Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Series 4 > Series 4 > Flashcards

Series 4 Flashcards

1
Q

Basic Information on Options New Account Form

A

Customer Name, Address, Cash or Margin Account, Birthdate, SS# or Tax ID or W-8 form, Occupation and Employer, Employment Status - employee of another brokerage firm, bank or insurance company, financial institution

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Independent Verification of Customer Identity

A

Rules adopted October 2003, customers identity independently verified by matching name, address, SS# &birthdate to government issued ID or database provider - Equifax

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Options Suitability information

A

Investment Objective, Investment Experience, Existing Portfolio.
May also be asked - Financial Situation, Financial Needs, Marital Status, Dependents, Net worth, Liquid Net Worth, Estimated Annual income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Suitability to sell naked options

A

member firm must have in place written procedures governing the conduct of such business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

ROP

A

Designation of specific registered options principle responsible of approving accounts that do not meet specific criteria, and standards that would allow approval alone by ROP or BOM - also need written records for the reasons for such approval

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Special Statement for Uncovered Options Writers

A

customers approved for writing naked short positions be provided with special written descriptions of the risks inherent in naked strategies at or prior to the initial short naked option transaction

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Special Statement includes:

A

Naked Call writers have unlimited risk, Naked put writers have substantial risk, / broker can demand additional margin for market moves / broker can liquidate to without prior notice if margin payment is not received / writer subject to exercise at anytime until expiration if secondary market became unavailable / only suitable for knowledge investors who understand risks and can absorb losses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

ODD

A

Options Disclosure Document - explains the risks and uses of options, date customer receives ODD placed on new account form,

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

When is account opened

A

when first trade is performed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

When is ODD Sent

A

Sent prior to opening

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

CBOE rule for ODD

A

the ODD must be given to the customer at or prior to approval of the account for options trading

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Options Agreement

A

Customer must sign the options agreement appropriate to the client based on the assessment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Options Agreement that customer signs contains

A

Customer says will not violate OCC rules such as position limits, account will be handled in accordance with OCC requirements,

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Options Agreement allows

A

close out any ITM option trades through offsetting trades in week prior to expiration,

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Options Agreement signed 15 days after

A

account is opened, CBOE requires customer must return the signed Options Agreement to firm no later than 15 calendar days after account opened. If not received no new trades can be made, only closing trades

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Material Change in Financial Status

A

CBOE requires, customer financial status changes the Options Agreement must be amended to reflect / firms include a legend on options trade confirmation and options account statements that tells clients they are required

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

ODD change

A

after amendment or update clients must get new ODD in timely fashion. Must be sent no later than with the next trade confirmation, or can be mailed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

FINRA rule 2090

A

Know your customer rule

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

KYC

A

Know your customer rule, rep and firm bust use reasonable due diligence to know and retain essential facts relative to every customer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Essential facts to KYC

A

effectively service customer account, act in accordance with any special handling instructions for the account, understand the authority of each person, comply with applicable laws regulations and rules

21
Q

SEC Rule 17a-3

A

this information must be collected from a new client / name / Tax ID / address / dob / telephone / occupation and employer / annual income / net worth / Investment objective / signature of person responsible for the account / signature of customer

22
Q

CIP

A

Customer Identification Procedures, first 4 items are critical and used to verify customers identity

23
Q

Required signature on new account form

A

Registered rep is the only one required to sign a new account application, sig attest tha this is the information disclosed by the customers, this is so info can be received over the phone.

24
Q

Discretionary Account

A

Customer gives representative power of attorney over the account. Customer signature is required.

25
Q

Customer verifies account profile

A

SEC requires that the cutover be given a copy of the account profile for verification within 30 days o account opening.

26
Q

Resent customer profile every 36 months

A

customer sent the account profile every 36 months for review and update

27
Q

FINRA rule 211

A

suitability rule, must have a reasonable basis to believe that a recommended transaction or investment strategy is suitable for the customer, based on the information obtained to ascertain the customers investment profile

28
Q

FINRA investment profile information

A

Investment profile includes investment objectives, investment experience, customer age, other investments, financial situation and needs gas status, investment time horizon, liquidity needs, risk tolerance, any other info disclosed by the disclosed.

29
Q

BOM

A

Branch Office Manager, passed 9/10, also the limited Principal General Securities Sales Supervisor,
Can Approve new accounts and can approve transactions in accounts, can approve correspondence prepared by representatives, but not advertising or sales literature

30
Q

ROP

A

Registered Options Principal, can do everything that a BOM can do

31
Q

Designated ROP

A

Is in the home office in compliance function, designated to the SRO, the SRO has this persons name and contact information as being responsible for creating and supervising the firms options supervisory procedures and for approval of options advertising and sales literature
also approves accounts for naked options writing that do not meet the firms standards, also reviews discretionary options accounts, including reviewing the acceptance of each new discretionary account

32
Q

Approval can be delegated

A

BOM or ROP must approve accounts in writing for options transactions. If BOM is not a ROP the approval must be confirmed with a ROP within 10 business days

33
Q

Resident ROP or BOM with 4 or more Reps

A

3 or fewer reps and the supervisor does not have to quality as a ROP or BOM as long as another qualified ROP or BOM assumes this responsibility

34
Q

Margin Account

A

Customer must sign a Margin Agreement also called a customers Agreement, must be signed by the customer before the account can be opened

35
Q

Loan Consent Agreement

A

Gives Bkg firm the right to lend securities, theory customer can refuse but in practice firms will not open margin account unless its signed

36
Q

Credit Disclosure Statement

A

Customer must be provided
explains how the loan balance is commuted and how interest is charged on loan balance, if changed to increase interest customer must be given 30 day advance notice. if changed to decrease no notice is needed

37
Q

Margin Risk disclosure Statement

A

Customer must be given when opening a margin account, explains that leverage in the account magnifies potential gains and losses and that if margin calls are not met the firm can sell out the securities

38
Q

Fiduciary Account

A

3rd party is acting for and in the best interest of the owner of the account, Types are, trust , guardian, conservator for incompetent, administrator of executor of estate, receiver in bankruptcy

39
Q

Trading Fiduciary account

A

only the fiduciary can trade the account, can not give trading authorization to another person

40
Q

Short Put position is the same as

A

long stock / short call

41
Q

ACATS forms must be forwred to the carrying broker

A

Immediately

42
Q

CBOE rules, options trade confirms must be sent

A

Promptly

43
Q

Obvious error panel reviews decisions amd make determination

A

same day

44
Q

responsibile for enforcement of Federal Telephone Consumer Protection Act is with

A

FTC- Federal trade commission, act established cold calling rules

45
Q

Regulations FD

A

Fair disclosure, disclosure must be made to the general public

46
Q

U4

A

prior 10 years of employment, prior 5 years residence, if change amendemnt must be filed, deficiency myst be filed, Marital status is not asked.

47
Q

Opening rotation begins

A

each day after the underlying security strats trading in primary market

48
Q

Options trade confirmation

A

must disclose commission charge, whether the executing roker received a payment for order flow fromthe market where routed, complete descripiton of option contract, including underlying securtiy, type of options, expiration month, exercise price and premium

49
Q

Paper needed to transfer assets for a TOA account

A

copy of death cert

Series 4 (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions