9 - Financial Markets

Question 1

What needs to be published for a market to be pre-trade transparent?

Answer 1

Real-time quotes

Question 2

Who are the 2 bodies carrying out depositary/settlement functions for Eurobonds?

Answer 2

Euroclear & Clearstream

Question 3

What is a major benefit of a quote-driven market?

Answer 3

Increased liquidity

Question 4

What levy does the takeover panel get from share transactions?

Answer 4

£1 on deals of 10k or more

Question 5

What is the purpose of variation margin?

Answer 5

Cover adverse movements in value from the previous day

Question 6

What is the process by which a clearing house becomes the central counterparty to all transactions on derivatives exchanges?

Answer 6

Novation

Question 7

What is the stamp duty rate (SDRT) on trades?

Answer 7

0.5% on share purchases

Question 8

How many auctions are there per day on Stock Exchange Electronic Trading Service (SETS)?

Answer 8

3 auctions per day

Question 9

On which basis do gilts accrue interest?

Answer 9

Actual/actual

Question 10

What is standard settlement for UK Government loan stock?

Answer 10

T+1

Question 11

How many days do UK & US equity trades take to settle?

Answer 11

2 days

Question 12

What is the Universal Trading Platform of the NYSE?

Answer 12

A system for transferring orders to designated market makers

Question 13

What is the role of a systematic internaliser?

Answer 13

To facilitate a cross trade between clients

Question 14

At what stage does a clearing house become the central counterparty to a trade?

Answer 14

When the trade is registered

Question 15

What stocks trade on SETS?

Answer 15

FTSE All Shares and the more liquid AIM shares

Question 16

What is a main distinction between an electronic quote driven system and an order-driven one?

Answer 16

Market makers have to quote bid and offer prices in quote-driven

Question 17

What form of settlement does CREST normally provide?

Answer 17

Delivery versus payment (DVP)

Question 18

How are deals executed on an electronic order book system?

Answer 18

Execute against the best priced sell orders immediately and if not completely filled the remainder will be cancelled

Question 19

What does the Gilt-Edged Market Makers’ Association (GEMMA) do?

Answer 19

Provides data at the end of each day to the DMO

Question 20

What new controls have been added to the commodity derivative market under MiFID II?

Answer 20

Establishing position limits on commodity derivatives (MTF, OTF and exchange contracts only)

Question 21

What is trade clearing?

Answer 21

Recording and matching trades and maintaining positions

Question 22

What is the best description of the principal-to-principal guarantee structure?

Answer 22

The clearing house guarantees trades between itself and the clearing member only

Question 23

To whom do the FCA listing rules apply?

Answer 23

Companies listed on the LSE (i.e. not AIM companies)

Question 24

What asset do Life Insurance companies mainly invest in?

Answer 24

Equities

Question 25

What is the standard settlement for Equity Corporate Bonds and Eurobonds?

Answer 25

T+2

Question 26

What is the minimum quote on SETSqx?

Answer 26

1xEMS

Question 27

What is the main restriction on buying third party research?

Answer 27

The research budget must NOT be linked to the volume or value of transactions executed on behalf of clients

Question 28

Which regulation requires UK persons entering into a derivatives contract to report and risk manage that position?

Answer 28

UK EMIR

Question 29

When can a single shareholder call a company meeting?

Answer 29

When they have at least 5% of the voting capital