Depositories Settle the Trade

Rule 8 of 8 in this unit1.1.4

1.1.4 Market Participants and their Roles

SIE outline 1.1.4

The outline names DTCC and the OCC as its two examples of depositories and clearing corporations. NOT the broker-dealer's own back office.

The trick

Common trap: OCC here means the Comptroller of the Currency. Correct: The outline places OCC under depositories: the Options Clearing Corporation. The section is the clue.

The method for this kind of question

Place the name on the map first

Now answer

1 question 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 1Harder

An issuer offers a member firm monthly cash to publish quotations and make a market in its stock. What does FINRA Rule 5250 permit?

A. Accepting it if the payment is disclosed to customers in writing B. Accepting it only if the issuer is an SEC-reporting company C. Refusing it, though the firm may still be paid for bona fide underwriting D. Accepting it if the firm also quotes two other issuers' stocks

How sure are you?

Sure Fairly sure Guessing

Correct: C. Rule 5250(a) bars payment from an issuer for publishing a quotation or making a market; Rule 5250(b)(1) permits payment for bona fide services such as underwriting.

A. The rule contains no disclosure cure; telling the customer changes nothing.

B. The ban does not turn on whether the issuer reports to the SEC.

D. Quoting other issuers has no bearing on this ban.

Unit: SIE outline 1.1.4

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