General Securities Sales Supervisor (Series10) Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Study for the General Securities Sales Supervisor (Series 10) Exam. Enhance your skills with multiple choice questions and explanations. Master your exam with detailed insights and tips!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

What is the primary reason for requiring broker-dealers to establish written policies against insider trading?

To enhance market competition
To ensure clients receive fair treatment
To protect the integrity of the financial markets
To comply with federal regulations

The correct answer is: To protect the integrity of the financial markets

Requiring broker-dealers to establish written policies against insider trading is primarily aimed at protecting the integrity of the financial markets. Insider trading undermines investor confidence and can lead to an uneven playing field where some market participants have access to material, non-public information that others do not. By implementing written policies, broker-dealers help to create a level playing field, thereby promoting fair and orderly markets. This integrity is vital for maintaining trust among investors and the general public, which in turn supports market liquidity and capital formation. While compliance with federal regulations is also crucial, the ultimate goal of these regulations is the protection of market integrity. Enhancing competition and ensuring clients receive fair treatment are important aspects of the financial markets, but they stem from a foundational need to maintain integrity. If market integrity is compromised, the repercussions can ripple through the system, affecting all other facets of the market. Thus, the primary focus of such policies centers on maintaining a trustworthy and fair market environment.