S3 5.2 Flashcards
Which document/agreement does customer need sign when opening an acocunt?
Commodity Customer’s Agreement
What is the purpose of a Commodity Customer’s Agreement?
TRo enable borker to liquidate / sell out in order to meet margin requirements
Does customer need to give broker permission to move funds in between accounts? Which document?
Yes - need permission; sign Suppplemental Commodity Customer’s Agreement” aka Transfer of Funds Agreement
Is the Supplemental Commodity Customer’s Agreement a part of the Commodity Customer’s Agreement?
Nope - it’s additional
Can client use surplus in a Commodity account to pay debt in stock account without Supplemental Commodity Customer’s Agreement?
Nope
Which documents are necessary when firm accepts an account from a CTA?
1) POA
2) Does agent participate in profits?
Which reports do some exchanges require?
1) Agent participating in profits notification
2) That client receives equity report each month
Which document related to Futures Trading must be given to all new clients?
1) All transaction costs (including NFA fees)
2) Risks associated with futures trading
What is included (verbatim) in the Disclosure Document for Futures Trading?
1) Client may lose all investment
2) May be impossible to liquidate to cover margin under certain market conditions
3) Spreads may riskier than straight long/shiort positions
4) Leverage can result in large loses or gains
5) Stop losses may not prevent losses
6) Managed accounts are subject to substantial fees
Does the Disclosure Document for Futures Trading include information on risk on options trading?
Nope - not included
Are risk disclosures a one-size fits all?
No - they must be submitted on a case by case basis
Is it necessary to have a dated and signed acknowledgement regarding the Risk disclosure document?
Yes, and must be maintained by account opening firm
Is is OK to hold profit-sharing agreements verbally?
Nope - always in written
