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Technology in Investment Management > Chapter 3: Technology and the Functional Flow of Financial Investments > Flashcards

Chapter 3: Technology and the Functional Flow of Financial Investments Flashcards

1
Q

What is an MTF

A

A multilateral trading facility is any type of system or service that brings together multiple parties interested in buying and selling financial instruments, especially those that may not have an official market

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2
Q

What is an SI

A

systematic internalisers are investment firms that execute client orders on their own account outside a regulated market, MTF or OTF without employing a multilateral matching system.

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3
Q

What is an RIE

A

A recognised investment exchange is one that is based in the UK and is recognised by the FCA

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4
Q

What is an ROIE

A

A recognised overseas investment exchange is one that is based outside of the UK but admits UK banks and securities firms as members, and is recognised by the FCA

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5
Q

What is a DIE

A

A designated investment exchange is an overseas exchange that does not carry on a regulated activity in the UK and is not a regulated market.

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6
Q

What are the 3 economic functions of an investment exchange

A

To provide a means for companies to raise new capital in the form of equities and bonds
To provide facilities for investors to trade equities, bonds and other securities
To create standardised derivative instruments such as futures and options which are based on the underlying securities, and to provide for investors to trade in these derivative instruments

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7
Q

What is an order driven system

A

Has no designated market makers. Member firms submits buy/sell orders which are matched. Identities are hidden.

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8
Q

What is a quote driven system

A

Uses market makers. Identity is known to one another. Suitable for illiquid proucts

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8
Q

What type of platform is SETS

A

Hybrid platform

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8
Q

What type of platform is SETSqx

A

Hybrid platform

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8
Q

What type of platform is Order book for retail bonds

A

hybrid platform

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8
Q

What type of platform is SEAQ

A

Quote driven platform

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8
Q

Which publications/facilities are needed for in house development

A

Data exchange specifications
Data dictionaries
Data security standards
SLAs
Testing facilities

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9
Q

What is a modular system

A

Packages that contain a number of core elements that can be added to with further modules

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9
Q

What is the purpose of CCPs

A

Central counterparties (clearing houses) provide one, both or two of:
Settlement and custody services
Central counterparty services

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9
Q

Who can register for EUI membership

A

stock exchange member firms, institutional investors, custodians, registrars

10
Q

What is EUI

A

Euroclear UK & Ireland

10
Q

What is an example of a CSD

A

An example of a central securities depository would be EUI and equivalent services

10
Q

What is novation

A

The substitution of one party to a contract by another party

10
Q

What are the services offered by EUI

A

Settlement service
custody service
payment of dividend
processing of COACS
Stock lending and borrowing

10
Q

What is SPAN

A

Standardised Portfolio Analysis of RISK uses a sophisticated set of algorithms to determine initial margin according to a global assessment of the one-day risk in a traders account.

11
Q

What is the difference between a non clearing member and a general clearing member

A

An NCM does not clear its own trades and only needs connectivity to exchange’s systems, whereas a GCM need connectivity to Exchange’s systems and clearing house’s systems

12
Q

What is a trade repository/swap data repository

A

an entity that centrally collects and maintains the records of OTC derivatives.

13
Q

What is RTS1 and what is their timeline for reporting

A

shares, depositary receipts, exchange-traded funds, certificates, and other similar financial
instruments and on transaction execution obligations in respect of certain shares on a trading venue or by a systematic internaliser – as near to real time as possible, but within one minute of execution

14
Q

What is RTS” and what is their timeline for reporting

A

bonds, structured finance products, emission allowances, and derivatives – as near to real
time as possible, but within five minutes of execution

15
Q

What is the difference between trade reports and transaction reports

A

Trade reports are for public dissemination, whereas transaction reports are private reports to the relevant regulator and their use is entirely different.

16
Q

Where di MiFIR Reports need to be sent to

A

National Competent Authority (NCA)

Technology in Investment Management (4 decks)

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