Trading Institution Dealers and Brokers Quiz

What is the responsibility of senior management of a trading institution?

Why is it crucial for senior management to monitor dealer/dealer and dealer/broker relationships?

What role does senior management play in the choice of brokers and electronic broking platforms?

Why should any freely negotiable brokerage be agreed only by senior management of both trading institutions?

What is the purpose of forwarding a copy of the brokerage agreement to the operations department?

Why should senior management periodically monitor the pattern of broker usage?

What is the primary function of money brokers in the interbank market?

Why are brokers not allowed to act in any discretionary fund management capacity?

What policy should the management of a broking company impose to ensure brokers execute on most favorable terms for the dealers?

What should brokers do if they suspect any attempts at market manipulation?

Senior Management Responsibility in Trading Institutions

Senior management is responsible for monitoring dealer/dealer and dealer/broker relationships to ensure fairness, transparency, and compliance with regulatory requirements.
They play a crucial role in selecting brokers and electronic broking platforms to ensure the best possible execution of trades.

Brokerage Agreements and Monitoring

Any freely negotiable brokerage should be agreed upon by senior management of both trading institutions to prevent unauthorized or unfavorable agreements.
A copy of the brokerage agreement should be forwarded to the operations department to ensure they are aware of the terms and conditions.
Senior management should periodically monitor the pattern of broker usage to identify any irregularities or biases.

Role of Money Brokers in the Interbank Market

The primary function of money brokers in the interbank market is to facilitate transactions between banks, acting as intermediaries.

Brokers' Responsibilities and Limitations

Brokers are not allowed to act in any discretionary fund management capacity to prevent conflicts of interest and maintain their impartiality.
Broking companies should impose a policy to ensure brokers execute trades on the most favorable terms for the dealers, prioritizing their clients' interests.
If brokers suspect any attempts at market manipulation, they should report it immediately to prevent fraudulent activities and maintain market integrity.

Test your knowledge about the roles and relationships of dealers and brokers in trading institutions. Learn about the importance of active management involvement and electronic broking platforms in monitoring these relationships.