Futures Exchange - Currency Commodity Pool Trading

Floor traders mainly execute orders for customers.


A) True
B) False

B: This is false. Floor traders trade for themselves out of their own trading account. They trade at their own risk and do not trade for customers.



All of the following are true regarding Position Limits EXCEPT:


A) Sets a limit on an amount of contracts that can be held by an individual or group
B) The Commodity Futures Trading Commission (CFTC) can set position limits
C) The exchange where the contract trades can set position limits
D) Position limits only apply to long positions


D: Position limits apply to “same side” control of contracts, long or short. The exchange or the CFTC can set the limits.


Futures contracts only trade on futures exchanges.

A) True
B) False


Correct answer is A: This is true. Futures law states that futures contracts only trade on designated futures exchanges.


Floor brokers usually trade for their own accounts.

A) True
B) False


Correct answer is B: This is false. Floor brokers trade for customer accounts. Floor traders normally trade for their own account.


Which of the following account types require prior approval of the exchange before a firm can trade for them?

A) Corporate accounts
B) Partnership accounts
C) Trust accounts
D) Investment Company accounts


D: Investment Company accounts must have approval from the exchange before a firm can trade for them. Investment companies are responsible for pools of money from investors. A check of the company’s finances and evaluation of the advisors is done.

All of the following can be ordered by the Regional Committee after a case has been concluded EXCEPT:

A) Censure
B) Fine up to $500,000
C) Cease and desist order
D) NFA suspension


B: The maximum fine that can be imposed is $250,000 per violation. All of the other orders can be imposed.


CFTC rules state that customer reparations must start no later than 2 years from the initial event.

A) True
B) False

A: This is true. The CFTC’s forum for customer complaints is for customers alleging violations against a firm or registered individual. The latest date that reparations can start is 2 years from the infraction date.

Commodities trading on an exchange must be delivered from exchange approved warehouses.

A) True
B) False


A: This is true. All warehouses must be approved by the exchange. This is the “point of delivery” that must be stated on each futures contract.


Open interest only applies to short sales.

A) True
B) False


B: This is false. Open interest refers to the total number of contracts that are open and have not been closed out or liquidated.


31. A commodity pool operator must maintain books and records for:

A) 1 year
B) 2 years
C) 3 years
D) 5 years

D: A commodity pool operator must maintain it’s books and records for 5 years.

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