Chapter 1 Flashcards
What are the 8 principles of good regulation?
East Coast park is Sustainable Cause Senior Residents Ocean Trees
East
Efficiency and Economy
Park
Proprotionality
Sustainable
Sustainble growth
Cause
Consumer responsibility
Senior
Senior Management responsibility
Residents
Recognising differences in business carried on by different regulated persons
Ocean
Opennes and disclosure
Trees
Transaprency
11 Principles for Business
I Sell My Financial Markets Course and classes con customers and clients regularly
I
Integrity
Sell
Skill care diligence
My
Management and control
Financial
Financial prudence
Markets
Market Conduct
Class
Customer interest
Course
Communication with clients
Con
Conflicts of interest
Customer
Customer Trust
Clients
Client asset
Regularly
Relation with regulators
5 Compulsory Conduct Rules for NEDs and staff (SM&CR functions)
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Integrity
Saw
Skill care diligence
Cute
Cooperative
Indian
Interest of customer
Parents
Proper standards fo market conduct
What are the 4 Second Tier Rules for Senior managers (SM Functions)
Cute Couple Does date
Cute - Senior managers code of conduct
Controlled effectively
Couple
Comply with requirements
Does
delegated responsibiltiy
Date
Disclose Appropriately
What are the 4 statement principles for approved persons?
I Saw Cute Parents
I
Integrity
Saw
Skill Care Diligence
Cute
COoperative
Parents
Proper Standards
What are the 4 requirements of senior managers and directors
In the SYSC handbook
ACES
A
Apportionment of responsibility
C
Common platform and standards
E
Effective organisation and control
S
Senior management responsibility
The statement of responsibilities (SoRs) is required under? What is it
FSMA. States what senior managers are responsible and accountable for, not how they carry out those responsibilities
What are the 4 controlled functions for SM&CR firms
Gordon Ramsay Has Stars
Gordon
Governing functions -
Ramsay
Required functions
Has
High level management
Stars
Systems and control functions
What is S.165 of FSMA
FCA has power to require firms to provide it with infomration and documents to support supervisory adn enforcement functions
What is Part 26 and Part 26A of the COmpany Act
Schemes of Arrangement (26A for significant financial difficulty)
What are the procedures for Part 26
Explanatory statement, Members and creditors meeting (75% value approval), court apporval
What is S974-985 of the FSMA
Squeeze out and Sell out
What is the period of notice needed to hold a GM. What is the max period of disapplication of pre-emption rights?
14 days, 5 years
What is max discount for non-pre-emption issue
10%
For disapplicaiton of pre-emption rights, whats the max amount
5% 1 year issued or 7.5% 3 year rolling
Who can call for BEIS investigation?
200 members with 10% issued share capital
What is section 678-680 of the Companies Act
What is the sentence?
Relating to prohibition of financial assistance
2 years and or fine
What is notice period for AGM
every 6 months, 21 days notice for public and 14 days for private companies
What is notice period for GM
21 days, but can be reduced to 14 days at an AGM for listed companies. But for unlisted companies can be 14 days
How can shareholders call for GM
5% of voting rights can call for GM, must have 21 days notice, held within 28 days
How to shroten notice period of GM?
95% of voting rights agree to notice period, 90% for private companies
Who can propose resolutions
Shareholders representing 5% voting rights or 100 shareholders with 100 paid up cash each
What is the quorum to pass resolutions
2
What is S793 of the companies Act
Public company can have power to issue notice person who it believes to have an interest in tis share past 3 years
What are 2 documents needed by company
Memorandum association and articles of association
-article is more important: establish relationship between company and shareholders
What is S.170-175 of Companies Act
Directors Duties and Conflicts of interest
What are the 3 stages of ML. What is the primary and secondary legislation?
Placement, layering, integration. POCA, MLR
JMLSG is a guidance
What are the 5 offences of POCA
FAACT
FAACT
Failure to disclose, Arranging, acquisitions, Concealing, Tipping off
What are the sentences? For Money Laundering
Criminal offences. AAC: 14 years and or fine
FT: apply only to regulated sctor, 5 yeras and or both
What is POCA part 7
Prejudciing Investigations
Supervision of the regulated sector (law firms, casino operators,
accountants) are by who
HMRC and FCA
When should firm identify customer?
enter into business relationship with a party or undertaking transaction of 15,000 more outside of business relationship
What are the 3 offences of insider dealing
DED
DED
deal, encourage, disclose inside information
What instruments does insider dealing exclude
Comodities andderivatives on commodities, FX and related, unit shares and OEICs
What is part 7, S.89-95of FSA 2012.
