Marketing & Business Development Flashcards

Before opening an account for a non-institutional customer, NFA Rule 2-30 calls for the firm to obtain what?

Answer: Information on investment objectives, income, and net worth, as applicable

Firms must gather relevant financial information and give risk disclosure before the account is opened.

A prospect says, 'I need a guaranteed 20% return.' The best response from an AP is to:

Answer: Explain that no returns can be guaranteed and that loss is possible

Guarantees against loss are prohibited, and the AP must explain risk honestly.

Before exercising discretion over a customer's account, an AP needs:

Answer: Written authorization (power of attorney) from the customer

Discretionary trading requires written authorization and supervisory review.

Who must generally review and approve promotional material before first use?

Answer: A principal of the firm under written procedures

Firm supervisors must approve promotional material before it is used.

Promotional material records under CFTC Rule 1.31 must generally be kept for:

Answer: 5 years

Required records are kept five years, with prompt access for the first two.

An AP posts about futures trading on a personal social media page. NFA guidance treats this as:

Answer: Promotional material subject to the same standards when it relates to the firm's business

Social media communications can be promotional material and must follow Rule 2-29 standards.

Which options-related document must be provided to an options customer?

Answer: Options Disclosure Document

Customers trading options must receive the appropriate options risk disclosure before trading.