S3 - 1.4 Flashcards
What can an IB firm do?
Solicit and Accept client orders
Things an IB cannot do?
Cannot take client funds, securities or property
Does a IB need to have any kind of registration?
YES - CFTC
Who carries the accounts of an IB and on which basis?
through a FMC on a fully disclosed basis
Do IB clients need to know about FCM?
YES - IB must let clients client was introduced to the FCM by the IB
2 kinds of IBs
Independent and Guaranteed
How are requirements different for a Guaranteed and an Independent IB?
Difference regarding requirements on:
1) net capital
2) recordkeeping and reporting
What is the min net capital requirement for an Independent IB?
45k
What happens if Independent IB adjusted net capital falls under the 45k min requirement?
IB must cease to operate til back up above 45k
Are there any min reporting or capital requirements for Guaranteed IB?
1) No min capital requirements
2) No financial reporting responsibility
3) FCM is fully responsible for the IB and liable for IB misconduct
Who carries the accounts of an Independent IB?
The IB itself
Who carries the accounts of a Guaranteed IB?
The FCM
How many Guarantee Agreements can an IB have?
ONE ONLY
Which are the responsibilities of an IB? - Not order-related
1) Time stamp order tickets
2) Signed and dated acknowledgements of client regarding receiving disclosure documents
What should a Guaranteed IB NEVER do?
MUST NOT accept checks in their own name or own bizz name
Who are checks made payable to with a Guaranteed IB?
Payable to the FCM
Who requires IBs to report EVERY QUARTER?
NFA
What is the name of the quarterly UNaudited IB report to the NFA?
1-FR
When does an IB need to submit an audited report?
End of the year
Can anyone audit the IB annual report?
Must be audited by an Independent Public Accountant fully UNRELATED to the IB
How long does an IB need to keep its records?
5 years, 2 of them easily accesible
How are trade fees usually charged?
On a PER TRADE or ROUND TURN basis
What happens when IB charges $100+ per contract traded?
Enhanced Supervisory Requirements will be put in place
