Trading Jobs Trading Compliance and Regulations

Question 1

What is 'insider trading' as defined by the SEC?

Accepted Answer

Trading securities based on material, non-public information in breach of a duty

Answer

Trading securities as a professional at a large firm

Answer

Trading securities within the first hour of market open

Answer

Buying and selling the same security within a single day

Question 2

What does 'Regulation NMS' govern in US equity markets?

Accepted Answer

Rules for the national market system including order protection and best execution

Answer

Margin requirements for broker-dealers

Answer

Reporting requirements for large trader positions

Answer

Disclosure requirements for corporate insiders

Question 3

What is 'best execution' in securities trading?

Accepted Answer

The obligation to seek the most favorable terms reasonably available for client orders

Answer

Executing trades only on the NYSE

Answer

Executing the largest block trades at market open

Answer

Completing all client orders before proprietary trades

Question 4

What is 'front-running' in trading?

Accepted Answer

A broker trading for their own account ahead of executing a client's large pending order

Answer

Trading a security before its IPO

Answer

Placing limit orders before market open

Answer

Trading in anticipation of positive earnings news

Question 5

Under SEC Rule 10b-5, what constitutes securities fraud?

Accepted Answer

Any untrue statement or omission of material facts in connection with the purchase or sale of securities

Answer

Any unprofitable trade

Answer

Trading without a Series 7 license

Answer

Failure to diversify a client's portfolio

Question 6

What is a 'suspicious activity report' (SAR) required for in trading?

Accepted Answer

Reporting transactions that may involve money laundering, fraud, or other financial crimes

Answer

Reporting any trade over $10,000

Answer

Reporting all short sale transactions

Answer

Reporting suspected insider trading directly to the SEC