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Securities > Clearing and Settlement > Flashcards

Clearing and Settlement Flashcards

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SIE Exam flashcards
1
Q

Between which parties is a sub-custody agreement binding?

A

Global custodian and sub-custodian

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2
Q

Which one of the following is the normal settlement convention for a Japanese government bond?

A

T+1

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3
Q

All of the following are true of the impact continuous-linked settlement has had on the foreign exchange market EXCEPT:

A

CLS settlement members pay and receive gross via central banks

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4
Q

What would standard settlement time be for a ten-year Japanese government bond?

A

Trade + 1

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5
Q

Through which system do German equities settle?

A

Clearstream

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6
Q

Which of the following best describes a one-stop banking service for clients that are hedge funds?

A

Prime brokerage

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7
Q

What is the special ex-trading period for equities?

A

Ten business days

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8
Q

Which of the following is responsible for coordinating foreign currency settlement on behalf of its members between the Bank of England and the Bank of Japan?

A

CLS

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9
Q

Which two of the following provide clearing/settlement facilities for eurobond transactions?

A

Clearstream

Euroclear

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10
Q

Which of the following statements about a regional custodian is TRUE?

A

Its credit rating may be higher than that of a single market custodian

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11
Q

Which of the following is the settlement agency for listed French equities?

A

Euroclear

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12
Q

What is the main purpose of stock borrowing from the lender’s point of view?

A

To increase the portfolio returns

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13
Q

What do spot foreign exchange trades settle?

A

T+2

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14
Q

When is standard settlement of gilts?

A

24 hours

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15
Q

Which of the following is not a custody service?

A

Trade comparison/matching with the counterparty

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16
Q

Foreign exchange trades are fed into the continuous linked settlement system. Which of the following could account for the trades not being properly settled?

A

The net funds that are due to be settled are not passed to their central bank

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17
Q

What is the settlement time for German equity trades settling through Clearstream?

A

T+2

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18
Q

hich ONE of the following statements about sub-custody agreements is FALSE?

A

Agreements cannot contain specific provisions, only general guidance

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19
Q

The name on a register of shareholders would be:

A

Legal owner

20
Q

In a stock borrowing and lending agreement which of the following is borrower not obligated to pass back to the lender?

A

Voting rights

21
Q

The system used in FX markets to prevent cross-border settlement risk due to time differences is:

A

CLS

22
Q

Who is the beneficial owner of stock in a stock loan situation?

A

The principal trader

23
Q

When will a UK equities transaction, entered into after 5.15pm on the London Stock Exchange, normally be settled?

A

Three business days including the day of the tradeClearstream and Euroclear

24
Q

Which of the following organisations clear/settle eurobonds?

A

Clearstream and Euroclear

25
Q

An investor is considering the most cost-effective way of registering his shares. Which of the following would BEST meet his objective?

A

An omnibus account

26
Q

Special cum-bargains in equities are permitted:

A

Up to the day before payment day

27
Q

A trade takes place on 4 April, the ex-div date is 6 April. Settlement takes place after the record date. When the dividend is made, who would issue the claim?

A

Buyer’s broker

28
Q

How would an international bank avoid settlement risk on a foreign exchange transaction?

A

Payment vs. payment

29
Q

What is the standard settlement period for cash settlement?

A

T+1

30
Q

Which of the following is usually a bearer instrument?

A

Eurobonds

31
Q

Which of the following is TRUE of a global custody structure?

A

The investor deals with one custodian based in the UK

32
Q

When a market maker uses a stock borrowing and lending intermediary to cover a short position by borrowing stock from a fund manager, which of the following best describes the relationship between the SBLI and their counterparties?

A

Agent with the market maker and agent with the fund manager

33
Q

Which of the following always describes the status of the person whose name is on the shareholder register?

A

Legal owner

34
Q

Your client is concerned that if they deal in foreign exchange they will be exposed if they settle the transaction but the other side settles in another time-zone. What do you tell them?

A

Their risk is reduced because you can use continuous-linked settlement

35
Q

What is the standard settlement for UK corporate bonds in CREST after the trade?

A

Two business days

36
Q

An investor wishes their broker to arrange a special-ex trade, which of the following would explain their motivation?

A

They wish to avoid additional income tax

37
Q

Which of the following helps to eliminate Herstatt risk?

A

CLS

38
Q

What is the settlement period for OATs?

A

T+2

39
Q

A nominee holder of shares is all of the following, EXCEPT:

A

Beneficial owner

40
Q

Under instructions from an issuing company that shareholders with a particular sized share holding must be held with a nominee company, which of the following would allow an investor to mandate dividends to a particular bank account?

A

Designated

41
Q

Which of the following is not a centralised depository?

A

London Stock Exchange

42
Q

A special ex-bargain allows an investor to:

A

Trade cum-dividend where the seller retains the right to the dividend

43
Q

Your client, Jenny, has stated that she does not wish to participate in an auto-stock lending programme. To comply with Jenny’s wishes her shares would be held within which of the following nominee accounts?:

A

A designated nominee account

44
Q

The ‘safekeeping and administration of a client’s assets’ best describes which of the following?

A

Global custody

45
Q

The central counterparty clearing agent for French equities is:

A

LCH.Clearnet

Securities (19 decks)

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