QFC Regulatory Compliance & Ethics 3

Question 1

Under the Global Investment Performance Standards (GIPS), composite performance must include:

Accepted Answer

All actual, fee-paying, discretionary portfolios managed in that strategy

Answer

GIPS requires composites to include all actual, fee-paying, discretionary portfolios managed according to the same investment mandate.

Question 2

Which regulation requires U.S. registered investment advisers to implement written compliance policies and procedures?

Accepted Answer

Investment Advisers Act Rule 206(4)-7

Answer

Rule 206(4)-7 under the Investment Advisers Act requires registered investment advisers to adopt and implement written compliance policies and procedures.

Question 3

An algorithmic trading firm's strategy causes a mini flash crash by amplifying market volatility. Under FINRA rules, this may constitute:

Accepted Answer

Disruptive quoting or layering that manipulates market prices

Answer

FINRA Rule 5210 prohibits disruptive quoting practices including layering and spoofing that manipulate price discovery.

Question 4

The concept of 'best execution' in the context of quantitative trading requires brokers to:

Accepted Answer

Execute orders on terms most favorable to the client considering multiple factors

Answer

Best execution requires considering multiple factors including price, speed, likelihood of execution, and market impact, not just commission.

Question 5

Which of the following is an example of 'marking the close' market manipulation?

Accepted Answer

Placing orders near market close to artificially influence the settlement price

Answer

Marking the close involves trading near market close with the intent to artificially influence settlement prices, which is prohibited.

(QFC) Quantitative Finance Certification Practice Test

(QFC) Quantitative Finance Certification Practice Test

QFC Regulatory Compliance & Ethics 3