Series 7 Brokerage Support Services

Front 1

What is the flow of an order through a brokerage firm

Back 1

Other People Might Care. O=Order department; P=purchases and sales; M= margin or credit department; C =cashiering department cage

Front 2

What does the purchase and sales department do

Back 2

Recorded all transactions in a client account and handles all billing

Front 3

What does the cage or cashiering department do

Back 3

Receive and deliver securities and money. It issues payment only if the margin department instructs it to do so. Send certificates to transfer agents.

Front 4

When is a customer order most susceptible to error

Back 4

At two points Communication of the order between customer and broker and transmission of the order from the Broker to wire operator

Front 5

If there is a mistake on the order, who corrects it

Back 5

If a mistake is made, no change to the order can be made without the approval of a principal or branch manager

Front 6

When must order tickets be approved

Back 6

Order tickets must be approved by a principal promptly after execution, but orders are not required to be approved before they are entered

Front 7

What happens if an order is executed outside the customer's instructions

Back 7

The trade is not binding

Front 8

If an error is made what do FINRA rules require

Back 8

A record of any errors made must be reported to the person designated to receive such error reports by the firm.

Front 9

What is the minimum amount of time to send a statement to a customer

Back 9

Although most firms send customers monthly statements, the minimum time is quarterly

Front 10

Is a customer of a broker-dealer request a copy of the firm's most recent income statement in writing, must the broker dealer comply

Back 10

No the customer is entitled to the most recent balance sheet only

Front 11

What is regular way settlement

Back 11

The third business day following the trade a known as T+3

Front 12

What security settle T+1

Back 12

Money market

Front 13

When are securities delivered and payment remitted in a cash settlement or same day settlement

Back 13

Requires delivery of securities from the seller and payment from the buyer on the same day a trade is executed. Stocks or bonds sold for cash settlement must be available on the spot for delivery to the buyer

Front 14

When can an option contract be settled

Back 14

On any day from the fourth business day through the contract date, provided the buyer is given a one day written notice

Front 15

What must a when issued transaction confirmation include

Back 15

A description of the security, with the contract price yield and trade day

Front 16

Under Regulation T when is payment due

Back 16

Payment is due two business days after regular way settlement

Front 17

What happens if a buyer cannot pay for a trade within 5 business days from the trade date

Back 17

The broker dealer may request an extension from is designated examining authority DEA before the fifth business day. In the case of introducing broker dealers, those that do not clear their own trade, the extension request is made by the clearing firm. A broker dealer has the option of ignoring amount of $1000 or less without violating regulations T requirements

Front 18

What securities are settled next business day

Back 18

Equity options, index options, t bills, t note, & T bond

Front 19

What is NOT included in a when issued confirmation

Back 19

SAT. S =settlement date, A= accrued interest, T =total dollar amount due at settlement

Front 20

Is there a difference between customer confirmations and broker to broker confirmation

Back 20

Yes. Customer confirmations must be sent no later than the settlement date. Broker to broker confirmations must be sent no later than the business day following the trade date, T+1

Front 21

Member firms that are nominal owners of record must vote street name stock in accordance with the wishes of the beneficial owners. If a customer fails to indicate how those shares are to be voted what is the member firm do

Back 21

Vote shares as recommended by management

Front 22

If the matters to be voted on are of major importance such as mergers or issuance of additional shares, what must the member firm do

Back 22

The member may never vote the shares as it sees fit. In this case if the proxy is not returned, the shares are not voted

Front 23

What is a DK or don't know trade

Back 23

Dk are used in inter dealer trades for which one party to the transaction does not recognize the trade or if it does, disagrees with the terms of the trade as submitted by the other party.

