Operations & Process Management Flashcards

Under CFTC recordkeeping rules, most required records must be kept for:

Answer: Five years, and be readily accessible during the first two years

CFTC Rule 1.31 sets five-year retention with ready accessibility for the first two years.

A trader holding a long position in a physically delivered contract does not wish to take delivery. The trader should generally:

Answer: Offset the position before the delivery period begins

Longs who do not want the commodity must liquidate or roll before first notice or delivery obligations arise.

In physical delivery, the short typically fulfills the obligation by:

Answer: Tendering a warehouse receipt or shipping certificate per exchange rules

Delivery on many contracts is made through warehouse receipts or shipping certificates.

Which contract is settled by cash rather than physical delivery?

Answer: E-mini S&P 500 futures

Stock index futures are cash settled based on the index value at expiration.

An exchange for physical (EFP) is:

Answer: A privately negotiated exchange of a futures position for a cash position

In an EFP, parties exchange futures for the equivalent cash commodity, outside the open market.

Speculative position limits are often most restrictive during:

Answer: The spot month

Spot-month limits prevent manipulation as contracts approach delivery.

An FCM must send a customer a confirmation of a trade:

Answer: Promptly, generally by the next business day

Confirmations of executed trades must be provided promptly so customers can review activity.