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IAD Level 4 > Chapter 10- Application of COBS > Flashcards

Chapter 10- Application of COBS Flashcards

1
Q

What does COBs apply to

A

DIB and long term insurances business in relation to life polices. Indirectly to appointed reps

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2
Q

Clients best interest rule

A

All clients (including ECP)

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3
Q

Client categorisation

A

All clients

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4
Q

Electronic media

A

All clients

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5
Q

Inducements

A

All customers

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6
Q

Inducements and research

A

All clients

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7
Q

Direct offers or invitations

A

Retail clients only

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8
Q

Fair agreements

A

All customers

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9
Q

Information about the firm

A

All clients

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10
Q

PRIIPs and KFDs

A

Retail clients

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11
Q

Suitability

A

All customers . PC (MIFID) RC (DIB)

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12
Q

Appropriateness

A

All customers. MIFID (RC and PC) Direct offers (RC)

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13
Q

Conflicts of interest

A

All clients

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14
Q

Best execution

A

All customers

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15
Q

Order of execution policy

A

All customers

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16
Q

Client order handling

A

All customers

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17
Q

Aggregation and allocation

A

All customers

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18
Q

Limit orders

A

All customers

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19
Q

Personal account dealing

A

All clients

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20
Q

Transaction confirmation

A

All clients

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21
Q

Periodic reporting

A

All clients

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22
Q

CASS

A

All clients

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23
Q

Client categorisation

A

All clients

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24
Q

Most info disclosure rules

A

All clients

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25
Q

Chinese walls

A

All clients

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26
Q

Investment research

A

All clients

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27
Q

Financial promotion rules

A

Retail clients only

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28
Q

KFD , KIID , KIDs

A

Retail clients only

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29
Q

Who are per se professional clients

A 
Authorised regulated firm 
Central bank
Government
Supranational body 
Large undertaking 
Other institutional investors e.g SPV

(Not per se but elective professionals)

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30
Q

Who are per se eligible counter parties

A

Authorised reg firm
Central bank
Government
Supranational body

31
Q

Who are elective EPC

A

Large undertaking (never an institutional investor e.g SPV)

32
Q

What makes a large undertaking

A

Balance sheet 20m
Net turnover 40 m
Own funds 2m

33
Q

Non MIFID business per se PC requirements

A

LLP 5m
Company 2/3:
12.5m EUR
25m net turnover
average no of employees 250, governments and public bodies
Institutional investor main activity to invest in FI (MIFID) or DIB (non mifid)

34
Q

Elective PC requirements

A

Average trade frequency of 10 per quarter in previous 4 quarters
Greater than 500k euros in portfolio
Worked in financial sector for more than one year in professional capacity

35
Q

What consist of ECP business

A

Dealing on own account
Execution of orders
Transmission of orders

36
Q

Per se ECP

A

Authorised firm
Gov
Central bank
Supranational

37
Q

Elective eligible counter parties restriction

A

No available to an institutional investor e.g SPV

38
Q

How long voice recording kept for

A

5 years

39
Q

Minor non monetary benefits

A

Info that is generic or personalised to individuals
Written by a third party and paid by issuer to promote a new issuance of company
Participation in training
Hospitality

40
Q

Exemptions from inducement rules for research

A

SME research
FI, currency and commodity research
Independent research providers (not linked to EO or broker services)
Openly available research

41
Q

Can you rely on other firms info

A

MIFID- yes

Non mifid- if info is in writing, competent, independent

42
Q

Must not communicate a financial promotion unless

A

It is an authorised person

Or content had been approved by an authorised person

43
Q

Never in breach of a financial promotion by a third party if

A

Authorised firm approved
To those intended
Fair clear and not misleading

44
Q

Exemptions to financial promotion rules

A 
Those exempt from FPO
Outside UK
Subject to takeover code or similar codes 
Personal quotes or illustration 
One off promotions not cold calls
45
Q

