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FCA Exams > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

What are the 8 principles of good regulation?

A

East Coast park is Sustainable Cause Senior Residents Ocean Trees

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2
Q

East

A

Efficiency and Economy

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3
Q

Park

A

Proprotionality

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4
Q

Sustainable

A

Sustainble growth

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5
Q

Cause

A

Consumer responsibility

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6
Q

Senior

A

Senior Management responsibility

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7
Q

Residents

A

Recognising differences in business carried on by different regulated persons

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8
Q

Ocean

A

Opennes and disclosure

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9
Q

Trees

A

Transaprency

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10
Q

11 Principles for Business

A

I Sell My Financial Markets Course and classes con customers and clients regularly

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11
Q

I

A

Integrity

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12
Q

Sell

A

Skill care diligence

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13
Q

My

A

Management and control

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14
Q

Financial

A

Financial prudence

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15
Q

Markets

A

Market Conduct

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16
Q

Class

A

Customer interest

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17
Q

Course

A

Communication with clients

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18
Q

Con

A

Conflicts of interest

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19
Q

Customer

A

Customer Trust

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20
Q

Clients

A

Client asset

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21
Q

Regularly

A

Relation with regulators

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22
Q

5 Compulsory Conduct Rules for NEDs and staff (SM&CR functions)

A

I Saw Cute Indian Parents

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23
Q

I

A

Integrity

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24
Q

Saw

A

Skill care diligence

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25
Q

Cute

A

Cooperative

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26
Q

Indian

A

Interest of customer

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27
Q

Parents

A

Proper standards fo market conduct

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28
Q

What are the 4 Second Tier Rules for Senior managers (SM Functions)

A

Cute Couple Does date

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29
Q

Cute - Senior managers code of conduct

A

Controlled effectively

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30
Q

Couple

A

Comply with requirements

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31
Q

Does

A

delegated responsibiltiy

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32
Q

Date

A

Disclose Appropriately

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33
Q

What are the 4 statement principles for approved persons?

A

I Saw Cute Parents

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34
Q

I

A

Integrity

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35
Q

Saw

A

Skill Care Diligence

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36
Q

Cute

A

COoperative

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37
Q

Parents

A

Proper Standards

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38
Q

What are the 4 requirements of senior managers and directors

In the SYSC handbook

A

ACES

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39
Q

A

A

Apportionment of responsibility

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40
Q

C

A

Common platform and standards

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41
Q

E

A

Effective organisation and control

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42
Q

S

A

Senior management responsibility

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43
Q

The statement of responsibilities (SoRs) is required under? What is it

A

FSMA. States what senior managers are responsible and accountable for, not how they carry out those responsibilities

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44
Q

What are the 4 controlled functions for SM&CR firms

A

Gordon Ramsay Has Stars

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45
Q

Gordon

A

Governing functions -

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46
Q

Ramsay

A

Required functions

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47
Q

Has

A

High level management

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48
Q

Stars

A

Systems and control functions

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49
Q

What is S.165 of FSMA

A

FCA has power to require firms to provide it with infomration and documents to support supervisory adn enforcement functions

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50
Q

What is Part 26 and Part 26A of the COmpany Act

A

Schemes of Arrangement (26A for significant financial difficulty)

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51
Q

What are the procedures for Part 26

A

Explanatory statement, Members and creditors meeting (75% value approval), court apporval

52
Q

What is S974-985 of the FSMA

A

Squeeze out and Sell out

53
Q

What is the period of notice needed to hold a GM. What is the max period of disapplication of pre-emption rights?

A

14 days, 5 years

54
Q

What is max discount for non-pre-emption issue

A

10%

55
Q

For disapplicaiton of pre-emption rights, whats the max amount

A

5% 1 year issued or 7.5% 3 year rolling

56
Q

Who can call for BEIS investigation?

A

200 members with 10% issued share capital

57
Q

What is section 678-680 of the Companies Act

What is the sentence?