Misleading statements and impressions
Misleading statements relating to benchmarks as well
Where is part 7 FSA 2012 applied
Take place within UK or have effect within UK
What are the 3 offences under MAR
DED
DED
Dealing, encourage(manipulate), disclosure
Differences between Insider Dealing under MAR and CJA
MAR include spot commodity contracts and benchmarks, emission allowances. So CJA smaller range, MAR wider range of investments
What are the 5 types of Market Abuse
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Insider Dealing
Use
Unlawful disclosure
My
Manipulating transactions
Macbook
manipulating devices
Desktop
Dissemination
What is the key aim of MiFID
Obtain best possible result for client, act in clients best interest
Who does the MiFID mainly concern
Investment firms, trading venues, and data providers. Essentially people providing investment services or activities in the UK
What are some core services
arranging, dealing, executing, portfolio management, investments advice, dealing on own portfolio
What are ancillary MiFid
Safekeeping and administering, FX services, investment research and analysis, services in relation to underwriting,
Advice on capital structure
What are excluded investments under the Specified investments (FSMA)?
Premium bonds, commodities, FX, tangible properties
What investments are excluded for CJA?
Commodities, FX, and things that are NOT price sensitive, OEICs
What is S.19 of FSMA. Who is exempt? What are the penalties?
Breach of general prohibition - carrying out activities without being authorized. Local authority
Magistrate: 6 months and 5000,
Crown: 2 years and unlimited
Who can call an inspection by BEIS?
-own initiative
-200 members with 10% holdings
-the company itself with ordinary resolution
When is a warning notice issued?
After investigation but before response to RDC
Who requires to be regularly vetted to be fit and proper
Senior manager: so non-execs
Who is in the FCA governing functions
CEO. executive director, audit committee
Who si the the required function
Compliance and MLRO
What is in the SYSC function
CFO CRO COO
Does PRIN apply to all firms?
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
How many prescribed responsibilities given to senior managers at core firms?
5 usually, 6 for authorised fund managers
What are not regulated activites
Newspaper, television
DPB if not separately remunerated
Trustees if not separately remunerated
Employee share scheme
Who is covered under the Certification function
CASS oversight, prop trading, dealing with clients, material risk-taking,
their supervisors and managers
Is Executive Director part of the Senior Manager Function?
Yes for FCA, no for PRA
What function is investment adviser
Certification function
What does the MAR concern?
the effect of the behavior
What is excluded from scope of MiFID
The use for commercial purposes ie to hedge exposure
-no pension related
-no spot FX
-no bank deposits
-no tangible property
What is not a core or ancillary MiFID function
commodity derivatives used by commodity users or producers
Which notices can be posted without consent of party
Final decision and final supervision
Who DECIDE TO TAKE ACTION AGAINST AUTHORISED FIRM?
FCA investigates, RDC decides
What are funeral plans?
Retail savings. They are specified investments but not designated investments
Is a company dealing as principal only for themselves considered an investment business under the FSMA 2000?
Yes, even market makers
Is underwriting core or non-core?
Is receipt and transmission core or non-core?
Underwriting is core. Services related to underwriting is ancillary
Receipt and transmission is core
What is FCA’s general approach to supervision of authorised firm?
Outcome-focused
What is absence of holding out?
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
Designated Investments
TBH: Just remember what are NOT included
C P F S O P
CIS, Pension, Futures, Shares, options, P2p
What are not included: Insurance, funeral, mortgage, deposits, emoney, emissions, lloyds
DIB
Same: Just remember what are NOT included
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
Who does not need to be authorised? (excluded)
-operate employee share scheme
-representative of another party
-not separately remunerated
-overseas person not in the UK
Who are exempt person?
-RCH and RIEs
-Appointed representatives
-DPB
What is the new consumer duty?
-new principle: deliver good outcomes for a retail client
What is a certified function
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
Exceptions to financial assistance
-not main purpose of transaction
-loan made to employees as part of employee share scheme
Who prosecutes for insider dealings?
FCA, CPS, BEIS
FCA can do both CJA and MAR
Defences for insider dealing?
Did not expect profit
Sufficiently disclosed
Would have acted the same without
Market Maker
Market information
Price stabilisation
Who are exempt from MiFID
Commodity producers and trader, employee schemes, any insurance, etc.
How long does money laundering record have to be kept for
5 years
