Trading Platforms & Regulatory Compliance Flashcards
7 cards from real CPT practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Trading Platforms & Regulatory Compliance flashcards as text
What is a 'dark pool' in the context of trading platforms and market structure?
Answer: A private trading venue where large orders are executed without pre-trade price transparency
Dark pools are private Alternative Trading Systems (ATS) where large institutional orders can be executed without revealing the order details to the public market before execution.
Which regulatory requirement mandates that broker-dealers retain electronic trading records for a minimum of three years?
Answer: SEC Rule 17a-4
SEC Rule 17a-4 specifies the records broker-dealers must preserve, including electronic communications and order records, for a minimum of three years.
A 'Time and Sales' window on a trading platform displays:
Answer: A chronological record of every executed trade, showing price, volume, and time
The Time and Sales (T&S) window shows a real-time feed of all executed trades with their timestamp, price, and size, also known as the 'tape.'
Under CFTC regulations, a trader who exceeds position limits in a futures contract is subject to which consequence?
Answer: Civil and criminal penalties and required reduction of the position
Traders who exceed CFTC-established position limits may face civil monetary penalties, criminal prosecution, and must reduce their positions to comply.
What is the primary regulatory purpose of requiring broker-dealers to maintain a minimum net capital under SEC Rule 15c3-1?
Answer: To ensure firms have sufficient liquid assets to meet obligations to customers and counterparties
The Net Capital Rule requires broker-dealers to maintain minimum liquid assets so they can meet financial obligations to customers and counterparties even during market stress.
On a trading platform, an 'Immediate or Cancel' (IOC) order instructs the system to:
Answer: Fill as much of the order as possible immediately and cancel any unfilled portion
An IOC order fills as much of the order as possible at the current market price instantly and cancels whatever portion cannot be filled immediately.
Which anti-manipulation provision under the Securities Exchange Act of 1934 broadly prohibits fraudulent schemes in connection with securities transactions?
Answer: Rule 10b-5
SEC Rule 10b-5 is the primary anti-fraud provision that prohibits any device, scheme, or artifice to defraud in connection with the purchase or sale of any security.