Client Relationship Management Flashcards

A corn farmer wants to lock in a selling price for the upcoming harvest. Which position suits this goal?

Answer: Short corn futures

A short hedge via selling futures protects against falling prices for a producer.

Which type of participant is generally exempt from speculative position limits when positions qualify?

Answer: Bona fide hedgers

Bona fide hedging positions are exempt from federal speculative position limits.

A retired customer with modest savings and low risk tolerance asks about highly leveraged speculative positions. What should the AP emphasize?

Answer: That only risk capital should be used and suitability must be considered

Customers should only speculate with risk capital, and recommendations must fit their profile.

A customer requests a wire of funds to an unrelated third party with no clear business reason. What should the AP do?

Answer: Treat it as a possible red flag and escalate to compliance

Unusual third-party wires are AML red flags to escalate internally, without tipping off the customer.

When must a futures firm generally provide an initial privacy notice to a new individual customer?

Answer: At the time the customer relationship is established

CFTC privacy rules require an initial notice when the customer relationship begins.

An AP suspects an elderly customer may have diminished capacity and is making unusual requests. What is the best step?

Answer: Escalate to a supervisor or compliance for review

Concerns about capacity should be escalated internally so the firm can respond appropriately.

Which basis must support a trade recommendation made by an AP to a customer?

Answer: A reasonable basis grounded in the customer's financial profile and objectives

Recommendations require a reasonable basis and consideration of the customer's information and objectives.