Download Eurex Trader Ultimate Exam and more Exams Technology in PDF only on Docsity!
Question 1. Which legal act sets the high‑level requirements for the operation of Eurex? A) Market Abuse Regulation (MAR) B) Stock Exchange Act (Börsengesetz) C) MiFID II Directive D) Basel III Accord Answer: B Explanation: The Stock Exchange Act (Börsengesetz) is the primary legislation governing the organization and functioning of German exchanges, including Eurex. Question 2. The Management Board of Eurex may exercise which of the following powers? A) Set the risk‑free rate for pricing B) Suspend trading of a product C) Approve individual trader licenses D) Conduct post‑trade audits Answer: B Explanation: The Management Board can suspend trading, adjust contract specifications, and direct cash settlements when necessary. Question 3. The Trading Surveillance Office (HÜSt) is NOT authorized to: A) Monitor for insider trading B) Conduct on‑site inspections of members C. Set margin requirements for clearing members D. Detect market manipulation Answer: C Explanation: HÜSt monitors market conduct but does not set margin requirements; that is the remit of Eurex Clearing AG. Question 4. Which body can impose a fine, reprimand, or withdraw admission for rule violations? A) Management Board B) Trading Surveillance Office
C. Disciplinary Committee D. European Securities and Markets Authority (ESMA) Answer: C Explanation: The Disciplinary Committee handles sanctions for breaches of exchange rules. Question 5. An applicant must satisfy which of the following to meet the admission requirements for Eurex? A) Minimum net worth of €1 million B) Proven experience in derivatives trading C. Ownership of a proprietary trading system D. Residency within the EU Answer: B Explanation: Admission requires demonstrated professional experience in derivatives trading; specific capital thresholds are not universal. Question 6. Which activity is prohibited under market integrity rules? A. Placing a limit order that improves price B. Executing a wash trade C. Using a market‑to‑limit order D. Posting a quote as a market maker Answer: B Explanation: Wash trades—simultaneous buying and selling to create artificial volume—are expressly banned. Question 7. When a technical fault occurs, which rule governs order deletion? A. Pre‑trade risk limit rule B. Mistrade rule C. Auction interruption rule D. Margin call rule Answer: B
Question 11. Continuous trading on Eurex is characterized by: A. Matching orders only at set intervals B. Real‑time matching of incoming orders C. Execution exclusively through auctions D. Mandatory use of market‑to‑limit orders Answer: B Explanation: Continuous trading matches orders instantly as they arrive, providing liquidity throughout the session. Question 12. The closing auction’s purpose is to: A. Reset all limit orders to market orders B. Determine the final settlement price for the day C. Cancel all open orders automatically D. Recalculate margin requirements for the next day Answer: B Explanation: The closing auction establishes the final price used for settlement and valuation of positions. Question 13. Post‑trading activities include all EXCEPT: A. Clearing through Eurex Clearing AG B. Settlement of cash or physical delivery C. Real‑time price matching D. Generation of daily trade reports Answer: C Explanation: Real‑time matching occurs during continuous trading, not post‑trading. Question 14. A limit order differs from a market order because it: A. Guarantees immediate execution B. Specifies a maximum price for execution
C. Converts to a market order after 5 minutes D. Is only valid during the opening auction Answer: B Explanation: A limit order sets a price ceiling (or floor) for execution, whereas a market order executes at the best available price. Question 15. The “Market‑to‑Limit” order type: A. Converts a market order into a limit order if price improves B. Executes only if the market price is better than the limit price C. Is rejected if the order size exceeds the best bid/offer D. Is only allowed during the closing auction Answer: A Explanation: Market‑to‑Limit first attempts immediate execution as a market order; any unfilled portion becomes a limit order at the original price. Question 16. An IOC (Immediate‑or‑Cancel) order: A. Must be fully executed or is cancelled entirely B. Executes any portion immediately and cancels the remainder C. Remains in the book for the full trading day D. Is only available to market makers Answer: B Explanation: IOC orders execute any fill possible instantly; any residual quantity is cancelled. Question 17. A Fill‑or‑Kill (FOK) order: A. Executes partially and cancels the rest B. Must be executed in full immediately or be cancelled C. Is automatically converted to a limit order after 1 minute D. Can only be used for index futures Answer: B
