Chapter 5 Notes Flashcards
The FSMA gives the FCA the power to prosecute several civil proceedings in the High court. What are these civil offences?
- Insider dealing. When an insider deals, or tries to deal, on the basis of inside information.
- Improper disclosure. Where an insider improperly discloses inside information to another person.
- Misuse of information. Behaviour based on information that is not generally available but would affect an investor’s decision about the terms on which to deal.
- Manipulating transactions. Trading, or placing orders to trade, that gives a false or misleading impression of the supply of, or demand for, one or more investments, raising the price of the investment to an abnormal or artificial level.
- Manipulating devices. Trading, or placing orders to trade, which employs fictitious devices or any other form of deception or contrivance.
- Dissemination. Giving out information that conveys a false or misleading impression about an investment or the issuer of an investment where the person doing this knows the information to be false or misleading.
- Distortion and misleading behaviour. Behaviour that gives a false or misleading impression of either the supply of, or demand for, an investment; or behaviour that otherwise distorts the market in an investment.
What are the main prudential standards (financial framework) for firms ?
BIPRU (capital resource calculation rules)- Banks, building societies and investment firms (Credit risk, liquidity etc)
IFPRU (Financial requirements)- Investment firms
MIPRU (Financial safeguards) - Mortgage and home finance firms, insurance intermediaries
What is capital adequacy ?
Firms maintaining enough resources to cover risks that result from conducting business.
What is the capital requirements directive ?
A directive followed by most large firms, which requires them to undertake detailed risk assessments and stress testing scenarios to establish what level of financial resources is appropriate for them to hold.
What is COBS ???
Conduction of business (COBS) requirements applying to investment firms.
The purpose of COBS rules is to set out details guidance on how staff and representatives of regulated businesses should deal with customers.
What is ICOBS and who does it apply to ?
Insurance conduct of business.
ICOBS rules reflect the mort principles focused and risk-based approach the FCA is trying to establish.
Business requirements applying for insurance mediation activities, these are the requirements relating to how the firm must deal with customers.
What is MCOBS and who does it apply to ?
Mortgages and Home Finance: conduct of business.
Requirements relating to how a firm must deal with customers.
What is BCOBS and who does it apply to?
Banking conduct of business
Requirements relating to how a firm must deal with customers.
What is the upper tribunal ?
The upper tribunal is the appeal body for those aggrieved by decisions of the FCA
What is a sale and rent back scheme?
A sale and rent back scheme involves an individual selling their home, usually at a discount and, and obtaining an agreement to remain in the property for a set period.
Who is the prosecuting authority for Market abuse?
FCA
What is Free Asset Ratio?
The FAR can be obtained from an offices regulatory returns.
Laymans - Surplus of assets held by a life office over liabilities, expressed a % of total assets.
What are the FCAs 8 regulatory principles?
- Efficiency and economy
- Proportionality
- Sustainable growth
- Responsibility of customers
- Senior management responsibility
- Recognising the differences in the businesses carried out by different regulated persons
- Openness and disclosure
- Transparency
