S3 5.1

Question 1

What is “Know your customer”?

Answer 1

Firm needs to know enough bout client to decide whether or not OK to be their client

Question 2

Rule 2-30?

Answer 2

Implies good exchange of information between client and rep before oprning an account

Question 3

How often is firm supposed to update client information?

Answer 3

Annually

Question 4

What happens if cient does not respond to update his account?

Answer 4

Old information will be taken as verified

Question 5

What do we mean by due dilligence when firm allows opening an account for a new client?

Answer 5

Firm must know / have a good estimate of:

1) Annual income and net worth
2) Aproximate age
3) Previous futures or securities trading experience

Question 6

Is client’s educational background important?

Answer 6

Nope

Question 7

When do clients have to receive written confirmation on trades?

Answer 7

Next day

Question 8

What do we call an acount in which rep has authority to trade on client’s behalf?

Answer 8

Discretionary account

Question 9

What is a QEP?

Answer 9

Qualified Eligible Person

Question 10

What are the requirements of a QEP?

Answer 10

1) 2M + value securities account
2) Account with FCM no less than 6 months
3) 200k + in initial margin or options premiums

Question 11

What type of funds is a QEP eligible to invest on?

Answer 11

1) Futures pools

2) Hedge funds

Question 12

Is a QEP the same as an Accredited Investor?

Answer 12

Nope

Question 13

How much of available capital can investor dedicate to margin trading?

Answer 13

No more than 50%