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Series 24 Group Share > FC Chapter 12 > Flashcards

FC Chapter 12 Flashcards

1
Q

What is the ORF?

A

OTC Reporting Facility; reports trades in OTCBB and Pink Sheet securities

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2
Q

True or False: Trades executed between 8:00 p.m. and 8:00 a.m. ET must be reported within 10 seconds of execution.

A

False. The 10-second reporting requirement applies to trades executed between 8:00 a.m. and 8:00 p.m. ET.

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3
Q

Once a TRACE report is made, when is the information available to the public?

A

Immediately

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4
Q

If a trade is effected between two member firms, who is responsible for reporting the trade?

A

The executing firm

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5
Q

Regulations consider riskless principal trades as ______ trades since the executing BD is not exposed to _______ risk.

A

Regulations consider riskless principal trades as agency trades since the executing BD is not exposed to market risk.

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6
Q

Explain a give up transaction.

A

When one broker executes a trade on behalf of another broker and reports the trade to the clearing corporation

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7
Q

FINRA disseminates __________ trade information for TRACE-eligible securities.

A

FINRA disseminates real-time trade information for TRACE-eligible securities.

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8
Q

Identify the acronym: SIP

A

Securities Information Processor

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9
Q

When must trades executed between 8:00 a.m. and 8:00 p.m. be reported?

A

Within 10 seconds of execution

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10
Q

What system facilitates the mandatory reporting of secondary-market trades in eligible fixed-income securities?

A

TRACE (Trade Reporting and Compliance Engine)

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11
Q

In a trade between two non-market makers, who must report within 10 seconds?

A

The seller

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12
Q

For trades that occur between 8:00 a.m. and 6:29:59 p.m. ET, when is a TRACE report made?

A

Within 15 minutes of the trade

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13
Q

What is another name for the Nasdaq Market Center Execution System?

A

Single Book

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14
Q

In a trade between a market maker and a non-market maker, who must report within 10 seconds?

A

The market maker

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15
Q

What type of transaction transfers the trade from one BD to another for clearing purposes?

A

A step out

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16
Q

Give some examples of TRACE-eligible securities.

A

Depository-eligible, U.S. dollar-denominated debt of U.S. and foreign companies, investment or non-investment-grade debt

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17
Q

When would the following trades be reported to TRACE? One was executed at 6:20 p.m., the other at 8:40 p.m.

A

Both need to be reported within 15 minutes of TRACE opening on the next business day.

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18
Q

What is TRACS?

A

Trade Reporting and Comparison Service; TRACS reports trades in securities quoted in the Alternative Display Facility.

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19
Q

True or False: Debt issued or guaranteed by a U.S. government agency or enterprise is TRACE-eligible.

A

True

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20
Q

If a transaction is reported at a clearly erroneous price, when will review and action be taken by FINRA?

A

Under normal circumstances, within 30 minutes

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21
Q

For what transactions does TRACE not disseminate real-time trade information?

A

Rule 144A debt transactions between qualified institutional buyers (QIBs)

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22
Q

True or False: TRACS is used to report ATS trades to the TRF or ORF within 10 seconds of execution.

A

True

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23
Q

A trade in a TRACE-eligible security is executed at 2:55 p.m. When is the trade required to be reported?

A

By 3:10 p.m. (within 15 minutes)

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24
Q

Is a riskless principal trade reported to FINRA as one or two transactions?

A

It is reported as one transaction.

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25
Q

True or False: In order to have a give-up relationship, an agreement must exist between the two firms.

A

True

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26
Q

Two Nasdaq member firms effect a third-market trade. Who is responsible for reporting the trade?

A

The executing firm

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27
Q

What is OATS?

A

The Order Audit Trail System; it enables FINRA to review customer orders and market activity within a member firm

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28
Q

For trades effected between a member firm and a nonmember firm or customer, the ________ reports the trade.

A

For trades effected between a member firm and a nonmember firm or customer, the member reports the trade.

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29
Q

Between 8:00 a.m. and 6:29:59 p.m. ET, two FINRA members are involved in a trade. Who reports it to TRACE?

A

Each FINRA member is required to report its side of the trade.

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30
Q

To establish a give-up relationship, which BD is required to file the appropriate forms with Nasdaq?

A

Both BDs are required to file.

31
Q

What securities are NOT TRACE-eligible?

A

Money-market securities (with maturities of less than one year), U.S. Treasuries, and foreign government securities

32
Q

As it relates to TRACE-eligible securities, what does split-rated mean?

A

Securities are given an investment-grade rating from one rating organization and non-investment-grade from another.

33
Q

True or False: An order-entry firm has 10 seconds to accept or reject a trade report submitted to FINRA.

A

False. The order-entry firm has 20 minutes to accept or reject a trade report submitted to FINRA.

34
Q

What is the trade reporting system for OTC equities?

A

Over-the-Counter Reporting Facility (ORF)

35
Q

True or False: In a step-out transaction, a clearing report, but not a trade report, is submitted.

A

True

36
Q

True or False: If a give-up transaction is not reported appropriately, neither firm is responsible.

A

False. If reporting is not done appropriately, both firms are responsible.

37
Q

True or False: Government bond trades are reported through TRACE.

