C5. The Back Office – Trade Standards and Practices Flashcards
can trades executed skip the confirmation step?
Trades cleared through Central Counterparties (CCPs) or continuous link system (CLS) may skip the confirmation, but a written agreement between counterparties must be executed.
should institution set up Standard Settlement Instruction (SSI) for its customers per product and currency?
it is a good market practice for the institution to set up SSIs for its customers per product and currency.
When there is a change of the existing SSI, the previous SSIs should be ‘deactivated’.
Changes in SSIs should be communicated to its customers before implementation. Any alterations to original instructions or SSIs are to be notified immediately and directly to the counterparty and which must be agreed upon by the relevant parties involved.
Full authentication of SSIs should be independently performed by the operations department.
should institution set up Standard Settlement Instruction (SSI) for its customers per product and currency?
it is a good market practice for the institution to set up SSIs for its customers per product and
currency.
When there is a change of the existing SSI, the previous SSIs should be ‘deactivated’.
Changes in SSIs should be communicated to its customers before implementation. Any alterations to original instructions or SSIs are to be notified immediately and directly to the
counterparty and which must be agreed upon by the relevant parties involved.
Full authentication of SSIs should be independently performed by the operations department.
are front office dealers allowed to modify confirmations or interfere with the confirmation process?
no. Confirmation is to be performed by back-office staff only and should be independent from those executing the trades, i.e. the front office dealers should not have the ability to modify any confirmations or interfere in the confirmation process.
Confirmation should only be sent by back-office staff and sent only once to avoid duplication.
when should trade confirmations be sent?
Both parties of a trade should send confirmations for every trade executed within 2 hours of the trade being booked, and matching should be done upon receipt of confirmation, preferably automated if possible.
What is the main purpose of nostro account reconciliations?
A. To compare the cash entries from the bank’s internal nostro accounts with the actual cash movements from the bank’s agent account and reconcile any differences between the two.
B. To compare securities entries from the bank’s internal nostro accounts with actual securities movements from the bank’s agent account and reconcile any differences between the two.
C. To compare the actual cash and securities accounts between internal account and the agent bank’s account.
D. To provide an overview of all the transactions contracted between the counterparties.
A
The key principle to combating money laundering and terrorism financing is to:
A. Adopt a proper know-your-client policy
B. Clear all transactions with your compliance officer
C. Limit client transaction to specific types of transactions
D. To cap the amount of a single transaction
A
