Chapter 9: Regulatory Requirements Flashcards
What are self-regulatory organisations (SROs)?
Nationally-licensed exchanges
What is The International Organization of Securities Commissions (IOSCO)?
Association of organisations that regulate the worlds securities and futures markets
What is the The International Swaps and Derivatives Association (ISDA) ?
Members are the main participants in OTC derivatives
ISDA master, FpML
What have UK firms had to do to post brexit to service EU clients?
Create EU subsidiaries
What are the two participants that retain “passporting” after brexit?
CSDs and Clearing Houses
What is the Capital Requirements Directive
(CRD)?
Part of MiFID
Sets out requirements for the regulatory capital a firm must hold
What is the range of UK firms that are classified as MiFID firms? (3)
- firms dealing and managing investments
- firms operating an MTF, OTF and/or SI
- venture capital firms that meet certain criteria.
What is the penalty for breaching international financial sanctions?
10% annual turnover or twice the amount of the benefit derived from the violation
What is the Operations Steering Committee (OSC)?
Part of ISDA
Improve infrastructure of OTC derivatives
OTC broker dealers, buy-side
What are the European regulators? (2)
European Banking Authority (EBA)
Conducts stress tests on EU banks, overrule national regulators
European Securities and Markets Authority (ESMA)
Assess risks, and provide rulebook for financial markets
Supervisory convergence - across all authorities
What are the regulators in;
China
Hong Kong
Singapore
CSRC - China Securities Regulatory Commission
SFC - Securities and Futures Commission of Hong Kong
MAS - Monetary Authority of Singapore
What are the 3 main elements in the FCAs regulation?
- broad-based standards in preference to detailed rules
- outcomes-based regulation, and
- increasing senior management responsibility
What are the 3 ways a client is categorised in COBS?
Retail client
Professional client
Eligible counterparty (institutions, firms, pensions funds, banks)
What is FCA’s Conduct of Business Sourcebook (COBS)
11 key principles for business which authorised firms must observe
How can a client elect to have more protection?
Changing client category
E.g. professional to retail