Securities Trader Representative (Series 57) Practice Exam

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What is the first action Broker-Dealer B must take to start making markets in Nasdaq stocks?

Apply to FINRA for approval

To start making markets in Nasdaq stocks, the first action that Broker-Dealer B must take is to apply to FINRA for approval. This step is crucial because FINRA (Financial Industry Regulatory Authority) oversees the activities of broker-dealers and ensures they meet the necessary regulatory requirements to operate in the securities market. Before a broker-dealer can engage in market making, they must establish compliance with industry standards, which is initiated through this application process.

The approval from FINRA ensures that Broker-Dealer B is authorized to provide liquidity to the market and adhere to the rules governing trades, quotations, and customer interactions. Once this approval is obtained, the broker-dealer can proceed with entering quotations for the stocks and performing other related activities. This foundational requirement is a critical step in ensuring market integrity and protecting investors.

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Enter a registration request for each security

Enter quotations into Nasdaq for the stocks

Obtain client approval for trading

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