Series 57 Exam || with Complete Solutions.
Settlement correct answers Corporate Securities T+2
Muni Securities T+2
US Gov't Securities T+1
Options T+1
Cash Trades- trade date
Priority of Orders correct answers 1. Market
2. Limit orders by price
3. Limit orders @ same price ranked by time
GTC correct answers Good till cancelled
MOC correct answers Market on close: to buy or sell @ or near the close
LOC correct answers Limit on close: buy or sell @ close only if closing price is equal equal to or
better than preset limit price
NH correct answers Not Held: gives receiving firm discretion to time and price, limited to day
order is entered
IOC correct answers Immediate or cancel: immediate execution on as much of the order as
possible- any part not executed is cancelled
DNR correct answers Do not reduce: all open orders are adjusted for stock splits and stock
dividends unless its a DNR order
CQS correct answers Consolidated Quotation System: collects quotes for all markets in which
the listed stock trades and displays quotes on one screen
ATS correct answers Alternative Trading System: SEC approved, non exchange trading system,
provides alternative method to trading on exchange and enhances liquidity of securities in
marketplace, needs to register with SEC and FINRA as BD but not an exchange, subject to
FINRA
MPID correct answers Market Participant ID: 4 digit alpha code, represents symbol by which
bids and offers are identified by in Nasdaq Market Center
Market Access (SEC Rule 15c3-5) correct answers Customer orders aren't erroneous and don't
violate applicable regulatory requirements, BD is required to retain a copy of supervisory
procedures and written description of risk management tools
SEC Rule 13h-1 correct answers SEC requires registration of of large traders; those who exercise
investment discretion in exchange listed equities or options
,SEC Rule 13h-1 Requirements for Large Traders correct answers a) During the day, either 2
million shares or a market value of $20 million
b) During the month, either 20 million shares or shares with a market value of $200 million
Form 13H correct answers 1. Name and officers of business org
2. Tax ID number
3. Business address of large trader
4. Other SEC or CFTC filings of large trader
5. List of broker dealers at which large trader or affiliates has an account
Regulation NMS correct answers Requires nondiscriminatory access to quotations, automated
execution of orders, and limit order protection on an interexchange basis
SEC Rule 610 (Access Rule) correct answers Promotes fair and equal access to quotations
1. Requires participants have access to quotes on Nasdaq, NYSE, and NYSE American
2. Places a limit on access fees of $0.003 per share
3. Trade centers must provide written rules designed to prevent displaying quotes that lock or
cross the market
Locked Market correct answers Market center displays a bid at same price as current lowest offer
made by another market center
Crossed Market correct answers Occurs when a market center displays a bid that's higher/ offer
that's lower than the current lowest/ highest offer/ bid made by another market center
SEC Rule 611 (Order Protection Rule) correct answers Prevents trade-throughs of of protected
quotes, requires market centers to establish written policies and procedures designed to
reasonably prevent trade throughs within NMS by routing orders to market center that's
displaying best price
Protected Quotations correct answers Immediately accessible through automatic execution
Trade Throughs correct answers Occurs when an order that passed the market is executed at an
inferior price regardless of better priced quotes that may be available at other market centers
Exceptions to SEC Rule 611 correct answers Limit orders that are designated as intermarket
sweep orders, stopped orders
Intermarket Sweep Orders (ISO) correct answers Allow BDs to execute trades at inferior prices
in one market, while simultaneously directing orders for execution to away markets that are
displaying protected quotes
Stopped Orders correct answers Give clients comfort that they will not be paying more or receive
less than a certain amount when buying or selling, may be outside current inside market
, Designated Percentages Away from NBBO correct answers 1. 8% if security is in S&P 500 or
Russell 1000 Index
2. 28% if security is NMS stock, but not in above indices and price greater than or equal to $1.00
3. 30% if security is NMS stock, but not in above indices and price is below $1.00
Defined Limit from NBBO correct answers 1. 9.5% if security is in S&P 500 or Russell 1000
Index
2. 29.5% if security is NMS stock, but not in above indices and price greater than or equal to
$1.00
3. 31.5% if security is NMS stock, but not in above indices and price is below $1.00
Primary Peg correct answers Pegged to same side of NBBO
Market Peg correct answers Pegged to opposite side of NBBO
Discretionary Orders correct answers Has a displayed limit order price and a nondisplayed limit
order price at which the participant is also willing to buy or sell
Reserve Order correct answers Gives a market participant the ability to display a portion of an
order's size and keep the remainder in reserve where it's not displayed
Non-Displayed Orders correct answers Limit orders that are entered, but not displayed, in the
system, available for execution until filled or cancelled
Minimum Quantity Orders correct answers Specify a minimum quantity to be executed or
cancelled, may only be entered with a time-inforce (TIF) designation of system hours immediate
or cancel, or market hours immediate or cancel.
Price to Comply Orders correct answers Prevent violations of Regulation NMS
System Hours Immediate or Cancel (SIOC) correct answers Limit orders that, when entered into
the system, receive an immediate execution on that portion of the order that's marketable and a
cancellation of that portion of the order that's non-marketable
System Hours Day (SDAY) correct answers Remain displayed and open for potential execution
during system hours from 4:00 a.m. to 8:00 p.m
System Hours Good-till-Cancelled (SGTC) correct answers Remain displayed and open for
potential execution each trading day during system hours from 4:00 a.m. to 8:00 p.m
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