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Series 24 > Missed / Confusing Questions Chapters 9-16 > Flashcards

Missed / Confusing Questions Chapters 9-16 Flashcards

1
Q

It is both an order display and order execution system describes what

A

The NASDAQ market center execution system

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2
Q

If there is a transaction involving an OTC equity security, which of the parties in the transaction reports to the ORF?

A

The executing member firm

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3
Q

What type of securities are quotable in the alternative display facility ADF?

A

Pretty much everything except OTC equities

So you can have exchange, traded funds, NASDAQ global market securities, and NASDAQ capital market securities

It is open between 8 AM and 6:30 PM ET

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4
Q

How long is the ADF open for?

A

From 8 AM to 6:30 PM

All transactions executed journeys hours must be reported within 10 seconds

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5
Q

The transaction in the same security that has occurred at a time close to the dealers transaction

A

The prevailing market price

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6
Q

The prevailing market price is used to determine what

A

The markup or markdown

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7
Q

On the New York Stock Exchange, market on close and limit on closed orders must be entered by

A

3:50 PM et

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8
Q

When a bid is higher than an offer that’s already displayed

Or

When a offer is lower than a bid that’s already displayed

A

Crossed market

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9
Q

A NASDAQ market maker can withdraws quotes for a specific stock due to system outage for how many days

A

5 days

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10
Q

This activity is an attempt to push the closing price of a stock up or down based on the net position of the firm, in order to get a favorable mark to market, which is used to compute margin and net capital requirements

A

Marking the close

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11
Q

And ADF market participant reports transactions through which system

A

ADF

this is a FINRA own facility used for quoting, and the reporting of transactions in NASDAQ listed, and other exchange listed securities (like CQS securities)

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12
Q

What is CQS used for?

A

Exchange traded securities that are not listed on NASDAQ

It is also also a quotation system

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13
Q

Under the customer limit order display rule, how long does the market maker have to display the current quote?

A

Immediately (30 seconds)

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14
Q

When a broker dealer sells stock to a customer as a principal, how was the markup based?

A

It is based on the inside market market asking price

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15
Q

When a customer sells and a market maker buys, this is the ____

A

Bid

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16
Q

When a customer buys and a market maker sells, this is a___

A

Ask

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17
Q

Why did the SEC create rules regarding limit up/limit down?

A

In order to prevent trades in individual securities from occurring outside a specific trading band

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18
Q

According to the limit up/limit down rule, a trading pause of ___________ applies if the security enters a limit state

A

5 minutes

This happens if the national best bid is on or above the upper price band, or the national best offer is on or below the lower price band

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19
Q

Clearing firms often place limits on _______

A

The gross dollar amount of trades, or the size of any single trade, or Or limit based on a dollar amount

NOTTTT a specific number of trades

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20
Q

When a firm trades ahead of a customer who placed a held limit order, it can only be done legally if:

A

Another trading desk has no knowledge of the order

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21
Q

Which exchange has the most stringent listing requirements?

A

NASDAQ global select

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22
Q

TRACE needs to report within

A

15 minutes

23
Q

How often are trading venues required to file market center reports regarding price improvement?

A

Monthly

24
Q

How often are trading venues required to file market center reports regarding price improvement?

A

Monthly

25
Q

Before they execute a short sale, a broker dealer needs to look at

A

The easy to borrow list

Which also needs to be less than 24 hours old

26
Q

A market maker must protect the customer limit order from:

A

9:30 AM to 8 PM ET

27
Q

Would an OTC equity security be found on the consolidated quotation system CQS?

A

No

The CQS provides quotations on all common stock, preferred stock, warrants, and rights which are registered on the regular exchanges

28
Q

Prior to filling a customers by order, a dealer buys stock into inventory and resells it to the customer at a higher price

This is what

A

Net basis transaction

29
Q

A level 3 market decline: 20% decline in the S&P 500 index will halt trading for the remainder of the day

This applies to which concept

A

Equity market circuit breakers

30
Q

NYSC listed stock transactions in the over-the-counter market describes which market

A

The third market

31
Q

Under regulation SHO, an individual is considered to be long a security for purposes of the short sale rule, if the investor or an agent has titled to the security

What is an example of a customer not being long the stock?

