Communication & Stakeholder Engagement Flashcards

An introducing broker's customer asks where to send margin funds. What is the correct answer?

Answer: To the FCM carrying the account, payable to the FCM

An IB may not accept customer funds in its own name; they go to the carrying FCM.

What must a CTA deliver to a prospective client before entering into an agreement?

Answer: A disclosure document, with a signed acknowledgment of receipt

Rule 4.31 requires delivery of the disclosure document and a signed acknowledgment.

What is the maximum period a CPO or CTA disclosure document may be used after its date?

Answer: 12 months

Disclosure documents may not be used more than 12 months after their date, and must be updated for material changes.

Within what time must a commodity pool operator distribute the pool's annual report after the fiscal year end?

Answer: 90 calendar days

Rule 4.22 requires distribution of the annual report within 90 calendar days of year end.

Which person must be registered as an associate person (AP) to deal with the public at an FCM?

Answer: Anyone who solicits customer orders or accounts

Persons who solicit orders, customers, or customer funds must register as APs.

A broker recommends a trade while holding a personal position in the opposite direction. What is the best practice?

Answer: Disclose the material conflict of interest to the customer

Material conflicts of interest should be disclosed so the customer can evaluate the advice.

What does NFA Rule 2-30 require before a retail customer account is opened?

Answer: Obtaining the customer's essential background and financial information, and risk disclosure

Rule 2-30 requires know-your-customer information and delivery of risk disclosure.