Series 3 – The National Commodities Futures Test Communication & Stakeholder Engagement 3

Question 1

A customer has received a margin call. What is the best communication practice?

Accepted Answer

Promptly give clear notice of the amount due, the deadline, and the consequences of not meeting it

Answer

Clear, prompt notice of the amount and the deadline protects both the customer and the firm.

Question 2

A customer says verbally, 'Trade the account however you think best.' What is required before the broker may exercise discretion?

Accepted Answer

Written authorization (power of attorney) from the customer, accepted by the firm

Answer

Discretionary trading requires the customer's written authorization and firm acceptance.

Question 3

A broker's telephone solicitation script is treated as what under NFA rules?

Accepted Answer

Promotional material subject to Rule 2-29

Answer

Telemarketing scripts are promotional material and must meet Rule 2-29 standards.

Question 4

Under NFA Rule 2-29, who must approve promotional material before its first use?

Accepted Answer

A principal of the member firm, in writing

Answer

A principal must review and approve promotional material in writing before first use.

Question 5

A firm's promotion includes a customer testimonial. What must be disclosed?

Accepted Answer

That the testimonial may not be representative of other customers' experience, and whether the customer was paid

Answer

Testimonials must disclose that they may not represent other customers' experience and whether compensation was given.

Series 3 – The National Commodities Futures Test Practice Test