Chapter 4 Flashcards
How does HMRC value holdings for CGT purposes?
- If shares are bought and sold on the same day, use the cost of those shares
- If shares are sold that have been bought in the 30 days before the sale, use the cost of those
shares - For all other holdings, use the weighted average price method
What is used for the opening average price on day two in a mark-to-market calculation?
The closing mark-to-market price on day one, i.e. The closing bid price.
What is the Thomson Reuters trade notification service?
Real time messaging hub for confirming FX trade info back to counterparties
What type of investment exchange is based outside the uk but admits uk firms as members
ROIE
What is a trading book?
The portfolio of financial instruments held by a brokerage or bank. Financial instruments in a trading book are purchased or sold to facilitate trading for the institution’s customers, to profit from trading spreads between the bid and ask prices, or to hedge against various types of risk. Trading books can range in size from hundreds of thousands of dollars at the smallest institutions to tens of billions at the largest financial institutions. Most institutions employ sophisticated risk metrics to manage and mitigate risk in their trading books.
What info do investment decision makers need?
Cash flow forecasts Economic forecasts and research recommendations Market data Performance measurement applications Modelling (what if) tools
Name some common sell side firms order management systems.
Omgeo - trade suite and oasys
TR - autex
Bloomberg - poms and toms
With which type of instruments do sell side firms act as principal?
Sometimes equities
Always bonds, forex, OTC derivatives
For which types of instruments do sell side firms act as agent?
Sometimes equities
Always futures and options
What is PRIN 6
Customers interest
What is PRIN 8
Conflicts of interest
What confirmation elements are sent to a fund manager by the sell-side firm?
Name of the client Name of the stock Trade date Value date Price Net amount incl fees and charges and for bonds accrued interest Whether agent or principal Name of exchange
What is in an affirmation message?
Who clients are and shares to be allocated to each
What is the final step in an order flow between buy side and sell side firms
Both sides issue settlement instructions to their custodians
What is the OASYS Global system?
An ETC
What types of trades are corporate bonds handled as?
Principal trades
Where do the sell-side firms make money on principal trades?
Difference between buy and sell prices
Where do sell side firms make money on agency trades
Charging commission
What is the settlement cycle?
Difference between trade date and value date (expected settlement date)
Name some examples of performance measurent.
Daily performance
Customised segmentation by portfolio
Currency versus market
Individual security level performance
What do sell side firms that deal as principal need access to?
Support for the trading book and mark-to-market. Calculation of realised and unrealised P&L.
Name types of commission calculation
Flat fee Percentage Basis points Per unit Sliding scale Reducing scale
Name two reasons that commission may be charged by more than one broker
Cross border trading
Split services
Name some other fees and expenses
SDT - final investor ( STF)
SDRT - payable by the buyer
PTM levy
