Securities Trader Representative (Series 57) Practice Exam

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Which of the following transactions is NOT subject to FINRA's reporting requirements?

A NYSE-listed security traded in the third market
A transaction in a security quoted on the OTCBB
An ADR quoted in the Pink Sheets
A transaction on a foreign securities exchange executed by a FINRA member

The correct answer is: A transaction on a foreign securities exchange executed by a FINRA member

The transaction executed on a foreign securities exchange by a FINRA member is not subject to FINRA's reporting requirements due to the jurisdictional limitations of FINRA's regulations. FINRA's reporting requirements apply primarily to transactions that occur within U.S. markets or through U.S. entities. Transactions that occur on foreign exchanges typically fall outside of FINRA's purview because they are governed by the regulations of the respective foreign regulatory bodies. In contrast, transactions involving NYSE-listed securities traded in the third market, securities quoted on the OTCBB, and ADRs quoted in the Pink Sheets all take place within the U.S. marketplace or are related to securities that are under the jurisdiction of U.S. regulations, hence are subject to FINRA's reporting requirements. These transactions are associated with U.S. trading platforms or securities and thus require reporting to ensure transparency and compliance with regulatory obligations.