Applied Knowledge & Practice Flashcards
7 cards from real Series 3 – The National Commodities Futures Test practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Applied Knowledge & Practice flashcards as text
Which organization is the industry-wide self-regulatory organization for U.S. futures?
Answer: NFA
The National Futures Association is the futures industry's self-regulatory body under CFTC oversight.
What distinguishes an introducing broker (IB) from an FCM?
Answer: An IB does not hold customer funds
IBs solicit orders but customer funds are carried by an FCM.
When must a risk disclosure statement be provided to a new retail futures customer?
Answer: Before the account is opened
The disclosure must be given and acknowledged before the account is opened.
What is required for a broker to exercise discretion over a customer's account?
Answer: Written power of attorney
Discretionary trading requires written authorization from the customer.
Customer funds held by an FCM must be:
Answer: Segregated from firm funds
Customer funds must be segregated to protect them from the firm's creditors.
A broker buys for the firm's account ahead of a large customer buy order. What is this?
Answer: Prohibited front-running
Trading ahead of a customer order is a prohibited practice.
A customer's order is executed. When must the FCM send a confirmation?
Answer: By the next business day
Confirmations must be sent promptly, no later than the next business day.
How this page was made: written with AI tools and published by Nathan Beja, founder of Practice Test Geeks, who is responsible for its content. Exam facts are checked against the official sources listed below. Not reviewed by a subject-matter expert. Editorial policy
Sources & references
Exam facts on this page (fees, format, dates, passing scores) are checked against these official sources; the date is our last check. Editorial policy
- finra.org — Score release, test dates, test delivery, fees, exam format, passing score · verified Oct 2026
- nfa.futures.org — Eligibility, score validity · verified Oct 2026