Rule 2 of 6 in this unit1.1.2

1.1.2 Self-regulatory Organizations (SROs)

SIE outline 1.1.2

The SEC's Authority Reaches Every SRO

Created by the Exchange Act. Oversees FINRA, the MSRB and every exchange, all filed with it. NOT a rule-writer for daily broker-dealer conduct.

The trick

Common trap: A registered offering means the SEC approved it. Correct: The SEC never approves. Saying otherwise is itself unlawful. Say effective, never approved.

The method for this kind of question
  1. This material is Section 1: 12 of the 75

Now answer

2 questions on this screen, from this outline item's own pool, so some will test a rule you met earlier in the unit. Pick an answer, say how sure you are, then reveal. Being sure and wrong is the most useful thing that can happen here, and the coach treats it that way.

Question 1Exam level

Which SRO is the exchange SRO for listed options, writing and enforcing its own rulebook for trading on that market?

How sure are you?

Correct: A. CBOE is scoped to listed options and, like FINRA, both writes and enforces its own rulebook.
B. The MSRB writes municipal-securities rules but never enforces them, and its scope is municipal securities, not listed options.
C. The SEC oversees SROs but does not write or enforce exchange-trading rules directly.
D. FINRA governs broker-dealers broadly; the outline names CBOE specifically as the exchange SRO for listed options.

Unit: SIE outline 1.1.2

Question 2Harder

Which SRO's scope is limited to standardized options, and cannot itself clear or guarantee a contract?

How sure are you?

Correct: C. CBOE is the SRO for standardized options, the narrowest scope of the three named SROs, and it does not itself clear or guarantee a contract; that belongs to the Options Clearing Corporation.
A. FINRA's scope is broker-dealers generally, across most product lines, not limited to options.
B. The MSRB's scope is municipal securities, unrelated to options.
D. NASAA is a state-level association, not an options SRO.

Unit: SIE outline 1.1.2

Next ruleA Self-Regulatory Organization Regulates Its Own Members

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