A

True

38
Q

True or False: TRF is used to execute trades in Nasdaq securities.

A

False. TRF is a reporting, not execution, system for Nasdaq securities.

39
Q

Generally, TRACE reporting is required within ____ minutes of a trade.

A

Generally, TRACE reporting is required within 15 minutes of a trade.

40
Q

True or False: Debt issued or guaranteed by a foreign government is TRACE-eligible.

A

False. Only debt issued or guaranteed by a U.S. Government agency or enterprise is TRACE-eligible.

41
Q

The Nasdaq Market Center Execution System is an order display and execution system for what securities?

A

Nasdaq and CQS (third-market) securities

42
Q

True or False: Executions may occur against a market maker’s displayed and reserve (undisplayed) size.

A

True

43
Q

What two situations would require a trade to be reported to TRACE within 15 minutes of the next TRACE opening?

A

A trade occurs within 15 minutes of TRACE closing or a trade occurs when TRACE is not open.

44
Q

Transactions effected on an exchange or OTC must be reported within ____ seconds.

A

Transactions effected on an exchange or OTC must be reported within 10 seconds.

45
Q

True or False: The Nasdaq Market Center Execution System allows market makers to post anonymous quotes.

A

True. These non-attributable quotes will show NSDQ as the market participant identifier (MPID).

46
Q

What information is included in an OATS report?

A

The life of an order including receipt, routing, display, modification, cancellation, execution

47
Q

A TRACE-eligible corporate bond trade occurs at 6:20 p.m. When is the trade required to be reported?

A

It may be reported within 15 minutes of TRACE opening on the next business day.

48
Q

Is a net basis trade reported to FINRA as one or two transactions?

A

It is reported as two separate transactions.

49
Q

What is required of U.S. and foreign corporate debt for it to be TRACE-eligible?

A

It must be registered with the SEC or purchased or sold under Rule 144A of the Securities Act of 1933.

50
Q

What system is used for reporting corporate bond trades?

A

TRACE (Trade Reporting and Compliance Engine)

51
Q

Define marketable limit order.

A

An order that may be immediately executed at the current inside market

52
Q

When are trades in foreign securities excluded from the reporting requirement?

A

When executed on, and reported through, a foreign exchange or when executed OTC and reported to a foreign regulator

53
Q

What type of orders are accepted by the Nasdaq Market Center Execution System?

A

The system accepts market and limit orders.

54
Q

How often must OATS reports be submitted to FINRA?

A

Daily

55
Q

What is TRF?

A

The Trade Reporting Facility. TRF reports trades in Nasdaq and Third Market securities.

56
Q

True or False: CQS transactions must be reported within 10 seconds of completion.

A

True. CQS transactions must be reported within 10 seconds.

57
Q

What is the trade reporting system for Nasdaq securities?

A

Trade Reporting Facility (TRF) - formerly the Automated Confirmation Transaction system (ACT)

58
Q

Explain a step-out transaction.

A

An executing BD allocates all or part of a trade to another BD for clearing purposes.

59
Q

Corporate bond trades are reported through TRACE within _____ minutes.

A

Corporate bond trades are reported through TRACE within 15 minutes. (TRACE then disseminates information in real time)

60
Q

True or False: Trades executed through the Nasdaq Market Center Execution System do not have to be manually reported.

A

True. They are automatically reported by the system.

61
Q

On a net basis trade, BD capacity is reported as __________ on the confirmation, but _______ is NOT disclosed.

A

On a net basis trade, BD capacity is reported as principal on the confirmation, but markup is NOT disclosed.

62
Q

True or False: Money-market instruments are TRACE-eligible securities.

A

False

63
Q

For a trade involving OTCBB securities, the __________ firm is responsible for reporting.

A

For a trade involving OTCBB securities, the executing firm is responsible for reporting.

64
Q

To whom and when are ATS trades reported by TRACS?

A

To the TRF or ORF within 10 seconds of execution

65
Q

What does it mean to indicate that Nasdaq Market Center Execution System trades are locked-in?

A

The terms have been agreed to by the parties, and the transaction is ready for clearance and settlement.

66
Q

On a riskless principal trade, the _______ on the trade must be disclosed to the client.

A

On a riskless principal trade, the markup on the trade must be disclosed to the client.

67
Q

Trades executed through an electronic system are reported _______________.

A

Trades executed through an electronic system are reported automatically.

68
Q

True or False: TRACE disseminates information on debt securities sold under Rule 144A and transacted between two QIBs.

A

False. Although the trade information is reported to TRACE, it will not be disseminated.

69
Q

What is TRACE?

A

The Trade Reporting and Compliance Engine. TRACE is a reporting system for corporate bonds.

70
Q

True or False: In a step-out relationship, only a client’s complete position may be transferred to another BD.

A

False. All or part of a client’s trade may be transferred to another BD for clearing purposes.

71
Q

In a trade between two market makers, who must report within 10 seconds?

A

The seller

72
Q

True or False: Only a FINRA member involved in a trade with a nonmember is required to report it to TRACE.

A

True. The FINRA member reports the entire trade.

73
Q

True or False: For trades negotiated manually (not electronically), reporting is done by the member firm.

A

False. Negotiated, manual executions are reported by the executing firm.

Series 24 Group Share (42 decks)

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