Free NFA Branch Manager Examination Practice Questions

Sample Practice Questions

Try these 10 sample questions from the NFA Branch Manager Examination practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1A Member proposes assigning one manager to two branch offices. Which finding establishes Notice 9002's exception to the usual separate-manager requirement?

   1. A. The manager can effectively supervise both offices given their size, scope and operations.
   2. B. The manager has satisfied the applicable branch-manager proficiency requirement for the Member.
   3. C. The manager is already listed as a principal of the Member sponsoring both branch offices.
   4. D. The manager holds active AP registration under the Member operating both branch locations.

   Answer: A

   Explanation: Notice 9002 permits this when the manager "can effectively and diligently supervise more than one branch office location." The determination must reflect the offices’ size, scope and operations.

   Reference: NFA Rulebook: Interpretive Notices — Interpretive Notice 9002, Form 7-R, Branch Offices

2. 2An adviser relying on 17 CFR 4.14(a)(10) does not hold itself out publicly as a CTA. What is the maximum number of persons it may have advised during the preceding 12 months under that exemption?

   1. A. 10 persons
   2. B. 15 persons
   3. C. 25 persons
   4. D. 35 persons

   Answer: B

   Explanation: The exemption requires that it "has not furnished commodity trading advice to more than 15 persons". The separate public-holding-out condition must also be satisfied.

   Reference: 17 CFR Part 4 — Commodity Pool Operators and Commodity Trading Advisors — 17 CFR 4.14(a)(10)

3. 3A CPO's Disclosure Document remains materially accurate. Under 17 CFR 4.26(a)(2), what is its maximum permitted age when used?

   1. A. Six months
   2. B. Nine months
   3. C. Twelve months
   4. D. Eighteen months

   Answer: C

   Explanation: Section 4.26(a)(2) prohibits a document "dated more than twelve months prior to the date of its use." Material accuracy does not extend that age limit.

   Reference: 17 CFR Part 4 — Commodity Pool Operators and Commodity Trading Advisors — 17 CFR 4.26(a)(2)

4. 4A natural person qualifies as an eligible contract participant and opens a futures account. How does Rule 2-30(a) treat that customer?

   1. A. Covered because the customer is an individual
   2. B. Exempt because eligible contract participant status controls
   3. C. Covered only if the account has discretionary authority
   4. D. Exempt unless the customer requests investment recommendations

   Answer: A

   Explanation: Rule 2-30(a) covers "all individual customers and any other customers who are not eligible contract participants". The individual customer remains covered regardless of ECP status.

   Reference: NFA Rulebook: Compliance Rules — Compliance Rule 2-30(a)

5. 5A CTA uses a dilution table to disclose initial charges. It has no standardized initial investment, minimum or unit. What investment amount should the table illustrate under Notice 9006?

   1. A. $100
   2. B. $500
   3. C. $1,000
   4. D. $10,000

   Answer: C

   Explanation: Notice 9006 specifies "showing dilution of an investment of $1,000" when standardized amounts, minimums or units are not used.

   Reference: NFA Rulebook: Interpretive Notices — Interpretive Notice 9006, A

6. 6An IB operates under a guarantee agreement with an FCM. Where must it carry its customers' futures accounts under 17 CFR 1.57(a)?

   1. A. With the guarantor FCM on a fully disclosed basis
   2. B. With the guarantor FCM on an omnibus account basis
   3. C. With another FCM on a fully disclosed account basis
   4. D. With another FCM on an omnibus account basis

   Answer: A

   Explanation: Section 1.57(a)(1) requires carrying the customer account "with such guarantor futures commission merchant on a fully-disclosed basis". An omnibus or separate carrying arrangement is not the prescribed structure.

   Reference: 17 CFR 1.57 — Operations and activities of introducing brokers — 17 CFR 1.57(a)(1)

7. 7An FCM executes a futures transaction for an ordinary customer on Tuesday. Wednesday is a business day. What is the latest ordinary confirmation deadline under 17 CFR 1.33(b)?

   1. A. Wednesday, the next business day
   2. B. Friday, the third following business day
   3. C. The last business day of the month
   4. D. The last business day of the quarter

   Answer: A

   Explanation: Section 1.33(b) requires confirmation "not later than the next business day" after the transaction. Here that is Wednesday.

   Reference: 17 CFR 1.33 — Monthly and confirmation statements — 17 CFR 1.33(b)

8. 8An AP will choose the commodity and quantity for an unrelated customer's futures trades. What authorization must exist before that discretion is exercised?

   1. A. Written authorization from the customer or account controller
   2. B. Written authorization from the Member's compliance principal
   3. C. Written authorization from the executing FCM's trading supervisor
   4. D. Written authorization from the carrying FCM's financial principal

   Answer: A

   Explanation: Rule 2-8(a) requires authorization "in writing (by power of attorney or other instrument)" from the customer or account controller before exercising discretion.

   Reference: NFA Rulebook: Compliance Rules — Compliance Rule 2-8(a)

9. 9A futures advertisement emphasizes possible profits. Which standard governs its discussion of risk of loss under Rule 2-29(b)(3)?

   1. A. Equal prominence of the risk and profit discussions
   2. B. Equal word counts in the risk and profit discussions
   3. C. Equal paragraph counts in the risk and profit discussions
   4. D. Equal numbers of examples in the risk and profit discussions

   Answer: A

   Explanation: Rule 2-29(b)(3) requires "an equally prominent discussion of the risk of loss". Prominence governs the presentation; a fixed equality of word counts, paragraph counts or example counts is not the prescribed standard.

   Reference: NFA Rulebook: Compliance Rules — Compliance Rule 2-29(b)(3)

10. 10An IB opens a new account subject to its CIP. When must it obtain the minimum identifying information, as distinguished from completing identity verification?

    1. A. Before opening the account
    2. B. Within 30 days after the first trade
    3. C. With the first quarterly account review
    4. D. At the first annual information update

    Answer: A

    Explanation: Notice 9045 says "all firms must obtain certain minimum information prior to opening an account." Risk-based verification has a separate reasonable-time rule.

    Reference: NFA Rulebook: Interpretive Notices — Interpretive Notice 9045, A, Required Identifying Information