Practice Test GeeksSIE - Securities Industry Essentials Practice Test
← All SIE Flashcard Decks

Regulatory Framework Flashcards

7 cards from real SIE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Regulatory Framework flashcards as text

  1. A broker-dealer that only transmits customer orders to a carrying firm for execution and clearing is called a(n):

    Answer: Introducing broker

    An introducing broker handles customer accounts and order entry but relies on a carrying (clearing) firm for custody of assets and trade settlement.

  2. Under the Bank Secrecy Act, broker-dealers must file a Currency Transaction Report (CTR) when a customer conducts a cash transaction exceeding:

    Answer: $10,000

    The Bank Secrecy Act requires a CTR for any cash transaction exceeding $10,000, and structuring transactions to avoid this threshold is illegal.

  3. Which of the following best describes the role of the Options Clearing Corporation (OCC)?

    Answer: It acts as guarantor and central counterparty for listed options trades

    The OCC acts as the central counterparty and guarantor for all exchange-listed options contracts, ensuring performance of obligations.

  4. An investment adviser with assets under management below $110 million must generally register with:

    Answer: The state securities regulator where they operate

    Investment advisers with less than $110 million in AUM are generally required to register with their state securities administrator rather than the SEC.

  5. Regulation NMS (National Market System) was designed primarily to:

    Answer: Promote fair competition and best execution across equity markets

    Regulation NMS modernized equity market rules to promote competition, transparency, and best execution by requiring orders be routed to the market with the best price.

  6. When a broker-dealer acts as a dealer (principal) in a transaction, it:

    Answer: Buys or sells securities from its own inventory and charges a markup or markdown

    When acting as a principal, a dealer buys or sells from its own inventory and profits through a markup (on sales) or markdown (on purchases) rather than a commission.

  7. The Investment Advisers Act of 1940 requires investment advisers to act in their clients' best interests under the:

    Answer: Fiduciary standard

    Investment advisers registered under the Investment Advisers Act of 1940 are held to a fiduciary standard, requiring them to put clients' interests ahead of their own.