Customer Accounts Flashcards
There is no margin requirement to keep an inactive account open.
“True”
Margin is only required if the customer has an open futures position or positions. There is no maintenance requirement in order to keep an account open which has no positions.
Permission to transfer funds from a customer’s futures account to their stock account is usually contained in the Commodity Customer Agreement.
“False”
Permission to transfer funds would be in the Supplemental Commodities Customer Agreement.
At least annually, the FCM Member that carries a customer account is required to request updated information from any active customer who is an individual.
“True”
As described in NFA Rule 2-30 Know you Customer, at least annually the FCM that carries a customer account is required to request updated information from any active customer who is an individual.
The settlement price is the daily price at which the clearing organization clears all trades and settles all accounts between clearing members of each contract month.
“True”
The settlement price is basically the last price of the trading day for settlements.
Changes in minimum maintenance margin requirements applies to all open positions.
True
Written confirmations must be provided to customers:
at or before the completion of any transaction in any security
Whenever futures contracts are traded, the buyer or seller becomes contingently responsible for
the contract’s full cash market value.
The Chicago Mercantile Exchange (CME) requires renewal of written powers of attorney for customer discretionary accounts every six months.
False - Discretionary authorizations are good until revoked in writing by the client.
Under NFA Compliance Rule 2-30, when opening a new account for a client, the firm opening the account is required to verify all information obtained from that client.
False - When opening a new account for a customer the FCM or IB must obtain the estimated net worth and annual income of the client but does NOT have to verify such information.
Whenever opening a discretionary account for a customer for the trading of options on futures, it is an NFA requirement that the customer’s financial statement be obtained.
False - Customers are NOT required to file financial statements when opening a discretionary account.
Changes in minimum maintenance margin requirements applies to all open positions.
True
You are an AP with power of attorney over one of your client’s discretionary accounts. The client calls and wishes to enter a trade in this account. You may enter the order without any further action.
False - NFA Rule 2-8 states that all orders entered for a discretionary account will be presumed discretionary unless otherwise indicated in writing. So in this case, since the customer has entered this order and it is not discretionary, you as the AP would have to make note of the customer trade in writing.
