Series 34 study guide
Series 34 · Work through your exam, one topic at a time.
The Series 34 - Retail Off-Exchange Forex Examination is a qualification exam for individuals who solicit, or who supervise others who solicit, retail off-exchange foreign currency (forex) business from customers. It is most relevant to associated persons at firms offering retail forex accounts, and to the supervisors and compliance staff responsible for that activity. The Series 34 study guide has 4 sections and about 1,535 words.
01Forex Terminology, Products, and Market Concepts
Off-exchange retail forex is a contract between a customer and a registered dealer to exchange one currency for another. In a pair, the base currency comes first and is always one unit; the quote (counter) currency comes second and states the price.
395 words, about 2 min02Regulation of Retail Off-Exchange Forex: Registration, Disclosures, and Recordkeeping
Retail off-exchange forex is regulated by the CFTC under CFTC Regulations Part 5, with the NFA as the self-regulatory organization. A firm acting as counterparty must register as a Retail Foreign Exchange Dealer (RFED) and become a Forex Dealer Member (FDM) of the NFA.
369 words, about 2 min03Account Opening, Customer Communications, and Margin/Capital Requirements
Before any trade, the dealer must complete know-your-customer and customer identification procedures, verify identity, and gather the information needed to judge suitability: financial condition, net worth and liquid assets, investment/trading experience, risk tolerance, and objectives. The file typically includes the customer agreement, the margin (security deposit) agreement, an arbitration agreement or notice, the acknowledged risk disclosure, and, where someone other than the customer trades, a written limited or full power of attorney.
383 words, about 2 min04Sales Practices, Suitability, Supervision, and Prohibited Conduct
Forex marketing is held to a strict anti-fraud standard. A registered person may not guarantee profits, guarantee against loss, predict specific returns, or describe forex as a safe, savings-like, or "second income" vehicle.
388 words, about 2 min