S3 - 1.4

Question 1

What can an IB firm do?

Answer 1

Solicit and Accept client orders

Question 2

Things an IB cannot do?

Answer 2

Cannot take client funds, securities or property

Question 3

Does a IB need to have any kind of registration?

Answer 3

YES - CFTC

Question 4

Who carries the accounts of an IB and on which basis?

Answer 4

through a FMC on a fully disclosed basis

Question 5

Do IB clients need to know about FCM?

Answer 5

YES - IB must let clients client was introduced to the FCM by the IB

Question 6

2 kinds of IBs

Answer 6

Independent and Guaranteed

Question 7

How are requirements different for a Guaranteed and an Independent IB?

Answer 7

Difference regarding requirements on:

1) net capital
2) recordkeeping and reporting

Question 8

What is the min net capital requirement for an Independent IB?

Answer 8

45k

Question 9

What happens if Independent IB adjusted net capital falls under the 45k min requirement?

Answer 9

IB must cease to operate til back up above 45k

Question 10

Are there any min reporting or capital requirements for Guaranteed IB?

Answer 10

1) No min capital requirements
2) No financial reporting responsibility
3) FCM is fully responsible for the IB and liable for IB misconduct

Question 11

Who carries the accounts of an Independent IB?

Answer 11

The IB itself

Question 12

Who carries the accounts of a Guaranteed IB?

Answer 12

The FCM

Question 13

How many Guarantee Agreements can an IB have?

Answer 13

ONE ONLY

Question 14

Which are the responsibilities of an IB? - Not order-related

Answer 14

1) Time stamp order tickets

2) Signed and dated acknowledgements of client regarding receiving disclosure documents

Question 15

What should a Guaranteed IB NEVER do?

Answer 15

MUST NOT accept checks in their own name or own bizz name

Question 16

Who are checks made payable to with a Guaranteed IB?

Answer 16

Payable to the FCM

Question 17

Who requires IBs to report EVERY QUARTER?

Answer 17

NFA

Question 18

What is the name of the quarterly UNaudited IB report to the NFA?

Answer 18

1-FR

Question 19

When does an IB need to submit an audited report?

Answer 19

End of the year

Question 20

Can anyone audit the IB annual report?

Answer 20

Must be audited by an Independent Public Accountant fully UNRELATED to the IB

Question 21

How long does an IB need to keep its records?

Answer 21

5 years, 2 of them easily accesible

Question 22

How are trade fees usually charged?

Answer 22

On a PER TRADE or ROUND TURN basis

Question 23

What happens when IB charges $100+ per contract traded?

Answer 23

Enhanced Supervisory Requirements will be put in place