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TIM > CHAPTER 2 > Flashcards

CHAPTER 2 Flashcards

1
Q

What is prudential regulation?

A

financial soundness of firms and protect investors

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2
Q

What is the Financial Policy Committee?

A

within BoE, responsible for stability and resilience

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3
Q

Prudential Regulation Authority?

A

supervision of significant individual forms

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4
Q

Financial Conduct Authority

A

regulation of retail and wholesale financial markets
statutory objective to make relevant markets function well

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5
Q

ESMA

A

EU wide financial markets watchdog

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6
Q

MiFID II

A

requires firm to have conflict management policy

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7
Q

Multi Trading Facility

A

system that brings together multiple parties that have common interest
can be stock exchanges, crossing networks or matching engines that are operated by an investment firm or market operator

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8
Q

Systematic Internalizer

A

a firm that deals its own account by executing client orders outside of an MTF

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9
Q

Pre-Trade Transparency (MiFID II)

A

MTFs and SI and other continuous order matching systems must make 5 best price levels on buy and sell side

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10
Q

Transaction reporting

A

most firms nominate an Approved Reporting Mechanisms (ARM) to do it themselves
published to ESMA and monitored for market abuse and insider dealing

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11
Q

Trade Publication

A

needs to be reported to a nominated Approved Publication Arrangement (APA) on a near real time basis

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12
Q

Best Execution

A

obligation for sell side firm to take all sufficient steps to get lowest price for customer and vice versa

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13
Q

Organized Trading Facilities

A

For derivatives and other highly liquid and eligible for clearing assets to be traded on a venue

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14
Q

Third Country Firms

A

if seeking to provide financial services in the EU they are required to open a branch in chosen countries

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15
Q

3 rules about handling client money and assets

A
  • Record keeping
  • Segregation
  • Reconciliation
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16
Q

Ex-Ante

A

Pre sale reporting to show what costs are predicted

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17
Q

Reporting Portfolio Changes

A

periodic reporting - quarterly
drop of 10% needs to be reported within 24 hours

18
Q

Principles of GDPR

A
  • Lawfulness, fairness and transparency
  • Purpose Limitation
  • Data Minimization
  • Accuracy
  • Storage Limitation
  • Integrity and confidentiality
19
Q

Ex-Post

A

Post Sale reporting showing actual cost incurred

20
Q

Penalty for Non-Compliance with GDPR

A

up to €20 million or 4% group worldwide turnover (whichever is greater)

21
Q

Senor Management Arrangements, Systems and Controls

A

take practical responsibility
organize and control affairs with adequate risk management systems
create a common platform of organizational, systems and controls requirement for all firms

22
Q

Client Asset Sourcebook (CASS)

A

Segregate cash and securities that belong to firm itself so client assets aren’t mistakenly used
also must be regularly reconciled

23
Q

Senior Manager Regime (SMR)

A

each senior manger has a statement of responsibilities
produce a firm responsibility map
ensure managers are pre approved

24
Q

Certification Regime

A

applies to ‘material risk takers’
need to have indentified all certiied individuals
assess them as fit and proper
have procedures in place to reassess he fitness and proprietary of certified staff on an annual basis

25
Q

Approved Persons Regime (APER)

A

someone who is approved to do one or more activities for an authorized firm
must meet requirements of FCA fit and proper test
must comply with statements of principle and code of practice
must report anything affecting suitability to FCA or Firm

26
Q

Basel II minimum capital ratio

A

8-15%

27
Q

Basic Indicator Approach

A

bank holds fixed percentage of its gross income as operational risk capital (15%)

28
Q

Standardized Approach

A

risk weighted assets
uses gross income as a broad indicator and has it reflect each business line
ranges from 12-18%

29
Q

Advanced Measurement Approach (AMA)

A

banks use their own internal measurement system and loss data as a basis
use their own VAR model that has to be at 99% confidence level, 10 day period, historic data over 250 days

30
Q

FATCA minimum holding

A

30%

31
Q

Transaction Reporting due to Dodd Frank

A

sawp trades now reported within 15 mins of trade execution
counterparty of any trade now identified by LEI

32
Q

Dodd-frank Act

A

main provisions:
- consumer protection
- investor protection
- ends ‘too big to fail’ bailouts
- advance warning system
- executive compensation and corporate governance
- regulatory enforcement
- technical expertise
- making risks transparent

33
Q

Clearing and settling of OTC Derivatives

A

should now be cleared through a RCH (recognized clearing house)

34
Q

EMIR

A

made reporting OTC and ETD derivatives
clearing obligation for OTC derivatives
common rules for central counterparties (ccp)
rules of establishment on ccp

35
Q

Central Securities Depositories Regulation (CSDR)

A

tries to harmonize different rules applicable to central security depositories (CSD)
and establish a level playing field among (CSD)
increase safety and efficiency of security settlements
create integrated market for securities settlements

36
Q

4 phases of CSDR

A

Phase 1 - Omnibus/Segregated Accounts
Phase 2 - Internalized Settlement reporting
Phase 3 - Settlement Discipline Regime (SDR)
Phase 4 - Electronic book keeping

37
Q

KYC - MiFID classifications of clients

A
  • Eligible Counterparty (bank or stock exchange member)
  • Professional Client (pension fund)
  • Retail client (private individual)
38
Q

Verification Checks - When to check CDD

A
  • establish initial relationship
  • carries out occasional transactions
  • suspects money laundering or terrorist financing
    doubts integrity of information
39
Q

Verification checks - when to check EnhanceDD

A
  • People who are not personally present when CDD identity checks carried out
  • PEP hits
40
Q
A

TIM (13 decks)

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