3.2: UK REGULATION Flashcards
The Financial Services Act 2012 amended what act to reform the UK financial services regulatory structure? (1)
Financial Services and Markets Act 2000 (FSMA)
What is considered as the “macro-prudential” regulator? (1)
Financial Policy Committee (FPC)
What are the current regulatory frameworks (implemented in 2013 set by the BoE? (3)
- establishing a macro-prudential regulator (FPC) to monitor systemic risk
- transferring prudential regulation responsibilities to the PRA (Prudential Regulation Authority
- creating a conduct of business regulator, to focus on wholesale and retail markets.
What is the FCA? (2)
Financial Conduct Authority is the conduct of business regulator. Its main goal is to ensure that the relevant markets function well
What are the objectives of the FCA? (3)
Protect, Enhance, Promote
- Protection of consumers
- Enhance integrity of markets
- Promote competition in regulated financial services
Protect, Enhance, Promote
What is the scope of the FCA? (4)
- Regulator of conduct for all firms in retail and wholesale markets, including PRA authorised firms and firms passporting into the UK
- Lead regulator for firms other than the PRA-Authorised
- Markets regulation
- Regulatory oversight of the client assets and countering financial crime
What is the Prudential Regulation Authority responsible for? (1)
Prudential supervision of banks, insurers and large investment firms
What activities did the FCA take over from the Office of Fair Trading? (4)
Lending or brokering credit
Credit reference agency
Debt collection
Contracts of hire of good
When misleading financial promotions are made, the FCA can… (2)
ban these financial promotions without going through enforcement process
What is the core objective of the Prudential Regulation Authority? (1)
To ensure the the safety and soundness of the firms it regulates
What is the function of the PRA? (2)
They monitor and regulates the firms resilience
If firms fail they are responsible for resolving this
What kind of approach does the FCA take? (2)
Proactive led approach
In particular to consumer protection
What kind of approach does the PRA take? (2)
Judgement led approach
The more risk a firm poses, the more supervision that happens
What is the FPC tasked with and where is it situated? (3)
Situated in the Bank Of England, the FPC is tasked with monitoring the systemic risk in the whole financial system and identifies risk to stability
The FPC can make recommendations and offer advice to the… (2)
… PRA and FCA
What does the FPC do to show transparency? (1)
Publishes 2 financial stability reports each year
How often does the FPC meet? (1)
At least quarterly
The FCA and PRA share a single admin process for what? (1)
Dual regulated firms
Dual regulated firms apply to the FCA or PRA? (1)
PRA
Anyone who partakes in investment business in the UK is required to be… (2)
…an authorised person
…an exempt person
What are the 2 main kinds of authorised person? (2)
Part 4A permission
Qualified for authorisation
The _____ has the lead role in investigating and prosecuting authorised person violations. A person who commits this crime can be jailed for up to how many years? (2)
FCA
7
Specified investments include all investment instruments excluding ________. (1)
Physical Assets
Extended in 2016 and MiFiD, what was added to regulated investments? (4)
Provision of credit
Regulated mortgages (buy to let)
Structured Deposits
Emission Allowances
Examples of regulated activity include: (4)
Accepting Deposits Issuing electronic money contracts of insurance managing investments Arranging a mortgage MTFs and OTFs
What is the PSR? (3)
Payment Systems Regulator
established in 2015 it is a subsidiary of the FCA
Payment systems regulator do not regulate what types of systems? (1)
Payment systems embedded in securities trading systems, like clearing houses are central counter parties,
What are the objectives of the Payment Systems Regulator? (3)
Promotes interests of business and consumers
Promotes competition
Promotes innovation
What was the CMA established under? (1)
Enterprise and Regulatory Reform Act 2013
What is the turnover test? (2)
When a firm with over £70m of turnover attempts to merger the CMA will investigate.
What is the share of supply test? (2)
If merger causes and market supply of over 25%, the CMA will investigate.
How many days has the CMA got to undertake initial (phase one)? (2)
40 days
What is the Department for Business, Energy and Industrial Strategy? (1)
The BEIS intervene when there is a threat to public interests, like national security.
What is the Panel on Takeovers and Mergers responsible of enforcing? (1)
The City Code
How is the PTM financed? (1)
A levy on UK publicly quoted shares and charging fees. It is 100p per contracts where the investor is investing over 10k
The PTM levy is payable on trades in: (4)
Equity share capital
Securities converting into equity
Transferable securities
US and global depositary receipts
What is the role of the Panel on Takeovers and Mergers? (2)
To make sure that all share holders are treated fairly. Therefore they look at predator companies, and target companies
Any bidder who acquires __% or more of voting rights, has to make a cash offer to all shareholders at the highest price they paid in the previous year. (1)
30%