Front 24

What is that good delivery clearing rules

Back 24

100 share uniform unit

Front 25

What is good delivery for bonds

Back 25

Delivery of bonds in coupon or bear form should be made in denominations of $1000 or $5000. Fully registered bonds are delivered in denominations of $1,000 but in no case larger than $100,000

Front 26

What is the time frame to send back reclamation securities with the reclamation form

Back 26

For minor irregularities, the time frame for reclamation is 15 days from delivery date. If the certificates delivered are refused by the transfer agent for whatever reason or if the certificates are stolen or counterfeit, the time frame is 30 months from delivery date. If the certificates (bonds are subject to partial call, there is no time limit for reclamation.

Front 27

What are the two types of on deliveries that are never subject to reclamation

Back 27

Bond certificates subject to an in-whole call (redemption of entire issue) and bonds where the issuer goes into default after trade date

Front 28

A customer sales $5000 worth of a security in a cash account and on the same day purchases eight thousand dollars worth of a different security in the same account. At the close of the fifth business days following these transactions, no payment has been received from the customer and no extension has been obtained. What must the firm do

Back 28

Liquidate $3K of securities and freeze the account for 90 days . When an investor buys and sells different securities in the same account on the same day, the two transactions can be netted against each other to determine whether money is due to the client or the client old money to the firm.

Front 29

How are dealer to dealer transactions in US government securities settled and in what funds

Back 29

Settlement occurs on the business day following trade date. in dealer to dealer trade settlement is made in federal funds through the Federal Reserve wire system

Front 30

Regular way settlement for US government bonds is

Back 30

Occurs on that next business day

Front 31

Introducing broker dealers who did not clear their own trade may request extensions for their customers directly from

Back 31

The DEA, designated examining authority

Front 32

If a beneficial owner of a street named stock returns a signed proxy statement but fails to indicate how the shares are to be voted, the member firm must vote the shares how

Back 32

As recommended by management of the issuer

Front 33

Who bears the expense of shipping proxy

Back 33

The issuer must bear the expense of shipping the proxy

Front 34

What would be good reasons for a dealer who sold municipal securities to another dealer to fail to deliver the bonds

Back 34

mutilated coupons, lack of legal opinion, lack of proper endorsement on a registered bond

Front 35

What would NOT be good reasons for a dealer who sold municipal securities to another dealer to fail to deliver the bonds

Back 35

Change in the market price of the bonds. The MSRP requires delivery regardless of subsequent price changes.

Front 36

What should a registered representative do if a customer has sold 300 shares of ABC and has sent you 3 100-share certificates one of which has not been endorsed

Back 36

Rather than risk sending in an unendorsed stock certificate back through the mail, the stock power is sent to the customer for the signature that will allow ownership transfer

Front 37

When are ordered tickets written

Back 37

Upon receipt of the order

Front 38

May a member firm charge a customer for safekeeping of security and collection of dividends and interest

Back 38

Yes. Members are permitted to charge reasonable fees to their customers for a variety of services. Included are collection of interest and dividends, finding a buyer for a client who wishes to sell a relatively illiquid investments, and holding customer securities in safekeeping. Members may also charge interest on loans made to customers.

Front 39

In order to transfer certificate held jointly they must be signed by

Back 39

Both parties

Front 40

Can a certificate with an assignment of a power of substitution executed by someone who has died be good delivery as long as these signature was witnessed

Back 40

Never

Front 41

Under FINRA rules, delivery on a seller's account can be made to no sooner than the

Back 41

Fourth business day following the transaction.

Front 42

What information about the firm must appear on all confirmations.

Back 42

The capacity of the firm, principal or agent, must be disclosed on all confirmation.

Front 43

What is a Due bill

Back 43

An assignment of a forthcoming distribution from the seller to the new owners

Front 44

Every transaction made by a registered representative for a customer's account must be

Back 44

Reviewed by a principal of a FINRA member firm

Front 45

In an interdealer trade, what happens if the seller delivers before the settlement date

Back 45

The buyer may accept the stock or may refuse it without prejudice

Front 46

What is the settlement for various Bond transactions and closed end funds

Back 46

Regular way settlement for US government bond occurs on the business day after the trade date. Corporate bonds and closed end funds fall under the SEC settlement rule, and MSRP rules require three day settlement of municipal bond secondary transactions