General Securities Sales Supervisor (Series10) Practice Exam

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What occurs to a trade executed during a regulatory trading halt according to FINRA rules?

  1. A FINRA will declare the trade null and void

  2. B The firm has the option of accepting or rejecting the execution

  3. C The trade must be accepted as reported

  4. D The trade must be reported to the Market Operations Review Committee

The correct answer is: A FINRA will declare the trade null and void

When a trade is executed during a regulatory trading halt, FINRA rules stipulate that the trade is declared null and void. This is because regulatory trading halts are put in place to protect investors and ensure fair and orderly markets during periods of significant uncertainty or when material information is pending. Allowing trades to stand that took place during this period would undermine the purpose of the halt and could lead to unfair advantages or disadvantages among market participants, affecting overall market integrity. Therefore, any trades executed during such a halt are automatically invalidated to maintain a level playing field for all investors.