Unit 5: Options Accounts and Supervision

Question 1

OCC Disclosure Document

Answer 1

Firm must obtain from customer within 15 days of account approval; If not received, firm can limit to closing transactions only

Question 2

limited discretion clause

Answer 2

allows firms to close out open positions in expiring contracts

Question 3

Special statement for uncovered option writers

Answer 3

Required for customers writing uncovered short options. Must be delivered prior to first uncovered trade

Question 4

Changes in customer circumstances

Answer 4

ROP may have to reapprove options account. When firms sends amended options form, must be returned within 15 days.

Question 5

discretionary

Answer 5

If firm chooses more than price and/or time of execution

Question 6

Form 104 (currency receipt)

Answer 6

must be reported for any currency received of more than 10k. Failure to report results in fines up to 500k and 10 years in prison. Records must be retained for 5 years. Filed within 15 days of receipt

Question 7

stages of money laundering

Answer 7

placement, layering, integration

Question 8

customer complaints

Answer 8

copy must be kept in branch and sent to central file within 30 days of receipt

Question 9

order tickets vs confirmations

Answer 9

discretion not required on confirmation; solicitation not required on confirmation

Question 10

record retention - original books of record

Answer 10

lifetime

Question 11

record retention - order entry blotters

Answer 11

six years

Question 12

record retention - customer account statements

Answer 12

six years

Question 13

record retention - written customer complaints

Answer 13

4 years

Question 14

record retention - customer order tickets

Answer 14

3 years

Question 15

record retention - customer order confirmations

Answer 15

3 years

Question 16

record retention - firms compliance and procedures manual

Answer 16

3 years

Question 17

record retention - default

Answer 17

6 years

Question 18

3 categories of communication

Answer 18

retail; institutional; correspondence

Question 19

correspondence

Answer 19

fewer than 25 retail customers

Question 20

correspondence - principal approval

Answer 20

must be approved prior to first use. Filing must occur at least 10 days prior to first use

Question 21

series 9/10 can’t approve

Answer 21

retail communications literature

Question 22

Options communications should be preceded or accompanied by

Answer 22

current OCC Disclosure document

Question 23

annualized rate of return may be given based on minimum…

Answer 23

60 day experience

Question 24

past performance

Answer 24

must cover at least the last 12 months

Question 25

options worksheets

Answer 25

blank form must be approved by ROP; completed form doesn’t require approval

Question 26

transferring - firm has how many days to confirm account assets

Answer 26

one business day

Question 27

transferring - after validation, firm has how many days to effect transfer

Answer 27

3 business days

Question 28

transferring - open options expiring within this many days are exempt from freezing

Answer 28

seven business days