1 business day.

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10
Q

No receipt of confirmation

A

If a dealer sent confirmation but didn’t receive one back they must call by the fourth day after the trade date but no later than the eight Business day. and follow with written notice the next business day.

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11
Q

Good delivery conditions

A

must have a delivery ticket that includes denominations, par value and coupon rate
Bearer bonds must be in denominations of 1K or 5K and
registered bunds must be in denominations of 1K or multiples of 1K up to 100K per bond.

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12
Q

Mutilated certificate deliver

A 
must have validation letter from any of the following
Transfer Agent
Paying Agent
Trustee 
Registrar
Issuer
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13
Q

Mutilated interest coupons

A

must be validated by the issuer or a commercial bank

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14
Q

cancelled coupons

A 
endorsement or guarantee may be by 
issuer
authorized agent 
official of the issuer
trustee
paying agent
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15
Q

bearer bonds coupons delivery

A

all unpaid coupons must be attached
If defaulted all unpaid and future coupons must be attached
If delivering within 30 days of interest payment the seller can detach the coupon and provide a bank draft paying no later than the interest payment date

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16
Q

Delivery of called bonds

A

If partial call prior to settlement seller must deliver uncalled bonds
If in whole call on or before trade date seller must disclose the bond is called
if in whole call after trade date delivery is good

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17
Q

minimum denomination

A

No municipal security issued after June 1 2002 may be traded in a denomination lower then when it was issued unless done to close out a customer position which requires written notice

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18
Q

Small money differences

A

IF computations don’t match small money differences wont cause rejection it’s deemed the sellers price will prevail and must reconcile within 10 business days

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19
Q

Small Money Differences Chart

A 
par up to 
25K 10 dollars
100K 25 dollars
250K 60 dollars
1 mill 250 dollars
1 million or more 500 dollars
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20
Q

delivery insured bonds

A

must be accompanied by proof of insurance

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21
Q

registered securities deliver

certificate

A

must be endorsed for delivery known as assignment. Must be exact match to name on cert. All sigs and alternations must be guaranteed by a commercial bank or NYSE member

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22
Q

bond interest abberviations

A

Jan 1 july 1 is a J&J bond
May 1 and November 1 is an M&N bond
Feb 15 and August 15 is an F&A 15 bond
June 15 and Dec 15 is a J&D 15 bond

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23
Q

Reclaiming interest sent to the wrong party

A

Party owed interest must send written notice to recipient
10 business days to send check
if notice is 60 days after interest was due then 20 business days to send check.

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24
Q

Reclamation

A

Receiving dealer returns securities with a copy of the delivery ticket and attached written notice that describes the issue.
Delivering firm must correct the deficiency promptly and return the securities

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25
Q

Time limits for reclamation

A

missing coupon, mutilated, missing legal opinion or proof of insurance 1 business day
Dishonored interest check 3 business days
irregular deliver refusal by transfer agent 18 months
missing counterfit etc. unlimited

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26
Q

Closeout procedures

notification

A

notify by inter dealer system 1 business day after settlement. notice must state when they require completion but no earlier than 5:15 pm est. t+3. Can go out to 10th calendar day if purchaser wants.

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27
Q

Types of Closeout by buyer

A

3 ways

  1. buy in at market seller bears loss
  2. Accept delivery of municipals that are comparable.
  3. Require seller to repurchase the securities on terms that provide for seller t bear any accrued interest and costs.
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28
Q

re transmittal allowed

A

firms may retransmit to another broker dealer that securities are du. Must due it by 5:15 1 business day and must notify originating firm and tell the`m the dates was extended.

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29
Q

retransmittal of closeout

A

no faault dealer is sending it to the other dealer and claiming no fault.

30
Q

close out by seller

A

may sell out at market no earlier than close of business following date of notice. Notice can be by telephone

31
Q

Confirm

Yield for Callable discount bond

A

YTM

32
Q

Confirm

Yield for Callable premium bond

A

YT first Call

33
Q

Confirm

Stepped coupon bond rate

A

must display current rate

34
Q

Exception to displaying yield on a confirm

A

Reset Bonds
Bonds in Default - no interest no yield calc
Bonds sold at par - at par yields are the same

35
Q

Reset bonds

A

Coupon is adjusted periodically to reflect current market rates. Yield computations is impossible

36
Q

Customer request for trade info

A

within 30 days must respond in 5 business

outside 30 days must respond in 15 business days

37
Q

Municipal Risk less Principal Transactions

A

Buys for inventory to fill a customer and then sells to customer at a market. No risk as teh position is nill after selling to customer.

