Chapter 2: CIFs Flashcards
CTP must make published transactional information available within what MAXIMUM amount of time?
As near to real time as possible but within 15 minutes after publication it will be free of charge.
What is the minimum number of directors a firm should have at all times?
At least 2
Who is responsible for monitoring a tied agent?
CIFs
What should be done so that to treat a CL as an eligible counterparty?
The CIF obtains express confirmation from the CL that agrees to be treated as an eligible counterparty.
If a company does not offer services for 6 months to clients what happens?
Their license automatically lapses.
What is the maximum number of directorships one can hold?
- 1 executive and 2 non-executive
* 4 non-executive
Where is a CIF’s license applied to? How long for approval?
The authorization is valid to all member states. 6 months for approval.
What measures can be used to manage any disorderly trading conditions that may arise by the use of algorithmic trading systems?
- 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.
What conditions should a market fulfill in order to apply to be a SME growth market?
If at least 50% of the issuers admitted to trading are SMEs.
Who composes the nomination committee?
Directors without executive functions (non-executive directors)
A CIF obtained license 3 years ago but did not have any operations for the last 9 months. What will happen?
The license will be withdrawn (more than 6 months)
What directorships count as s single directorship?
- 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.
Directorships in which organizations do not count towards the directorship limit?
Directorships in charitable organizations (do not pursue predominantly commercial objectives).
What is the main goal of the remuneration policy?
To encourage responsible conduct.
What reports and how often should senior management receive?
Senior management should receive at least annually reports for:
i. Compliance
ii. Risk management
iii. Internal audit
What criteria must an issuer who is admitted to trading for less than three years satisfy in order to be deemed an SME?
Their market capitalization (number of shares x closing price) is below 200millions euros.
How an issuer without listed equity can be deemed an SME?
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.
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)?
Up to a month.
Why could CySEC withdraw the authorization of a regulated market?
• No use of the authorization within 12 months of the issue date
• No operations for the preceding 6 months.
i. Same for CIFs
What should a regulated market do when a violation is identified?
The market operator should report the violation immediately to CySEC and ESMA.
What behavior a CIF must immediately report to CySEC?
Any conduct that may indicate behavior prohibited under the MIFID rules.
When should ARMs report all transaction information?
As soon as reasonably practicable but the latest by the close of the next business day.
What should be applied as part of a remuneration policy?
- To encourage responsible conduct
- Fair treatment of clients
- Avoid conflict of interest in the relationship with the clients
What are the responsibilities of the nomination committee?
- 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.
What is required by a CIF in order to accept an Eligible counterparty as a client?
To receive express confirmation from the entity to be treated as an Eligible Counterparty.
Who has permission to provide Direct Electronic Access and Algorithmic trading?
Only authorized firms.
What does someone has to do in order to obtain Data Reporting Service Providers’ info in real time?
To pay a subscription fee.
After how long is this information published for free?
Within 15 minutes.
