Trading Institution Dealers and Brokers Quiz

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

Monitoring dealer/dealer and dealer/broker relationships

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

To prevent undue concentration of business with a single broker

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

They are responsible for authorizing the brokers and platforms

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

To avoid potential conflicts of interest

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

To facilitate prompt calculation and payment of brokerage

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

To identify any discrepancies in broker usage

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

Arranging deals between parties and receiving brokerage fees

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

To avoid conflicts of interest

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

Best execution policy

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

Escalate the matter to senior management

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.

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