38
Q

Transfer form

A

G-26 also called a TIF

39
Q

Customer complaints procedure

A
  1. must send copy of the investor brochure which includes methods for settling/resolving disputes.
  2. Series 53 or 9/10 must approve resolution
  3. Must retain for 6 years.
40
Q

Nominal Quote

A

Not firm informational only

41
Q

Subject Quotes

A

Conditioned must be identified as subject quote

42
Q

MPID

A

Each BD must obtain a unique broker symbol from FINRA the Market Participant Identity and file form RTRS.

43
Q

RTRS Reporting

A

uses mpid
RTRS business day is 730 am to 630 pm
15 minutes during business hours

44
Q

RTRS Reporting new issue

A

If executed before 630 pm must be reportedhours. If after 6:30 must be reported by 8pm on trade date otherwise 15 minutes after start next business day.

45
Q

RTRS Reporting Short Term Instruments

A

maturing in less than nine months including Variable rate bonds and commercial paper must report by end of RTRS business day.

46
Q

Transactions Not reported to RTRS

A

No cusip
Municipal fund Securities
inter dealer that are not inter dealer transactions eligible for comparison in a clearing agency registered with the commission

47
Q

smmp

dollar amount

A

any entity or person with 50 million

48
Q

Investor Letter

A

Also called a big boy letter or sophisticated investor letter
acknowledges the risks associated with securities being purchased and signed by the investor.
Often includes net worth, sophistication and access to market information.

49
Q

SIC

A

central reporting place for Lost, Counterfeit, Missing or Stolen Securities

50
Q

Lost Security Procedure

A

2 business days to locate if no criminal action is suspected.
On third day loss must be reported to SIC and transfer agent on form X 17f-1A

51
Q

Lost Security Criminal

A

must report in one day to SIC and Transfer Agent. FBI must be notified promptly.
If security is are later recovered must notify parties in one business day.

52
Q

Mandatory Securities Inquiries to the SIC

exceptions

A

Must inquire of the SIC if a securitiy is missing lost, counterfeit or stolen.
Exceptions
Received from issuer
Received from another reporting institution
part of transaction valued at 10K or less
received from existing customer and
is register in customers name or was previously sold to the customer by that member.

53
Q

Mandatory Securities Inquiries to the SIC

summary

A

requires inquiry if it’s from a new customer or registered in bearer form or from an existing customer with no record of purchase.

54
Q

fidelity bond requirement

A

finra rule 4360
net capital less than 250K coverage is 120 % or 100K whichever is greater.
over 250K use finra’s fidelity bond table

55
Q

Banker Dealers Fidelity bond coverage

A

Exempt they are already covered under banking laws for this type of insurance.

56
Q

Net worth calc

A

Total assets minus total liabilities

57
Q

Net Capital

A

Liquid assets minus total liabilities
In theory if a member goes into liquidation net capital is the amount realized after liquidation and liabilities are paid.

58
Q

Record Keeping

Life Time

A

Articles of incorporation
Minutes of board or partnership meetings
Records of stock certificate

59
Q

Six Year Records

A 
Purchase and Sales Blotters (P&S)
Cash Receipts and disbursement blotters
Receipt and delivery of securities blotters
General Ledger
Customer ledgers (statements)
Securities records including ownership and location
Customer account records
Syndicate settlement records
complaints
Principal designation
Political contributions Form g-37
gifts and gratuities
Consultant arrangements
60
Q

3 year records

A

all others not designated as lifetime or six year

includes U4, U5 and fingerprint card

61
Q

Records Availability

A

Must be readily available for 2 years

62
Q

Posting Requirements
Blotter
General Ledger
Customer ledgetrs

A

Blotters must post the event date plus one.
General ledger posted monthly 10 business days after month end. bank dealers are excluded
Customer Ledgers posted no later then settlement

63
Q

Customer Ledger required details

A

Purchase and sales of securities
receipt and disbursement of cash
receipts and deliveries of securities
other debits and credits relating to customer accounts

64
Q

Ledger requirement for same day in and out of securities

A

No posting is required because the security was not held on the books or a location over night.

65
Q

Special Syndicate 6 year records

A 
security description and aggregate par value
Name % participation for each member
Terms and condition of syndicate formation, operation & closure.
Allotments and Prices
Date & amount of good faith deposit.
Date of settlement with issuer
Syndicate closing date
All orders received
OS delivery to MSRB's Emma system
Reconciliation of syndicate account
66
Q

Record Dates

A

may be kept on a trade date or settlement date basis but must be applied consistently.

67
Q

When may reclamation occur without a time limit

A

If the security is counterfeit or stolen

68
Q

Payment when in receipt of an interest payment claim

A

10 business days unless it’s been more than 60 days then it 20 business days

69
Q

Reclamation of irregular delivery

A

Example delivered wrong certificate

up to 18 months

70
Q

accrued interest on confirms

A

Added to buyers purchase prices added to sellers proceeds

71
Q

fail to deliver fail to receive record retention

A

3 years

Series 53 (19 decks)

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