Securities Trader Representative (Series 57) Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the Securities Trader Representative Exam. Enhance your knowledge with questions, detailed hints, and explanations. Pass your test with confidence!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

What action is required if a market maker fails to maintain their clearing relationship?

They can maintain their quotes for 30 days
They must withdraw their quotes immediately
They may continue trading under special terms
They can only operate with permission from the SEC

The correct answer is: They must withdraw their quotes immediately

When a market maker fails to maintain their clearing relationship, they are required to withdraw their quotes immediately. This is critical because maintaining a clearing relationship is essential for executing trades and settling transactions efficiently. If a market maker does not have an established clearing relationship, they cannot ensure that trades will be correctly processed and settled, which can create systemic risks in the market. Immediate withdrawal of quotes ensures that the market remains orderly and that other participants are not misled by quotes that cannot be honored due to the lack of a functioning clearing agreement. This regulatory requirement helps to protect market integrity and provides a safeguard against potential trading disruptions.