A. The order flow exceeds 10,000 contracts per minute B. Prices deviate beyond a predefined threshold from the reference price C. The market maker fails to quote within 2 seconds D. The clearing house detects insufficient margin Answer: B Explanation: Volatility interruptions halt continuous trading and initiate an auction when price moves exceed set limits. Question 22. Pre‑trade risk limits primarily control: A. The number of auctions per day B. Maximum order quantities and values before entry C. The spread that market makers must quote D. The settlement cycle length Answer: B Explanation: Pre‑trade risk limits prevent excessively large orders that could destabilize the market. Question 23. Market makers on Eurex must maintain a minimum quote size of: A. 1 contract for all products B. 5 contracts for index futures and 1 for single‑stock futures C. 10 contracts for all products D. No minimum; they can quote any size Answer: B Explanation: Eurex sets product‑specific minimum quote sizes; typically 5 contracts for index futures and 1 for single‑stock futures. Question 24. A “Stop Market” order becomes a market order when: A. The price reaches the stop level B. The order is entered during the opening auction C. The trader manually activates it
D. The order expires at the end of day Answer: A Explanation: Once the underlying price hits the stop level, the order is triggered as a market order. Question 25. A “Stop Limit” order differs from a “Stop Market” order because: A. It cancels automatically if not filled within 1 minute B. It becomes a limit order at a specified price after the stop is triggered C. It can only be used in the closing auction D. It is not subject to pre‑trade risk limits Answer: B Explanation: Stop Limit orders turn into limit orders with a defined price once the stop price is breached. Question 26. Price/Time priority matching means that: A. Orders are matched solely on price, ignoring time B. Orders with the best price are filled first; within the same price, earlier orders have priority C. All orders are matched proportionally regardless of price D. Only market orders receive priority over limit orders Answer: B Explanation: The algorithm first sorts by price, then by entry time for orders at the same price level. Question 27. Pro‑Rata matching is used when: A. The market is in a volatility interruption B. A large order needs to be allocated across multiple counterparties at the same price C. Market makers fail to meet quote obligations D. The clearing house processes margin calls Answer: B Explanation: Pro‑Rata distributes a large order proportionally among all eligible orders at the same price.
D. Only after the closing auction Answer: B Explanation: American options allow early exercise at any point before expiration. Question 32. Automatic exercise of options occurs when: A. The option is in‑the‑money by more than € 5 B. The option is in‑the‑money by at least one tick at expiration C. The holder submits a manual exercise notice D. The market maker decides to exercise on behalf of the holder Answer: B Explanation: Eurex automatically exercises options that are in‑the‑money by at least one tick at the close of trading. Question 33. For the EURO STOXX 50 futures, the contract size is: A. €10 per index point B. €1 per index point C. €100 per index point D. €5 per index point Answer: A Explanation: The standard EURO STOXX 50 futures have a contract multiplier of €10 per index point. Question 34. The Bund futures underlying bond is: A. A German 10‑year government bond B. A German 5‑year government bond C. A German 2‑year government bond D. A German 30‑year government bond Answer: A Explanation: Bund futures are based on the German 10‑year benchmark bond.
