SIE Regulatory Framework 5

Question 1

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

Accepted Answer

Introducing broker

Answer

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

Question 2

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

Accepted Answer

$10,000

Answer

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

Question 3

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

Accepted Answer

It acts as guarantor and central counterparty for listed options trades

Answer

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

Question 4

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

Accepted Answer

The state securities regulator where they operate

Answer

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

Question 5

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

Accepted Answer

Promote fair competition and best execution across equity markets

Answer

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.

SIE - Securities Industry Essentials Practice Test

SIE - Securities Industry Essentials Practice Test

SIE Regulatory Framework 5