CSCP CSCP Surveillance & Monitoring

Question 1

What is the primary purpose of a trade surveillance system in a broker-dealer?

Accepted Answer

To detect potentially manipulative or abusive trading activity

Answer

To maximize trading profits

Answer

To automate order routing

Answer

To reduce settlement times

Question 2

Which regulatory body requires broker-dealers to establish written supervisory procedures (WSPs) for their surveillance programs?

Accepted Answer

FINRA

Answer

SEC only

Answer

CFTC only

Answer

OCC

Question 3

What does 'layering' refer to in the context of market surveillance?

Accepted Answer

Placing and quickly canceling orders to create a false appearance of market depth

Answer

Stacking multiple compliance approvals

Answer

Diversifying across asset classes

Answer

Applying multiple regulatory frameworks simultaneously

Question 4

Under FINRA Rule 3120, what must a firm's CEO or equivalent certify annually?

Accepted Answer

The firm's supervisory control system is reasonably designed to achieve compliance

Answer

The firm's profitability

Answer

The number of customer complaints

Answer

The firm's net capital ratio

Question 5

Which of the following is an example of 'spoofing' under the Dodd-Frank Act?

Accepted Answer

Bidding or offering with intent to cancel before execution to move prices

Answer

Selling securities short without locating shares

Answer

Trading on material non-public information

Answer

Failing to report a suspicious activity

Question 6

A compliance officer reviewing trading alerts notices a pattern of trades executed just before significant price moves. This most likely warrants investigation for:

Accepted Answer

Front-running or insider trading

Answer

Best execution failures

Answer

Excessive mark-ups

Answer

Churning