SIE Exam Question 433: Answer and Explanation

Question: 433

A Clearing Firm is

• A. The company that handles orders to buy and sell securities and maintains custody of securities and other assets.
• B. The company that acts as an agent or principal in a securities transaction and charges commissions or markups.
• C. The company that quotes both a buy and a sell price in a security held in inventory, hoping to make a profit on the bid-offer spread.
• D. The company that changes the name on a stock certificate for transactions and records it on the official master shareholder listing.

Correct Answer: A

Explanation:

A: (A) is the Clearing Firm. (B) is a broker-dealer. (C) is a market maker. (D) is a transfer agent.