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Unit 8 participants

QuestionAnswer
What is a Broker-Dealer's main source of revenue? Transaction fees such as commissions and sales loads.
What agreement governs a Broker-Dealer's business activities? FINRA membership agreement.
Can a Broker-Dealer claim to be approved, endorsed, or recommended by FINRA or another regulator? No. Firms and representatives may never claim regulatory endorsement.
What products can Broker-Dealers sell? Stocks, bonds, mutual funds, options, and other securities (depends on the firm's business model).
What is proprietary trading? A Broker-Dealer trades with the firm's own money to profit from price movements.
What is a market maker? A Broker-Dealer that continuously quotes bid and ask prices and stands ready to buy and sell securities.
Who do most Broker-Dealers serve? Retail investors.
Who do some specialized Broker-Dealers serve? Institutional investors only.
What are the three Broker-Dealer types tested on the SIE? Carrying firms, Fully Disclosed firms, and Prime Brokers.
What is a carrying firm? A Broker-Dealer that holds customer accounts, money, and securities.
What is another name for a carrying firm? Clearing firm.
What does a carrying firm do? Executes trades, clears and settles trades, holds customer assets, and performs back-office functions.
What customer assets does a carrying firm hold? Customer cash and securities.
What back-office duties does a carrying firm perform? Trade confirmations, account statements, recordkeeping, custody, clearing, and settlement.
Which type of Broker-Dealer sends trade confirmations and account statements? Carrying (clearing) firm.
Which type of Broker-Dealer actually holds customer securities? Carrying (clearing) firm.
General Rule: Regulatory endorsement No Broker-Dealer or representative may advertise that regulators approve or recommend them.
General Rule: FINRA membership Broker-Dealers that do business with the public are generally FINRA member firms.
General Rule: Membership agreement A Broker-Dealer may only conduct the lines of business authorized under its membership agreement.
Created by: ria868
 

 



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