Question 35. The conversion factor for a deliverable bond in a futures contract is used to: A. Adjust the cash settlement amount for inflation B. Convert the bond’s price to a standard futures price unit C. Determine the margin requirement for the delivery D. Set the tick size for the futures contract Answer: B Explanation: Conversion factors normalize the price of various eligible bonds to a common futures pricing basis. Question 36. The Cheapest‑to‑Deliver (CTD) bond is: A. The bond with the highest coupon among eligible deliveries B. The bond that minimizes the cost to the short position after accounting for conversion factors C. The bond with the longest maturity D. The bond selected by the clearing house arbitrarily Answer: B Explanation: CTD is the bond that, after applying conversion factors, yields the lowest cost for the short side of the futures contract. Question 37. Novation in clearing means: A. The original contract is cancelled and a new one is created between the same parties B. The CCP becomes the buyer to every seller and the seller to every buyer C. The trade is settled directly between the two counterparties without CCP involvement D. The trade is transferred to a third‑party broker for execution Answer: B Explanation: Novation transfers the counterparty risk to the central counterparty, which stands between all market participants. Question 38. Initial margin primarily covers: A. The daily profit and loss of a position B. Potential future exposure over the margin period of risk
Explanation: A mistrade refers to an erroneous trade, often caused by technical issues, and must be nullified according to the Mistrade rule. Question 42. Which order type is most suitable for a trader who wants to guarantee that the order will not rest on the book? A. Good‑Till‑Cancelled (GTC) B. Market‑to‑Limit C. Immediate‑or‑Cancel (IOC) D. Good‑Till‑Date (GTD) Answer: C Explanation: IOC orders either execute immediately or are cancelled, ensuring they never sit on the order book. Question 43. During a volatility interruption, which of the following occurs? A. All pending orders are executed at the last traded price. B. Continuous trading is halted and an auction is launched. C. Market makers are exempt from quoting obligations. D. Margin requirements are reduced for all participants. Answer: B Explanation: A volatility interruption stops continuous trading and initiates an auction to restore orderly price formation. Question 44. The “Pro‑Rata” allocation method is primarily used in which situation? A. When a single large order matches multiple smaller orders at the same price level. B. When the market is in a volatility interruption. C. When a market maker fails to meet its minimum quote size. D. When a stop order is triggered. Answer: A Explanation: Pro‑Rata distributes a large incoming order proportionally among all available opposite‑side orders at the same price.
Question 45. Which of the following is a true statement about “Eurex Improve”? A. It replaces the central order book for all trades. B. It allows broker‑client crossing before the order reaches the central book, improving execution speed. C. It is only available for equity options. D. It automatically cancels all GTC orders at the end of the day. Answer: B Explanation: Eurex Improve enables crossing of client and broker orders prior to entry into the central book, offering better price improvement. Question 46. The tick size for a single‑stock future on Eurex is typically: A. €0. B. €0. C. €0. D. €0. Answer: B Explanation: Single‑stock futures usually have a tick size of €0.05. Question 47. Which settlement method is used for the German Treasury Bond (Bund) futures? A. Physical delivery of the underlying bond B. Cash settlement based on the bond’s price C. Hybrid settlement (cash + physical) D. No settlement; contracts are rolled over automatically Answer: B Explanation: Bund futures settle in cash based on the final price of the underlying 10‑year German government bond. Question 48. An American‑style option on a single‑stock future can be exercised: A. Only at the closing auction of the expiration day
Explanation: Pre‑trade risk limits often cap the maximum number of contracts that can be submitted in a single order. Question 52. Which of the following best describes a “wash trade”? A. A trade where the buyer and seller are the same entity, creating artificial volume. B. A trade executed at the best available price. C. A trade that is automatically cancelled after the opening auction. D. A trade that triggers a volatility interruption. Answer: A Explanation: Wash trades involve self‑matching to inflate volume and are prohibited. Question 53. In the context of Eurex, “front‑running” refers to: A. Placing orders before the market opens to capture the opening price. B. Executing a trade based on non‑public information about upcoming large orders. C. Submitting a market‑to‑limit order after a price improvement. D. Cancelling a GTC order before the end of day. Answer: B Explanation: Front‑running is the illegal practice of trading ahead of known large orders to profit from the expected price movement. Question 54. Which of the following is a requirement for a market maker on Eurex? A. Must quote both bid and ask within a maximum spread of 2 ticks. B. Must provide a minimum quote size of 5 contracts for index futures. C. Must hold a minimum of €1 million in capital. D. Must submit all orders as Good‑Till‑Cancelled. Answer: B Explanation: Market makers have specific minimum quote size obligations; for index futures it is typically 5 contracts. Question 55. The “Opening Auction” price is calculated using which algorithm?
