Operations & Process Management Flashcards

A market order to buy futures is executed:

Answer: At the best available price when it reaches the trading floor or platform

Market orders prioritize immediate execution over price.

A sell stop order at 80 is placed while the market trades at 85. What happens when the market touches 80?

Answer: It becomes a market order to sell

A stop order is triggered when the stop price trades and then is executed as a market order.

A good-till-canceled (GTC) order remains working until:

Answer: It is filled or the customer cancels it, subject to firm or exchange limits

GTC orders persist across sessions until executed or canceled.

When an FCM receives a customer order, the order ticket must be:

Answer: Time-stamped upon receipt and identify the account

Order records must show the account and be time-stamped so execution priority can be verified.

A give-up occurs when:

Answer: An executing broker passes a trade to another clearing FCM for clearing

In a give-up, the executing broker transfers the trade to the customer's designated clearing firm.

Before a broker may exercise discretion in a customer's account, the firm must have:

Answer: Written authorization from the customer, such as a power of attorney

Discretionary trading requires written customer authorization and supervisory approval.

If an FCM employee enters an order in error for a customer account and it causes a loss, the loss is generally:

Answer: Borne by the firm, not the customer

Trade errors made by the firm are the firm's responsibility; the customer should not bear them.