Series 63 practice questionmediumBroker-dealer exclusion—transacting with existing clients temporarily in state
XYZ Securities is licensed in State R and has a client who temporarily relocates for the winter to State P. XYZ has no office in State P. Does XYZ need to register as a broker-dealer in State P under the USA?
- ANo, because the client is a temporary resident and XYZ has no office in State P.✓ Correct answer
- BYes, because business is conducted with a resident of State P.
- CYes, unless the client is an institution.
- DNo, because registration in the home state suffices.
Explanation
Why A — No, because the client is a temporary resident and XYZ has no office in State P.
The USA provides an exception for broker-dealers with no office in a state transacting only with existing clients who are temporarily there (USA Sec. 401(c)(2)). Registration is not required in such cases.
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