Securities Trader Representative (Series 57) Practice Exam

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Prepare for the Series 57 Exam with our quiz! Cover important topics with multiple choice questions and detailed explanations. Enhance your understanding and boost your confidence for exam success!

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Which of the following statements about CQS market makers is FALSE?

Must enter quotes in CQS within five business days or lose registration
Only CQS market makers may enter orders into the Consolidated Quotation System
May use the Nasdaq Market Center Execution System for retail transactions
All FINRA members executing OTC transactions must register as a CQS market maker

The correct answer is: All FINRA members executing OTC transactions must register as a CQS market maker

The statement regarding whether all FINRA members executing OTC (over-the-counter) transactions must register as a CQS market maker is indeed false. CQS market makers are specifically those firms that provide quotes and liquidity in stocks listed on the Consolidated Quotation System. Not all FINRA members are required to become market makers simply due to their participation in OTC transactions. The requirement to register as a market maker applies only to those who intend to quote and maintain liquidity in specific securities on the CQS. The other statements about CQS market makers are accurate: they must enter quotes within a specific timeframe to maintain their registration, they are the only entities that can enter orders into the CQS, and they can utilize the Nasdaq Market Center Execution System for retail transactions. Each of these reflects the specific regulatory framework that governs how market makers operate and their obligations in the trading environment.