A

Relating to prohibition of financial assistance

2 years and or fine

58
Q

What is notice period for AGM

A

every 6 months, 21 days notice for public and 14 days for private companies

59
Q

What is notice period for GM

A

21 days, but can be reduced to 14 days at an AGM for listed companies. But for unlisted companies can be 14 days

60
Q

How can shareholders call for GM

A

5% of voting rights can call for GM, must have 21 days notice, held within 28 days

61
Q

How to shroten notice period of GM?

A

95% of voting rights agree to notice period, 90% for private companies

62
Q

Who can propose resolutions

A

Shareholders representing 5% voting rights or 100 shareholders with 100 paid up cash each

63
Q

What is the quorum to pass resolutions

A

2

64
Q

What is S793 of the companies Act

A

Public company can have power to issue notice person who it believes to have an interest in tis share past 3 years

65
Q

What are 2 documents needed by company

A

Memorandum association and articles of association
-article is more important: establish relationship between company and shareholders

66
Q

What is S.170-175 of Companies Act

A

Directors Duties and Conflicts of interest

67
Q

What are the 3 stages of ML. What is the primary and secondary legislation?

A

Placement, layering, integration. POCA, MLR
JMLSG is a guidance

68
Q

What are the 5 offences of POCA

A

FAACT

69
Q

FAACT

A

Failure to disclose, Arranging, acquisitions, Concealing, Tipping off

70
Q

What are the sentences? For Money Laundering

A

Criminal offences. AAC: 14 years and or fine
FT: apply only to regulated sctor, 5 yeras and or both

71
Q

What is POCA part 7

A

Prejudciing Investigations

72
Q

Supervision of the regulated sector (law firms, casino operators,
accountants) are by who

A

HMRC and FCA

73
Q

When should firm identify customer?

A

enter into business relationship with a party or undertaking transaction of 15,000 more outside of business relationship

74
Q

What are the 3 offences of insider dealing

A

DED

75
Q

DED

A

deal, encourage, disclose inside information

76
Q

What instruments does insider dealing exclude

A

Comodities andderivatives on commodities, FX and related, unit shares and OEICs

77
Q

What is part 7, S.89-95of FSA 2012.

A

Misleading statements and impressions

Misleading statements relating to benchmarks as well

78
Q

Where is part 7 FSA 2012 applied

A

Take place within UK or have effect within UK

79
Q

What are the 3 offences under MAR

A

DED

80
Q

DED

A

Dealing, encourage(manipulate), disclosure

81
Q

Differences between Insider Dealing under MAR and CJA

A

MAR include spot commodity contracts and benchmarks, emission allowances. So CJA smaller range, MAR wider range of investments

82
Q

What are the 5 types of Market Abuse

A

i Use my Macbook and Desktop

83
Q

I

A

Insider Dealing

84
Q

Use

A

Unlawful disclosure

85
Q

My

A

Manipulating transactions

86
Q

Macbook

A

manipulating devices

87
Q

Desktop

A

Dissemination

88
Q

What is the key aim of MiFID

A

Obtain best possible result for client, act in clients best interest

89
Q

Who does the MiFID mainly concern

A

Investment firms, trading venues, and data providers. Essentially people providing investment services or activities in the UK

90
Q

What are some core services

A

arranging, dealing, executing, portfolio management, investments advice, dealing on own portfolio

91
Q

What are ancillary MiFid

A

Safekeeping and administering, FX services, investment research and analysis, services in relation to underwriting,

Advice on capital structure

92
Q

What are excluded investments under the Specified investments (FSMA)?

A

Premium bonds, commodities, FX, tangible properties

93
Q

What investments are excluded for CJA?

A

Commodities, FX, and things that are NOT price sensitive, OEICs

94
Q

What is S.19 of FSMA. Who is exempt? What are the penalties?

A

Breach of general prohibition - carrying out activities without being authorized. Local authority

Magistrate: 6 months and 5000,
Crown: 2 years and unlimited

95
Q

Who can call an inspection by BEIS?

A

-own initiative
-200 members with 10% holdings
-the company itself with ordinary resolution

96
Q

When is a warning notice issued?