FP are received by retail clients firms must ensure

A 
It’s name is included
Accurate and fair
Comprehensible
Does not obscure items 
Fair clear not misleading
46
Q

What do you say when you call someoje

A

Identity the caller employer purpose of call
If wish to continue call and terminate if not
Point of contact in event of cancellation
Call at appropriate time of day

47
Q

What is
Made
Directed at
Recipient

A

Made-FP addressed to a specific person
Directed at- generally accessible e.g newspaper or TV
Recipient- anyone who reads or heard communication

48
Q

What are permitted to be sold to RC in promotions

A

Generally marketed non geared packaged products
Deposits
Readily realisable securities other than warrants

49
Q

What are packaged products

A 
Life policy 
CIS regulated
Investment trust savings scheme 
Stakeholder pension 
Personal pension
50
Q

What is a high volatility fund

A

CIS regulated which invests in warrants or derivatives or borrows over the long term, causing movements in price of units to be significantly amplified

51
Q

What fair agreements do RC and PC apply to

A

RC- DIB

PC- MIFID business

52
Q

What is excluded from fair agreements rule

A

Insurance businesses where the firm acts as principal

53
Q

What products are PRIIPs KIDs for

A

Investment funds
Insurance based investment products
Retail structured securities
Structured term deposits

54
Q

What do KFDs apply to

A

Package products
Cash deposit ISAs
JISAs
CTF

55
Q

Cancellation rights for life policies and pensions and other products

A

Life policies and pensions- 30 calendar days

Other products -14 calendar days

56
Q

What’s in a SPS

A

Qualification from FCA handbook
35 h CPD 21 structured
Annual declaration of compliance w FCA conducts rules
Accordance to ethics
Send reports to qualification status of retail investment advisors to FCA

57
Q

When is suitability required for RC and PC

A

RC- all business
PC- MIFID business

When
- making personal recommendation -acting as an investment manager

58
Q

When is appropriateness for RC and PC

A

MIFID business- RC and PC

Direct offers-RC

59
Q

What are non complex FIs

A

Shares/bonds
Money market instruments
Units in a UCITs scheme

60
Q

What do firms require to manage conflicts

A

Information barriers including reporting lines
Remuneration structured
Segregation of duties
Policy of independence

61
Q

When a firm publishes research to client or public it must ensure

A

No inducement is received from those with material interest
Not the promise issuers favourable coverage
Issuers covered are not permitted to review drafts of resesfch

62
Q

What is best execution criteria

A

Client categorisation
Type of order
Type of FI traded
Characteristics of execution venues

63
Q

What info fo clients give of orders execution policy

A

List of execution venues
Factors that inform firms choices
Additional info for retail clients

64
Q

What are exemptions to limit orders being made public

A

Client instruction

Over 10% average daily trading volume

65
Q

Exemptions for transaction confirmations

A

MIFID- none

Non mifid business - if requested by the client

66
Q

When are periodic statements given

A

General- 3 months

Leveraged portfolios - prepared every month, sent out promptly

67
Q

When should money be reconciled for client money accounts

A

Internal- each business day
External- as often as necessary

Short falls/excess
Internal- close of business day
External- as soon as possible

68
Q

When should client assets be reconciled

A

As often as necessary

Short falls or excess as soon as possible

69
Q

Exemptions from CASS

A 
ICVC and UCITS schemes 
Incoming EEA firms
Banks and building societies
Coins held for the value of metal
Money held for delivery vs payment (DVP)
Money due and payable to the firm
70
Q

Time limits for pension contracts, stakeholders pensions and life assurance

A

5 years

71
Q

Time limits for pension transfers and opt outs, free standing additional voluntary contributions (FSAVCs)

A

Indefinitely

72
Q

Records of telephone communications

A

5 years from record creation

73
Q

Records offsite

A

Must be readily assessable

IAD Level 4 (4 decks)

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