3.1: International Regulation Flashcards
Level 1 ESMA
Clue (high level) (2)
The European Securities and Market Authority can be asked to provide technical advice.
Directives and regulations set the high level political objectives
Level 2 ESMA (1)
Primary role in drafting subordinate acts such as the delegated acts and the implementing acts
Regulations are passed by the… (2)
European Commission
European Parliament and Council
What does Vertical-direct effect mean? (1)
Companies and EU member states provision of directives are given precedence over national law
3 objectives of the Financial Services Action Plan (3)
Single EU wholesale markets
Maintain open and secure retail markets
State of the art prudential rules
Regulations are on par with… (1)
national law
What powers do the ESMA hold? (4)
Prohibit harmful financial products
Monitor cross border systemic risk
Create technical standards
Resolve disagreements
What is the harmonisation of financial services? (1)
To promote a single market between EU member states
Level 3 ESMA (1)
Making guidelines and recommendation for supervisory practices
Level 4 ESMA (1)
Can be requested to launch investigations and can issue them within 2 months
EU member states amend their… (1)
…laws to comply with EU directives
What was the FSAP and when was it launched? (1)
The Financial Services Action Plan was a major development in achieving harmonisation and was launched in 1999
What is a directive? (1)
Rules addressed to national authorities to be implemented into national law
Harmonisation programmes consist of… (1)
Directive under article 58 of the European treaty
What were the 3 main failings that caused the global financial crisis in Europe? (3)
Too much risk that wasn’t identified
Supervision was poor
National authorities did not work together
Overall aim of ESMA? (1)
To protect and enhance the integrity, efficiency, transparency and orderly European markets
What was the ISD? (1)
Investment Services Directive created a single passport, allowing EU member state companies to engage in investment services throughout the EEA
When was the ISD taken over by the MiFiD? (1)
2007
Why was MiFiD brought in? (1)
To better reflect the financial products in the market
What did MiFiD introduce? (3)
widened the range of financial products that could be passported
upgraded advice on personal recommendation
MTFs can be passported
What did MiFiD 2 introduce? (4)
A new regulated market, OTF, to regulate the unregulated trades
Strengthening post and pre trade requirements
Limiting size of positions in commodity derivative trades
Avoid disorderly markets from High frequency trading
Examples of Ancillary services include: (4)
safekeeping and admin of instruments
lending money to investors to fulfil trades down by them
advice on mergers and undertakings
foreign exchange services
Authorisation will not be granted solely for… (1)
…ancillary services
What did MiFiR introduce? (1)
Sets out a reporting requirements, but is not implemented into national law
What does UCITS Directive stand for? (1)
Undertakings in Collective Investment Transferable Securities Directive
For UCITS, the FCA is responsible for… (1)
…Recognising a scheme under UCITS.
UCITS III is split into two parts, which are? (2)
Management Directive
Product Directive
What is the management directive under UCITS III? (2)
This increase the range of management services that could be passported in the EU.
Including discretionary fund management, safekeeping and fund admin.
What is the product directive under UCITS III? (3)
This increased the scope of securities that could be in a UCITS fund, including derivatives
Also increased the limits on SOME instruments
Also set the limit on exposure of funds to 1 company
What is UCITS IV and when was it introduced? (6)
Introduced on July 2011 Passport for management companies Procedure for cross-border fund mergers Key Investor Information Document (KIID) Notification procedure for cross border marketing Strengthening of supervisory cooperation
What is UCITS V and when was it introduced? (3)
Introduced on March 2016
UCITS V introduced:
Responsibilities on depositaries
Remuneration policy for UCITS fund managers.
What is the AIFM directive?
Scope, objective and date) (4
Implemented in 2013
Alternative Investment Fund Managers Directive covers the admin, management and marketing of AIFs.
The scope of AIFs include, hedge funds, retail investment funds, private equity and investment companies.
Their objective is to regulate the managers not the funds.
The AIFMD requires authorisation of the managers with the … if AUM is above … (3)
…home state regulator.
…100m euros when leveraged or 500m euros if not leveraged
If an AIF has AUM under 2 thresholds it is deemed as… (2)
…“sub-threshold” and lighter regulations apply
A small registered UK AIFM is… (3)
…an internal AIFM of a corporate body
…the unauthorised manager of property funds
…a fund manager who applied to become a VCT or EIS
Sub threshold AIFs cannot partake in… (1)
…AIFM Directive