A

After investigation but before response to RDC

97
Q

Who requires to be regularly vetted to be fit and proper

A

Senior manager: so non-execs

98
Q

Who is in the FCA governing functions

A

CEO. executive director, audit committee

99
Q

Who si the the required function

A

Compliance and MLRO

100
Q

What is in the SYSC function

A

CFO CRO COO

101
Q

Does PRIN apply to all firms?

A

Yes to all authorised firms. PRA firms need to follow additional

-apply to all clients generally
-except if its PRIN 6 and 9 only for customers

102
Q

How many prescribed responsibilities given to senior managers at core firms?

A

5 usually, 6 for authorised fund managers

103
Q

What are not regulated activites

A

Newspaper, television
DPB if not separately remunerated
Trustees if not separately remunerated
Employee share scheme

104
Q

Who is covered under the Certification function

A

CASS oversight, prop trading, dealing with clients, material risk-taking,

their supervisors and managers

105
Q

Is Executive Director part of the Senior Manager Function?

A

Yes for FCA, no for PRA

106
Q

What function is investment adviser

A

Certification function

107
Q

What does the MAR concern?

A

the effect of the behavior

108
Q

What is excluded from scope of MiFID

A

The use for commercial purposes ie to hedge exposure

-no pension related
-no spot FX
-no bank deposits
-no tangible property

109
Q

What is not a core or ancillary MiFID function

A

commodity derivatives used by commodity users or producers

110
Q

Which notices can be posted without consent of party

A

Final decision and final supervision

111
Q

Who DECIDE TO TAKE ACTION AGAINST AUTHORISED FIRM?

A

FCA investigates, RDC decides

112
Q

What are funeral plans?

A

Retail savings. They are specified investments but not designated investments

113
Q

Is a company dealing as principal only for themselves considered an investment business under the FSMA 2000?

A

Yes, even market makers

114
Q

Is underwriting core or non-core?

Is receipt and transmission core or non-core?

A

Underwriting is core. Services related to underwriting is ancillary

Receipt and transmission is core

115
Q

What is FCA’s general approach to supervision of authorised firm?

A

Outcome-focused

116
Q

What is absence of holding out?

A

Firms that deal on their own account (e.g. market maker) need to be authorised

But individuals/firms that deal on their own behalf for profits are exempt

117
Q

Designated Investments

TBH: Just remember what are NOT included

A

C P F S O P

CIS, Pension, Futures, Shares, options, P2p

What are not included: Insurance, funeral, mortgage, deposits, emoney, emissions, lloyds

118
Q

DIB

Same: Just remember what are NOT included

A

M A A D M O

Manage, arrange, advise, deal, MTF, OTF

Police Car Drives Away

Pension, CIS, Dematerialised instructions, Administer investments and insurance

**NOT included*

Deposits, e money, insurance, mortgage, lloyds, funeral, benchmark setting

119
Q

Who does not need to be authorised? (excluded)

A

-operate employee share scheme
-representative of another party
-not separately remunerated
-overseas person not in the UK

120
Q

Who are exempt person?

A

-RCH and RIEs
-Appointed representatives
-DPB

121
Q

What is the new consumer duty?

A

-new principle: deliver good outcomes for a retail client

122
Q

What is a certified function

A

Falls under the SM&CR umbrella:

Firms must regularly vet the fitness and propriety of employees within firms who could pose a risk of significant harm to the firm or clients

123
Q

Exceptions to financial assistance

A

-not main purpose of transaction
-loan made to employees as part of employee share scheme

124
Q

Who prosecutes for insider dealings?

A

FCA, CPS, BEIS

FCA can do both CJA and MAR

125
Q

Defences for insider dealing?

A

Did not expect profit

Sufficiently disclosed

Would have acted the same without

Market Maker

Market information

Price stabilisation

126
Q

Who are exempt from MiFID

A

Commodity producers and trader, employee schemes, any insurance, etc.

127
Q

How long does money laundering record have to be kept for

A

5 years

FCA Exams (6 decks)

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