Chapter 2: CIFs

Question 1

CTP must make published transactional information available within what MAXIMUM amount of time?

Answer 1

As near to real time as possible but within 15 minutes after publication it will be free of charge.

Question 2

What is the minimum number of directors a firm should have at all times?

Answer 2

At least 2

Question 3

Who is responsible for monitoring a tied agent?

Answer 3

CIFs

Question 4

What should be done so that to treat a CL as an eligible counterparty?

Answer 4

The CIF obtains express confirmation from the CL that agrees to be treated as an eligible counterparty.

Question 5

If a company does not offer services for 6 months to clients what happens?

Answer 5

Their license automatically lapses.

Question 6

What is the maximum number of directorships one can hold?

Answer 6

• 1 executive and 2 non-executive

* 4 non-executive

Question 7

Where is a CIF’s license applied to? How long for approval?

Answer 7

The authorization is valid to all member states. 6 months for approval.

Question 8

What measures can be used to manage any disorderly trading conditions that may arise by the use of algorithmic trading systems?

Answer 8

• Limit the ratio of unexecuted transactions that may be entered into the system by a market participant.
• Slowing down the flow of orders
• Limit and enforce minimum tick size
• Impose a higher fee on operators of a high-frequency algorithmic trading technique.

Question 9

What conditions should a market fulfill in order to apply to be a SME growth market?

Answer 9

If at least 50% of the issuers admitted to trading are SMEs.

Question 10

Who composes the nomination committee?

Answer 10

Directors without executive functions (non-executive directors)

Question 11

A CIF obtained license 3 years ago but did not have any operations for the last 9 months. What will happen?

Answer 11

The license will be withdrawn (more than 6 months)

Question 12

What directorships count as s single directorship?

Answer 12

• When directorships are held within the same group
• When directorships are held within institutions that are members of the same institution that are members of the same institutional protection scheme.

Question 13

Directorships in which organizations do not count towards the directorship limit?

Answer 13

Directorships in charitable organizations (do not pursue predominantly commercial objectives).

Question 14

What is the main goal of the remuneration policy?

Answer 14

To encourage responsible conduct.

Question 15

What reports and how often should senior management receive?

Answer 15

Senior management should receive at least annually reports for:

i. Compliance
ii. Risk management
iii. Internal audit

Question 16

What criteria must an issuer who is admitted to trading for less than three years satisfy in order to be deemed an SME?

Answer 16

Their market capitalization (number of shares x closing price) is below 200millions euros.

Question 17

How an issuer without listed equity can be deemed an SME?

Answer 17

If according to their last annual or consolidated accounts meet at least two of the following three criteria:

i. The average number of employees during the financial year is <250.
ii. The total balance sheet does not exceed 43million euros.
iii. The annual net turnover does not exceed 50million euros.

Question 18

How long could take CySEC to grant or deny any changes to the ownership levels of a regulated market (selling of shares form the shareholder of the stock market)?

Answer 18

Up to a month.

Question 19

Why could CySEC withdraw the authorization of a regulated market?

Answer 19

• No use of the authorization within 12 months of the issue date
• No operations for the preceding 6 months.
i. Same for CIFs

Question 20

What should a regulated market do when a violation is identified?

Answer 20

The market operator should report the violation immediately to CySEC and ESMA.

Question 21

What behavior a CIF must immediately report to CySEC?

Answer 21

Any conduct that may indicate behavior prohibited under the MIFID rules.

Question 22

When should ARMs report all transaction information?

Answer 22

As soon as reasonably practicable but the latest by the close of the next business day.

Question 23

What should be applied as part of a remuneration policy?

Answer 23

• To encourage responsible conduct
• Fair treatment of clients
• Avoid conflict of interest in the relationship with the clients

Question 24

What are the responsibilities of the nomination committee?

Answer 24

• Identify and recommend candidates to fill vacancies in the Board of Directors.
• Ensure that the Board of Directors’ decision making is not dominated by any one individual or group in a manner that is detrimental to the interests of the CIF.

Question 25

What is required by a CIF in order to accept an Eligible counterparty as a client?

Answer 25

To receive express confirmation from the entity to be treated as an Eligible Counterparty.

Question 26

Who has permission to provide Direct Electronic Access and Algorithmic trading?

Answer 26

Only authorized firms.

Question 27

What does someone has to do in order to obtain Data Reporting Service Providers’ info in real time?

Answer 27

To pay a subscription fee.

Question 28

After how long is this information published for free?

Answer 28

Within 15 minutes.