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Official Practice ProblemFINRA Series 7 Blueprint: Function 2
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Question #1125Function 2Fundamental

Options Account Approval: Registered Options Principal (ROP) Mandate

Before a customer can execute ANY options transactions, who MUST approve the options account in writing?

Correct Choice: A

FINRA Rule 2360 mandates that every options account must be approved in writing by a qualified Registered Options Principal (ROP) BEFORE any option orders can be executed.

Complete Analysis & Legal Rationale

The customer must also receive the OCC Options Disclosure Document (ODD) at or prior to account approval.

Distractor Autopsy (Why Other Options Are Traps)

FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:

Choice ACorrect
Accurate Approval Hierarchy

Written approval by a qualified Registered Options Principal (ROP) is mandatory before trading.

Choice BIncorrect
Representative Self-Approval Fallacy

Representatives cannot approve their own accounts.

Choice CIncorrect
OCC Function Trap

The OCC clears and guarantees contracts; it does not approve retail customer accounts.

Choice DIncorrect
Corporate Officer Distractor

Executive officers do not review individual retail account forms.

Authorities & References:

Official Standard: Mandates Registered Options Principal review prior to transaction execution.

Official SourceFINRA FINRA Rule 2360(b)(16) — Options Account Approval
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Regulatory Authority & Citations: Primary Legal Sources

Verified citations governing Question #1125 (FINRA Series 7 Content Outline)

To pass the FINRA Series 7, candidates must understand not just the calculation formulas, but the exact federal securities acts, SRO rulebooks, and statutory frameworks that enforce them. Review the primary authority records below:

FINRAFINRA Rule 2360(b)(16)— Options Account Approval

Mandates Registered Options Principal review prior to transaction execution.

Read FINRA Official Rule
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