When a deal is done via a broker:

it need not be confirmed between the counterparties as the broker confirms it immediately with both counterparties
it should also be confirmed directly between the two counterparties
it is important to note that broker confirmations are bilateral confirmations between the principals of the trade
the dealer should obtain acknowledgement that the deal has been agreed to but may assume agreement to the trade in the absence of such acknowledgement

Answer(s): B

Bank XYZ calls you for a quote in EUR/USD for EUR 50,000,000.00. If you decide to quote, which of the following is true?

You must be prepared to deal EUR 50,000,000.00.
You may quote without stating the amount you are prepared to deal.
You are only committed to deal in a marketable amount.
You must be prepared to deal for more than EUR 50,000,000.00 in case Bank XYZ wishes to.

Answer(s): A

What happens if an instruction remains unmatched and/or unsettled through CLS Bank?

If there is more than one FX trade with a single counterparty to settle in the identical currencies, then both sides should bilaterally agree to settle the trades outside of CLS Bank on a net basis.
If there is only one FX trade with a single counterparty to settle in the identical currencies, then either side can unilaterally decide to settle the trade outside of CLS Bank on a net basis.
If there is more than one FX trade with a single counterparty to settle in the identical currencies, then both sides should bilaterally agree to settle the trade outside CLS Bank on a gross basis.
If there is more than one FX trade with a single counterparty to settle in the identical currencies, then either side can unilaterally instruct the CLS Bank to settle the trades.

Answer(s): C

What recommendation does the Model Code make to banks accepting a stop-loss order?

The Model Code emphasizes the importance of clear, concise documentation and on-going lines of communication.
Bank management must guarantee a fixed price execution to the counterparty.
The Model Code recommends that only experienced dealers should be allowed to take such orders.
Bank staff must secure the approval of the counterparty’s management to accept such orders.

Answer(s): A

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