Rule 6 of 6 in this unit1.1.2

1.1.2 Self-regulatory Organizations (SROs)

SIE outline 1.1.2

CBOE Governs Its Own Options Market

The exchange SRO for listed options. Writes and enforces its own rulebook, the way FINRA does for broker-dealers. NOT a broker-dealer regulator.

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

A municipal securities dealer at a bank breaks MSRB Rule G-32. Who enforces it against that dealer?

How sure are you?

Correct: C. The MSRB has no examination staff; at a bank dealer, that bank's own federal banking regulator enforces the rule.
A. The MSRB writes rules but brings no enforcement actions of its own.
B. FINRA enforces MSRB rules only against broker-dealers, not against bank dealers.
D. The SEC oversees the SRO layer; it is not the first-line enforcer of an MSRB rule at a bank dealer.

Unit: SIE outline 1.1.2

Question 2Above the exam

A new association of broker-dealers wants to register with the SEC as a national securities association, the way FINRA did. Which provision would it register under, and would that registration make it a federal agency?

How sure are you?

Correct: A. Exchange Act Section 15A, Registered Securities Associations, is the same hook FINRA registers under; registering there does not turn a body into a federal agency, it becomes an SRO, non-governmental and industry-funded, the same as FINRA.
B. Securities Act Section 7 governs registration statement contents, unrelated to an association's own registration, and confers no federal-agency status.
C. Exchange Act Section 12 registers securities, not associations, and invents a state-regulator outcome the source never states.
D. Securities Act Section 23 governs claims of SEC approval, an unrelated subject, and invents a reporting relationship to Congress found nowhere in the source.

Unit: SIE outline 1.1.2

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