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Introduction to Securities and Investments > Chapter 8: Financial Services and Professional Integrity > Flashcards

Chapter 8: Financial Services and Professional Integrity Flashcards

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SIE Exam flashcards
1
Q

what is the need for regualtion?

A

to protect investors and the public

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2
Q

what is the main purpose of regulation in all markets gloablly?

A

maintain fairness efficiency, competitiveness and orderliness, promote understanding, protection, reduce risks, maintain stability

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3
Q

what was the act that resulted in major change in the financial services sector?

A

Financial Services and Markets Act 2000

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4
Q

who are the key parties involved in financial regulation?

A

FPC (financial policy committee), PRA (prudential regulation authority), FCA (financial conduct authority)

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5
Q

what is the role of the FPC?

A

responsible for ‘macro-prudential’ regulation (regulation of the financial system as a whole), make recommendations on a comply-or-explain basis to the PRA and FCA

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6
Q

What is the role of the PRA?

A

regulate financial firms managing significant risks on their balance sheet, including deposit-taking firms, insurers and significant investment firms

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7
Q

what is the role of the FCA?

A

responsible for the conduct of all firms not supervised by the PRA. supervise trading infrastructure, retail and wholesale, functions of the UKLA (UK listing authority)

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8
Q

what are the 3 statutory objectives of the FCA?

A

Protect consumers, enhance integrity, maintain competitiveness

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9
Q

what agencies are included in the EU level framework of regulation?

A

EBA (european banking authority), ESMA (European securities and markets authority)

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10
Q

what is the process of the lamfalussy process?

A

European council and parliament adopt a co-decision in terms of procedure, a piece of legislation then sector-specific committees and regulators advise on the technical detail, commission issues rules at a detailed level only binding if they are a regulation, directives implemented nationally, compliance and enforcement of new rules handled at national level by the EC.

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11
Q

what is authorisation?

A

granted by the relevant regulator, solo regulated firms need authorisation by the FCA, dual-regulated firms need authorisation from both

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12
Q

what do regulators do when deciding whether to give firms authorisation or not?

A

asses whether the firm is ‘fit and proper’

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13
Q

what is the PRA’s fundamental rule 1

A

conduct business with integrity

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14
Q

what is the PRA’s fundamental rule2?

A

conduct business with due skill, care and diligence

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15
Q

what is the PRA’s fundamental rule 3?

A

firm must act in a prudent manner

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16
Q

what is the PRA’s fundamental rule 4?

A

all times maintain financial resources

17
Q

what is the PRA’s fundamental rule 5?

A

effective risk strategy and management

18
Q

what is the PRA’s fundamental rule 6?

A

organise and control affairs responsibly

19
Q

what is the PRA’s fundamental rule 7?

A

deal with regualtors in an open and cooperative way

20
Q

what is the PRA’s fundamental rule 8?

A

prepare for resolution if the need arises

21
Q

what are the FCA’s 10 principles of business?

A

integrity, skill care and diligence, management and control, financial prudence, market conduct, customers interests, communication with clients, managing conflicts of interest, ensure relationships of trust with customers, protect clients assets, maintain cooperative relationships with regulators

22
Q

what si the definition of money laundering?

A

process of turning money derived from criminal activities into money which seems to have come from legitimate activites

23
Q

what are the stages of money laundering?

A

placement, layering, integration

24
Q

what is terrorist financing?

A

involves small sums of money, if legitimate funds are used then it’s difficult to identify when the funds become terrorist funds

25
Q

what is identity fraud?

A

misappropriating someone’s identity in criminal activity to obtain goods/services by deception via stolen documents

26
Q

what is identity theft?

A

misappropriation of someone’s identity without their knowledge or consent

27
Q

what is advanced cybercrime?

A

sophisticated attacks against computer hardware and software

28
Q

hat is cyber-enabled crime?

A

crimes against children, financial crimes or even terrorism via the internet

29
Q

what did the bribery act 2010 achieve?

A

reformed corruption law to provide a modern and comprehensive scheme of bribery offences enabling courts and prosecutors to respond more effectively to bribery

30
Q

what is insider dealing?

A

when directors or employees of a listed company buy or sell shares and securities with knowledge that is not public in the hopes of making a gain (‘securities’ does not include commodities or derivatives on commodities)

31
Q

what is ‘inside information’?

A

information that relates to particular securities or a particular issuer of securities which is specific, not public and can have a significant effect on the price of securities

32
Q

when does information become ‘public’?

A

when it is published

33
Q

when does the offence of insider dealing take place?

A

when an insider acquires or disposes of price-affected securities while in possession of unpublished price-sensitive information

34
Q

what is market abuse?

A

when financial investors have been unreasonably disadvantaged, directly or indirectly by others who have behaved unlawfuly

35
Q

what must firms do in order to comply with the data protection act 2018?

A

notify the information commissioners office that they are procession information, process personal information in accordance with data protection principles, answering subject-access requests received from individuals

36
Q

what does the FCA require firms to do in terms of complaints?

A

deal with eligible complaints promptly and fairly

37
Q

what is the FOS and what is their role?

A

Financial ombudsman service, UK dispute and resolution scheme, eligible complaints are able to refer cases is they’re not satisfied with the response of a financial services firm

38
Q

what is the FSCS?

A

financial services compensation scheme, pays compensation or arranges cover in the event of a default by an authorised person or firm. max level of compensation is 100% of the first £85,000 for investments and bank deposits

39
Q

what are the principles of the CISI code of conduct?

A

personal accountability, client focus, managing conflict of interest, respect for market participants, professional development, awareness of capabilities, respecting others and the environment, speaking and listening up

Introduction to Securities and Investments (10 decks)

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