One-Page Cheat Sheet

This is the whole book at a glance. It assumes you have already worked through the units; each line is a memory jog, not a first lesson. If a line reminds you that you forgot something, open that unit's rapid-fire sheet.

General Trading Practices (Function 1)

• Achieving Market Making Status: The statute's market maker is a specialist permitted to act as a dealer, a dealer acting as block positioner, or a dealer holding out as willing to buy and sell a security for its own account on a regular or continuous basis. An Alternative Display Facility market maker quotes on a regular and continuous basis, and withdrawing quotes for five minutes, or missing the 30-minute re-entry after a halt, ends its registration in that security and bars re-registering for 20 business days, absent an excused withdrawal. A qualified block positioner needs $1,000,000 in net capital and blocks worth $200,000 or more. A market maker computes net capital at $2,500 per security, or $1,000 at $5 or less. Issuer payments for quoting are barred outside three carve-outs.
• Understanding Order Types: Two NYSE options rules, priced against the national best bid and offer, and the NYSE Arca equities rule, which adds protected quotations, define these orders, and they do not match. In options, a triggered Stop Order becomes a Market Order and a Stop Limit Order a Limit Order. Immediate-or-cancel accepts a partial fill, fill-or-kill demands the whole order, and an options all-or-none order survives arrival to wait for resting size. In equities, the Trading Collar reaches Market Orders only, unfilled Auction-Only Order quantity is cancelled, pegged orders never route, and a sweep order trades through a protected quotation only when marked and sent with simultaneous orders against the full displayed size of protected quotations elsewhere superior to its limit price.
• Market Access: A broker-dealer with market access, or providing it to others, must establish, document and maintain reasonably designed controls under its direct and exclusive control. Financial controls reject, before entry, orders over pre-set credit or capital thresholds for each customer and the firm, and erroneous or duplicative orders. Regulatory controls include blocking orders failing pre-order entry requirements or in securities the firm, customer or other person is restricted from trading, limiting system access to pre-approved and authorized persons and accounts, and sending immediate execution reports to surveillance personnel. Only specific regulatory controls may be allocated, by written contract after thorough due diligence, to a better-placed registered broker-dealer customer not trading for its own account. The chief executive or equivalent officer certifies annually that the controls comply and the review occurred.
• Identifying and Handling Clearly Erroneous Transactions: A transaction is clearly erroneous when any term, such as price, number of shares or the security's identity, carries an obvious error. For an over-the-counter trade in an exchange-listed security that arose out of or was reported through a trade reporting system owned or operated by FINRA or FINRA Regulation and authorized by the SEC, a FINRA officer may act on his or her own motion, generally within 30 minutes of becoming aware; outside normal market hours the Numerical Guidelines apply, and inside them the trade must first fit one of three gateways. The remedy is to declare the trade null and void, and over-the-counter equity breaks are rare. An appeal must be written and received within 30 minutes of notification, and it does not stay the determination.
• Display, Execution and Trading Systems: An alternative trading system matches multiple buyers' and sellers' orders by non-discretionary methods, sets no conduct rules beyond trading, disciplines subscribers only by exclusion, and registers as a broker-dealer unless an exclusion applies. Fair access attaches at 5% of a named category's volume, systems capacity at 20% in municipal securities or corporate debt, each in at least 4 of the preceding 6 calendar months. Alternative display facility trading centers post only automated quotations, give FINRA Market Operations at least fourteen calendar days' written notice before denying a registered broker-dealer direct access, and may be suspended after three unexcused outages in five business days. Outside curb trading hours, a queued Cboe options series passing a width check opens at a volume-maximizing price within the opening collar or without a trade; a forced opening never produces one.
• Identifying and Avoiding Prohibited Activities: A member may not move an inventory position on non-public advance knowledge of a report's content or timing, and needs a reasonably designed research-trading information barrier. A member or associated person may not cause an order to execute for accounts it has an interest in or discretion over, or customer or affiliate accounts tipped from inside the firm, while holding material, non-public market information about an imminent block until public, stale or obsolete, coordinate prices, intimidate others, or split orders or executions primarily to maximize amounts it receives from them. Outside exempted securities, the manipulation statute bars wash sales and matched orders aimed at a false or misleading appearance of active trading or the market, price-moving series to induce others to trade, and pegging contrary to Commission rules.
• Disseminating Quotes and Trade Advertisements: The responsible broker or dealer must fill any order other than an odd lot, from another broker or dealer or a person in a category it customarily deals with, at its published price or better, up to its published size, subject to a timely revised size, bid or offer. Circuit breakers halt trading fifteen minutes on a 7% or 13% decline in the S&P 500 Index, once per level, never after the late-day cutoff, and for the day on a 20% decline. Under the Limit Up-Limit Down Plan, a limit state that does not clear within fifteen seconds during regular trading hours brings a trading pause: no trades, but quotations may be displayed. During a trading halt, members may not trade or publish a quotation or unpriced indication of interest, except as that Plan permits.