A

When a customer owns a convertible, preferred equivalent to the number of common shares being sold

Because the security remains unconverted, the customer is not considered to be long

32
Q

True or false: SEC rules require that a customers limit order be displayed in a market maker quote if it improves that quote or if it does not improve the inside market

A

True

33
Q

A broker dealer may use the NASDAQ market center execution system to execute transactions in:

A

NASDAQ and CQS

34
Q

CAT reports must be generated by

A

8 AM ET on the next trading day

This is because a trading day starts after 4:15 PM and ends at 4:15 PM on the next trading day

35
Q

When it comes to piggybacking, if marketmaker A piggyback on the quote of market maker B, and marketmaker be withdraws it’s quote eventually, what happens to MM A?

A

They may continue to publish a quote on the security in an inter-dealer quote system

36
Q

True or false: they stopped order must be for the account of another broker dealer

A

False

A stopped order must be for the account of a customer - primarily for institutional customers

37
Q

The customer order protection interpretation (a.k.a. the Manning rule) requires that:

A

The Market maker holding a customer limit order for a NASDAQ stock execute that order immediately upon executing an order for its own account that would have filled the customer order

38
Q

A broker dealer may trade ahead of a customer by order:

A

If the firm is willing to pay at least $.01 more per share for the stock

39
Q

When a broker dealer sends, it’s non-directed order flow to a third-party market center for execution, this routing order flow must be reported

A

Quarterly

40
Q

Registration of any system that matches, buyers and sellers is it requirement of which regulation?

A

Regulation ATS

41
Q

Under the firm quote rule, when is the market maker obligated to execute a transaction at its quote?

A

When the market maker has exceeded its trading volume for the previous day prior to the presentation of the order

42
Q

Equity trades must generally be locked in within:

A

20 minutes

43
Q

True or false: the 5% markup policy does not apply to fixed priced offerings sold within a prospectus

A

True

44
Q

An executing broker dealer that previously submitted a trade to the TRF now elect to allocate a portion of that trade on behalf of another broker dealer. This is referred to as a:

A

Step out

45
Q

A broker dealer must satisfy the locate requirement before allowing a customer to execute a short sale under which regulation?

A

Regulation SHO

46
Q

NASDAQ prohibits a marketmaker from entering an offer _______ any other bid

Or

When a bid is ______ than an offer already displayed

A

Below ; above

47
Q

When a broker dealer is unable to deliver stock by the settlement date and finds themselves in a fail to deliver position under regulation SHO, the broker dealer firm:

A

Must Immediately purchase or borrow the security

48
Q

True or false: market makers can withdraw quotes without penalty in OTC equities

A

True

49
Q

When a transaction has been held as a blockbuster trade, the hold will be lifted if the clearing firm does not respond within _______

A

15 minutes

50
Q

In the NASDAQ market center execution system, market participants may enter odd lot, mix lot, and round lot orders. However, quotation and order sizes are displayed only in round lots. So when you get an odd lot or mixed lot order, what direction are they rounded to?

A

Rounded DOWN ( ex: 270 shares goes to 200)

51
Q

A confirmation sent to a customer states that the security was bought for your account – this would indicate the broker dealer on this transaction acted as a :

A

Broker and charged a commission

52
Q

Order entry firms use NASDAQ level 2 to ________

A

Monitor the market, but many institutional investors are also subscribers and it is not an order entry system because the firms send orders to market makers

53
Q

True or false: While NASDAQ system accepts round lot orders, odd lot, orders, and mixed lot orders, they will not be displayed on the quote system yet are still available for execution.

A

True

Series 24 (5 decks)

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