Operations & Process Management Flashcards
7 cards from real Series 3 – The National Commodities Futures Test practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Operations & Process Management flashcards as text
Large trader reporting exists so that the CFTC can:
Answer: Monitor concentrations of positions and detect potential manipulation
Positions at or above reportable levels are reported so regulators can monitor market concentration.
Before opening a futures account for a retail customer, the FCM or IB must provide:
Answer: A risk disclosure statement and obtain the customer's acknowledgment
CFTC rules require delivery of a risk disclosure document and signed acknowledgment before account opening.
An introducing broker (IB) differs from an FCM in that an IB:
Answer: Solicits orders but does not accept or hold customer funds for margin
IBs introduce accounts to an FCM that carries the accounts and holds the funds.
An FCM may use segregated customer funds to:
Answer: Margin or guarantee only the positions of the customers who supplied the funds
Segregated funds may not be used for the FCM's own obligations or other firms' needs.
A wash trade is prohibited because it:
Answer: Creates a false appearance of trading activity without a genuine change in market position
Wash trades involve offsetting trades with no real risk transfer and are illegal.
The Customer Identification Program (CIP) requires the firm to:
Answer: Verify the identity of a person opening an account
CIP is part of anti-money-laundering rules and requires reasonable procedures to verify identity.
Which practice is prohibited because the broker places its own order ahead of a customer's order?
Answer: Front running
Trading ahead of a customer order using knowledge of that order is a violation.
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Sources & references
Exam facts on this page (fees, format, dates, passing scores) are checked against these official sources; the date is our last check. Editorial policy
- finra.org — Score release, test dates, test delivery, fees, exam format, passing score · verified Oct 2026
- nfa.futures.org — Eligibility, score validity · verified Oct 2026