Chapter 3: Technology and the Functional Flow of Financial Instruments Flashcards
what are the recognised investment exchanges?
- London Stock Exchange plc (LSE)
- London Metal Exchange ltd (LME)
- ICE Futures Europe
- CBOE Europe ltd
- Aquis Stock Derivatives Exchange ltd
- Euronext London ltd
- IPSX UK ltd
what are the economic functions of an investment exchange?
- means for companies to raise new capital
- provide facilities for investors to trade
- create standardised derivative instruments
what are the three types of exchange order-handling
systems?
- Order-driven system
- Quote-driven system
- Hybrid systems
what are the different types of trading systems?
- SETS (hybrid platform)
- SETSqx (hybrid platform)
- SEAQ (quote-driven platform)
- Order Book for Retail Bonds (hybrid platform)
How do firms provide connectivity to investment exchanges systems?
- in house development of systems
- purchase packages
what is a funds platform and what does it do?
used by wealth managers, intermediaries, and direct investors to manage their investment portfolios.
- Supports a range of asset types
- Provides a one-stop shop for holding
- Manages back-end connectivity with the marketplace
what firms are seen as RCHs?
- LME Clear ltd
- Euroclear UK & Ireland ltd (EUI) (although Euroclear is not a
recognised central counterparty) - LCH ltd (London clearing house), and
- ICE Clear Europe ltd.
what are the different types of settlement services?
- free of payment (FoP)
- delivery-versus-payment (DvP)
what are alternative custody/settlement services?
- Custody services – stock belonging to members is held in accounts on their behalf.
- Payment of dividends to members.
- Processing of corporate action entitlements to members.
- Specialised facilities for stock lending and borrowing.
how do firms communicate with EUI?
Data Exchange Manual (DEX)
what are the benefits of CCSs?
- Post-trade anonymity
- Netting of positions
- A reduction in credit risk
what is a trade repository?
entity that centrally collects and maintains the records of derivative and securities financing
what are information vendors and what examples are there?
entity that brands a product and sells it directly to end users or through a channel e.g., refinitiv, bloomberg
what functionality is provided by information vendors?
- pre trade liquidity and price discovery
- pre trade analytics
- trade execution and post trade services
what regulations relate to Transaction Reporting/Publication?
- MiFIR Post-Trade Transparency(RTS 1 & 2)
- MiFIR Transaction Reporting
- EMIR Transaction Reporting
- Securities Financing Transactions Regulation (SFTR)
Reporting
