Regulations - Summary And Review

An Associated Person (AP) is one of several kinds of individuals or firms that must register with the FCTC; each of these categories has its own rules governing registration. The AP must be familiar with rules governing opening accounts and reporting positions, as well as rules governing futures commission merchants (FCMs), introducing brokers (IBs), commodity pool operators (CPOs) and commodity trading advisors (CTAs). The AP must further be familiar with NFA rules governing arbitration and disciplinary proceedings.


  1. A firm need not register with the CFTC if it is already registered with the:
    1. SEC
    2. NFA
    3. Both A and B
    4. Neither A nor B

  1. Every AP is qualified to

I. take customer orders

II. trade on her firm's account

III. trade on a customer's discretionary account

IV. supervise other APs

a. I only

b. I and II

c. I, II and III

d. I, II, III and IV

  1. Large-scale traders must report their positions

a. annually

b. semi-annually

c. quarterly

d. daily

  1. Which is NOT a stipulation of Rule 2-29 governing public communications?
    1. Promotional materials may not be deceptive or misleading
    2. Promotional materials may not use high-pressure sales tactics
    3. Testimonials must prominently state, in all cases, that they are paid testimonials.
    4. Must be accompanied by an equally prominent statement of the risk of loss

  1. Which statement about disciplinary procedures is TRUE :
    1. Investigations are initiated by the NFA's Business Conduct Committee.
    2. All violations are dealt with through the procedure of convening hearings.
    3. There is no appeal in the disciplinary hearing process.
    4. Monetary fines cannot exceed $250,000.

  2. A securities broker/dealer may offer security futures contracts.
    1. True
    2. False

  3. Which of the following individuals may approve security futures accounts?
    1. Series 24
    2. Series 3
    3. Series 30
    4. Series 53

  4. The following are self-regulatory organizations.

I. The SEC





1. II, III, V

2. I, III, V

3. II, III

4. I,II, III

  1. Brokerage and futures accounts are subject to substantially similar rules on account protection.
    1. False
    2. True

  2. Associated persons are subject to binding arbitration as are FINRA securities licenses.
    1. True
    2. False
Related Articles
  1. Mutual Funds & ETFs

    Top 3 Commodities Mutual Funds

    Get information about some of the most popular and best-performing mutual funds that are focused on commodity-related investments.
  2. Chart Advisor

    Agriculture Commodities Are In The Bear's Sights

    Agriculture stocks have experienced strong moves higher over recent weeks, but chart patterns on sugar, corn and wheat are suggesting the moves could be short lived.
  3. Investing News

    Glencore Shares Surge in Hong Kong

    Shares of Glencore International, a leading multinational commodities and mining company, jumped by around 15% on London Stock Exchange, after the shares had gained about 71% earlier on the Hong ...
  4. Investing Basics

    What Does Plain Vanilla Mean?

    Plain vanilla is a term used in investing to describe the most basic types of financial instruments.
  5. Investing

    Have Commodities Bottomed?

    Commodity prices have been heading lower for more than four years, being the worst performing asset class of 2015 with more losses in cyclical commodities.
  6. Investing

    Oil: Why Not to Put Faith in Forecasts

    West Texas Intermediate oil futures have recently made pronounced movements. What do they bode for the world market?
  7. Investing

    The Quinoa Quandary for Bolivian Farmers

    Growing global demand for quinoa has impacted Bolivian farmers' way of life. Should the American consumer be wary of buying this product?
  8. Economics

    Is the U.S. Economy Ready for Liftoff?

    The Fed continues to delay normalizing rates, citing inflation concerns and “global economic and financial developments” in explaining its rationale.
  9. Investing News

    What Alcoa’s (AA) Breakup Means for Investors

    Alcoa plans to split into two companies. Is this a bullish catalyst for investors?
  10. Investing

    A Look at 6 Leading Female Value Investors

    In an industry still largely predominated by men, we look at 6 leading female value investors working today.
  1. Implied Volatility - IV

    The estimated volatility of a security's price.
  2. Plain Vanilla

    The most basic or standard version of a financial instrument, ...
  3. Derivative

    A security with a price that is dependent upon or derived from ...
  4. Series 6

    A securities license entitling the holder to register as a limited ...
  5. Inverse Transaction

    A transaction that can cancel out a forward contract that has ...
  6. Best To Deliver

    The security that is delivered by the short position holder in ...
  1. Is a financial advisor required to have a degree?

    Financial advisors are not required to have university degrees. However, they are required to pass certain exams administered ... Read Full Answer >>
  2. Can mutual funds invest in options and futures?

    Mutual funds invest in not only stocks and fixed-income securities but also options and futures. There exists a separate ... Read Full Answer >>
  3. Can I use my IRA to pay for my college loans?

    If you are older than 59.5 and have been contributing to your IRA for more than five years, you may withdraw funds to pay ... Read Full Answer >>
  4. Can I use my 401(k) to pay for my college loans?

    If you are over 59.5, or separate from your plan-sponsoring employer after age 55, you are free to use your 401(k) to pay ... Read Full Answer >>
  5. How do futures contracts roll over?

    Traders roll over futures contracts to switch from the front month contract that is close to expiration to another contract ... Read Full Answer >>
  6. Why do companies enter into futures contracts?

    Different types of companies may enter into futures contracts for different purposes. The most common reason is to hedge ... Read Full Answer >>
Hot Definitions
  1. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  2. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  3. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  4. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  5. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  6. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!