CHAPTER 2 Flashcards
What is prudential regulation?
financial soundness of firms and protect investors
What is the Financial Policy Committee?
within BoE, responsible for stability and resilience
Prudential Regulation Authority?
supervision of significant individual forms
Financial Conduct Authority
regulation of retail and wholesale financial markets
statutory objective to make relevant markets function well
ESMA
EU wide financial markets watchdog
MiFID II
requires firm to have conflict management policy
Multi Trading Facility
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
Systematic Internalizer
a firm that deals its own account by executing client orders outside of an MTF
Pre-Trade Transparency (MiFID II)
MTFs and SI and other continuous order matching systems must make 5 best price levels on buy and sell side
Transaction reporting
most firms nominate an Approved Reporting Mechanisms (ARM) to do it themselves
published to ESMA and monitored for market abuse and insider dealing
Trade Publication
needs to be reported to a nominated Approved Publication Arrangement (APA) on a near real time basis
Best Execution
obligation for sell side firm to take all sufficient steps to get lowest price for customer and vice versa
Organized Trading Facilities
For derivatives and other highly liquid and eligible for clearing assets to be traded on a venue
Third Country Firms
if seeking to provide financial services in the EU they are required to open a branch in chosen countries
3 rules about handling client money and assets
- Record keeping
- Segregation
- Reconciliation
Ex-Ante
Pre sale reporting to show what costs are predicted
Reporting Portfolio Changes
periodic reporting - quarterly
drop of 10% needs to be reported within 24 hours
Principles of GDPR
- Lawfulness, fairness and transparency
- Purpose Limitation
- Data Minimization
- Accuracy
- Storage Limitation
- Integrity and confidentiality
Ex-Post
Post Sale reporting showing actual cost incurred
Penalty for Non-Compliance with GDPR
up to €20 million or 4% group worldwide turnover (whichever is greater)
Senor Management Arrangements, Systems and Controls
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
Client Asset Sourcebook (CASS)
Segregate cash and securities that belong to firm itself so client assets aren’t mistakenly used
also must be regularly reconciled
Senior Manager Regime (SMR)
each senior manger has a statement of responsibilities
produce a firm responsibility map
ensure managers are pre approved
Certification Regime
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