A. Pro‑Rata matching of all orders B. Maximizing the matched volume while minimizing price deviation C. First‑come, first‑served order execution D. Random selection among eligible orders Answer: B Explanation: The opening auction seeks the price that maximizes trade volume and results in the smallest price deviation from the reference. Question 56. During the “Closing Auction,” which order type is NOT allowed? A. Market‑to‑Limit B. Limit orders C. Stop orders D. Immediate‑or‑Cancel (IOC) Answer: D Explanation: IOC orders are not accepted in the closing auction; only limit and market‑to‑limit orders are permitted. Question 57. Which of the following statements about “Good‑Till‑Cancelled” (GTC) orders is correct? A. They automatically convert to market orders at the end of each day. B. They remain active until the trader manually cancels them or they are filled. C. They expire after 48 hours if not executed. D. They are only allowed for futures contracts, not options. Answer: B Explanation: GTC orders stay on the book indefinitely until cancelled or executed. Question 58. The “Margin Call” process is triggered when: A. The clearing member’s variation margin balance falls below the maintenance margin level. B. The market maker fails to provide a quote for more than 5 minutes. C. A trade is executed during a volatility interruption.
Explanation: Variation margin is the daily settlement of gains and losses to keep the member’s account balanced. Question 62. In the context of Eurex, “Novation” results in: A. The original bilateral contract being replaced by two contracts with the CCP as counterparty. B. The trade being settled directly between the two original parties. C. The trade being cancelled and re‑entered as a new order. D. The trade being transferred to a third‑party broker for execution. Answer: A Explanation: Novation transfers the counterparty risk to the central counterparty, creating two new contracts (buyer‑CCP and seller‑CCP). Question 63. Which of the following is true about “Eurex Improve” crossing? A. It only occurs after the closing auction. B. It allows broker‑client orders to be matched off‑book before entering the central order book. C. It forces all orders to be executed as market orders. D. It eliminates the need for a clearing house. Answer: B Explanation: Eurex Improve enables off‑book crossing of broker‑client orders, potentially achieving better prices before entering the main book. Question 64. The “Good‑Till‑Date” (GTD) order will: A. Remain active indefinitely until cancelled. B. Expire on a specific calendar date set by the trader. C. Convert to a market order after 24 hours. D. Be automatically cancelled after the first execution. Answer: B Explanation: GTD orders have a predefined expiration date.
Question 65. Which of the following is NOT a typical function of the Trading Surveillance Office (HÜSt)? A. Monitoring for insider trading. B. Conducting inspections of exchange members. C. Setting initial margin levels. D. Detecting market manipulation. Answer: C Explanation: HÜSt monitors market conduct but does not set margin requirements; that is the CCP’s role. Question 66. A “Stop Market” order is triggered when: A. The underlying price reaches the stop level, converting the order to a market order. B. The trader manually confirms the order after the stop price is reached. C. The order is placed during the opening auction. D. The order expires at the end of the day. Answer: A Explanation: Upon hitting the stop price, the order becomes a market order and executes at the best available price. Question 67. Which of the following best describes a “Fill‑or‑Kill” (FOK) order? A. It executes any available quantity immediately and cancels the rest. B. It must be executed in full immediately or it is cancelled entirely. C. It sits on the order book until the trader cancels it. D. It converts to a limit order after a brief waiting period. Answer: B Explanation: FOK orders require complete immediate execution; otherwise, they are cancelled. Question 68. The “Good‑for‑Day” (GFD) order is typically used when: A. The trader wants the order to remain open across multiple trading days. B. The trader wants the order to be active only for the current trading session.