Trading Specific Products (Function 1)

• IPOs, Secondary Offerings and Safe Harbor: Regulation M bars distribution participants, issuers, selling security holders and affiliated purchasers from bidding for or buying covered securities, or attempting to induce anyone to do so, during a restricted period starting, outside mergers, acquisitions and exchange offers, one or five business days before pricing, or on joining if later, subject to exceptions. Anyone shorting the subject security after filing and within five business days before pricing may not buy in a firm commitment equity offering for cash, absent an exception. Stabilizing may only prevent or retard a decline, never exceeding the lower of the offering price or the principal market's stabilizing bid, and recouping a representative's flip credit needs a syndicate-wide penalty bid. The issuer repurchase safe harbor requires all four daily conditions, and trading plans protect only if adopted before awareness of material nonpublic information.
• Non-listed and Penny Stocks: For most purposes, a penny stock is an equity security meeting none of seven alternative exclusions, one being a price of five dollars or more, with any commission, commission equivalent, mark-up or mark-down stripped from a transaction price, an exclusion withdrawn for the blank check offering rules. Unless one of six exemptions applies, the firm discloses, before the trade, the quotations, its own compensation and the salesperson's cash compensation determined by the time of the trade, and delivers the risk disclosure document against a signed and dated acknowledgment, trading no sooner than two business days after sending it. Absent an exception, a member may not initiate or resume quoting a non-exchange-listed security until it has filed Form 211 and received the Financial Industry Regulatory Authority's processing notification.
• Options Trading: Cboe recognizes only two order types, limit and market; stop and all-or-none are Order Instructions, and immediate-or-cancel is a Time-in-Force. Subject to exercise restrictions, an American-style option may be exercised on any business day through expiration and a European-style option only on its expiration date. At expiration, a contract in the money by $0.01 or more is deemed tendered to the Options Clearing Corporation unless the clearing member instructs otherwise before the time the Corporation specifies. Absent an exemption, a firm may not make an opening transaction it has reason to believe would breach a position limit, and exercise limits cap long positions exercised in a class within any five consecutive business days.
• Handling and Executing Short Sales: A sale is short when the seller does not own the security or delivers a security borrowed by or for the seller, and ownership generally counts only to a net long position. Before a short sale in an equity security, a broker or dealer needs a borrow, a borrowing arrangement or reasonable grounds to believe the stock can be borrowed, plus documentation, unless excepted. Every equity sell order is marked long, short or short exempt. After a 10% drop from the prior day's close in a national market system stock, trading centers need procedures blocking short sales at or below the national best bid that day and the next while that bid is disseminated, with exceptions. A clearing participant generally closes out fails by borrowing or purchasing, and threshold-security fails by purchasing only.

Handling Customer Orders (Function 1)

• Meeting Obligations to Customers Regarding Orders: A member owes a customer, as agent or as principal, reasonable diligence to find the best market so the price is as favorable as possible under prevailing market conditions, and a fair price or fair commission. Resting orders are adjusted for a dividend or split on the ex day, subject to the rule's exceptions and markings, and a reverse split cancels them. A net transaction needs disclosure and consent before execution, and a non-institutional customer's own consent must be written and order by order. A stop order is triggered only by a transaction at or through the stop price, and extended hours trading needs an individually furnished risk disclosure first.
• Identifying and Avoiding Prohibited Practices with Customer Orders: A member holding a customer equity order may not trade that security on the same side for its own account at a price that would satisfy it, unless it immediately fills the customer up to the size it traded, at the same or better price, or an exception applies: large orders or institutional accounts with opt-in disclosure, no knowledge behind effective controls, riskless principal, intermarket sweep orders, and odd-lot or bona fide error trades. Trading past a held national market system stock limit order at $1 or more and not outside the best inside market needs a penny of price improvement. The manipulative and deceptive devices rule has no exceptions; an adviser knowingly trading as principal with a client, except a broker-dealer not acting as adviser in that transaction, needs written capacity disclosure and consent before completion.
• Regulation NMS: Regulation NMS, the national market system regulation, applies its display, order protection and sub-penny rules to national market system stocks only, never to listed options. A trade-through is a regular-hours purchase or sale below a protected bid or above a protected offer, and protection requires an automated best bid or offer of an exchange or association. Each trading center keeps written procedures reasonably designed to prevent trade-throughs on that center, subject to nine exceptions. Specialists, similarly authorized exchange members and over-the-counter market makers must immediately display a customer limit order that improves their quote, unless an exception applies, and the sub-penny rule sets each stock's minimum pricing increment.

Books and Records, Trade Reporting and Settlement (Function 2)

• Reporting Trades to the Designated Reporting Facility: An off-exchange national market system stock trade goes to the Alternative Display Facility or either Trade Reporting Facility, and an off-exchange over-the-counter equity or restricted equity trade goes to the OTC Reporting Facility. Between two members the executing party reports; where both qualify, the sell side reports unless the parties agree otherwise and the sell side contemporaneously documents it. A national market system stock or over-the-counter equity trade executed in normal market hours is reported as soon as practicable but no later than 10 seconds after execution. A missed deadline is marked late, and a pattern or practice of unexcused late reporting may breach commercial honor standards.
• Creating, Retaining and Reporting Required Records of Orders and Transactions: A large trader exercises investment discretion and trades national market system securities through registered broker-dealers at or above 2 million shares or $20 million in a calendar day, or 20 million shares or $200 million in a calendar month, or registers voluntarily, and, unless excepted, files Form 13H. Every market center publishes a monthly execution report, and every broker or dealer a quarterly routing report. Industry Members record consolidated audit trail events contemporaneously and report them by 8:00 a.m. Eastern Time the trading day after recording or receipt. Each customer order carries its account name or designation before execution unless the investment adviser allocation exception applies, and order tickets are kept three years, the first two easily accessible.
• Clearance and Settlement: Members confirm customer transactions at or before completion. Outside its exceptions, the settlement cycle rule bars a contract settling later than the first business day after the contract date unless the parties expressly agree otherwise at the time of the transaction. Between members, a fail does not cancel the contract; absent mutual consent to cancel, the buyer's standard buy-in comes no sooner than the third business day after delivery was due, after written notice, and the seller's remedy is a sell-out. Except stock dividends and splits on foreign securities or American Depository Receipts, a dividend or warrant distribution under 25 percent of the security's value, with timely information, goes ex on the record date if a business day, and one of 25 percent or more on the first business day after the payable date.

That is the whole exam on one page. If you can read each line and hear the full unit behind it, you are ready.