Securities Trader Representative (Series 57) Practice Exam

What happens to a transaction that is held as a blockbuster trade?

1. The hold will be lifted if the clearing firm does not respond within 15 minutes

2. The hold will be lifted if the clearing firm does not respond within 30 minutes

3. The hold will not be lifted unless the executing firm contacts its clearing firm

4. The hold will not be lifted unless the clearing firm releases the trade

The correct answer is: The hold will be lifted if the clearing firm does not respond within 15 minutes

In the context of blockbuster trades, a hold is typically placed on a transaction to mitigate risks due to the significant size or value of the trade. The nuanced aspect of this situation is how long a clearing firm has to respond before the hold is automatically lifted. The correct answer indicates that if the clearing firm does not respond within a specified timeframe, in this case, 15 minutes, the hold may be lifted. This reflects industry protocols that are in place to ensure that there is a prompt process for resolving holds on high-impact trades. Timely decisions are critical in trading environments, as delays can lead to missed opportunities or increased market volatility. Hence, the trading rules prioritize a quick response from the clearing firm to either verify or address any issues related to the blockbuster trade. The details in the other choices suggest alternative conditions for lifting the hold, but these are not aligned with the established procedures for handling such trades. For example, the mention of a longer response timeframe or the need for contact with the clearing firm before lifting the hold indicates an understanding that may not reflect the typical practices in the industry regarding the handling of blockbuster trades.