Security Futures Training - Module 4: Regulatory Requirements for Security Futures

Module 4: Regulatory Requirements for Security Futures describes the regulatory framework, including sales practice and margin requirements, for these new products. All FINRA member firms must administer the content of Modules 3 and 4 to their personnel before such persons may engage in a security futures business.

Content Outline


Registration Requirements

  • Registration of markets
  • Registration of intermediaries with the SEC and CFTC
  • Registration of certain collective investment vehicles or providers of investment advice

Sales Practices

  • Communications with the public
  • Customer protection rules
    • SIPC
    • Segregated funds
  • Risk disclosure statement

Margin Requirements

  • Initial margin
  • Maintenance margin
    • Definition of current market value
  • Risk-based margins
    • Strategy offsets
    • Portfolio-based margining systems (not allowed)
  • Cross-margining
  • Applicability of Regulation T
  • Collateral
    • Type, form and use of collateral
    • Acceptable collateral deposits
    • Use of money market mutual funds
  • Computation of equity
  • Meeting margin calls
  • Account liquidation
  • Extension of credit

Other considerations

  • Suitability
  • Commissions
  • Account approval and documentation
  • Discretionary accounts
  • Best execution requirement
  • Reporting customer complaints
  • Anti-fraud and anti-manipulation requirements
    • Section 4(b) of the CEA and 10(b) of the Securities Exchange Act
    • Prohibition against trading on inside information
    • Prohibition against trading ahead of research reports
    • Prohibition against trading ahead of customer orders