Series 99 Regulatory Compliance & Reporting 5

Question 1

Under FINRA's consolidated audit trail (CAT) requirements, which entities are required to report order and trade data to the CAT system?

Accepted Answer

FINRA member broker-dealers and national securities exchanges

Answer

The CAT system requires all FINRA member broker-dealers and national securities exchanges to report order lifecycle data to facilitate market surveillance.

Question 2

A broker-dealer receives a subpoena from the SEC requesting trading records. Under SEC Rule 17a-4, the firm must produce these records:

Accepted Answer

Promptly and in the format requested by the regulator

Answer

SEC Rule 17a-4 requires broker-dealers to produce records promptly upon regulatory request and in the format specified by the examiner.

Question 3

Which of the following best describes the purpose of FINRA Rule 3120?

Accepted Answer

To require firms to test and verify their supervisory control systems annually

Answer

FINRA Rule 3120 requires member firms to conduct annual testing of their supervisory control systems and report findings to senior management.

Question 4

Under SEC Regulation NMS Rule 606, broker-dealers must publish quarterly reports disclosing:

Accepted Answer

Order routing practices for non-directed orders

Answer

Regulation NMS Rule 606 requires broker-dealers to publish quarterly reports on where they route non-directed customer orders, including any payment for order flow arrangements.

Question 5

A broker-dealer acting as a prime broker must establish and maintain procedures to ensure compliance with which key requirement?

Accepted Answer

Providing a prime brokerage disclosure document to customers before establishing the relationship

Answer

SEC and FINRA rules require prime brokers to provide customers with a disclosure document outlining the nature and risks of the prime brokerage relationship before it is established.

(Series 99) Operations Professional Exam Practice Test

(Series 99) Operations Professional Exam Practice Test

Series 99 Regulatory Compliance & Reporting 5