Clearing and Settlement Flashcards
Between which parties is a sub-custody agreement binding?
Global custodian and sub-custodian
Which one of the following is the normal settlement convention for a Japanese government bond?
T+1
All of the following are true of the impact continuous-linked settlement has had on the foreign exchange market EXCEPT:
CLS settlement members pay and receive gross via central banks
What would standard settlement time be for a ten-year Japanese government bond?
Trade + 1
Through which system do German equities settle?
Clearstream
Which of the following best describes a one-stop banking service for clients that are hedge funds?
Prime brokerage
What is the special ex-trading period for equities?
Ten business days
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?
CLS
Which two of the following provide clearing/settlement facilities for eurobond transactions?
Clearstream
Euroclear
Which of the following statements about a regional custodian is TRUE?
Its credit rating may be higher than that of a single market custodian
Which of the following is the settlement agency for listed French equities?
Euroclear
What is the main purpose of stock borrowing from the lender’s point of view?
To increase the portfolio returns
What do spot foreign exchange trades settle?
T+2
When is standard settlement of gilts?
24 hours
Which of the following is not a custody service?
Trade comparison/matching with the counterparty
Foreign exchange trades are fed into the continuous linked settlement system. Which of the following could account for the trades not being properly settled?
The net funds that are due to be settled are not passed to their central bank
What is the settlement time for German equity trades settling through Clearstream?
T+2
hich ONE of the following statements about sub-custody agreements is FALSE?
Agreements cannot contain specific provisions, only general guidance
The name on a register of shareholders would be:
Legal owner
In a stock borrowing and lending agreement which of the following is borrower not obligated to pass back to the lender?
Voting rights
The system used in FX markets to prevent cross-border settlement risk due to time differences is:
CLS
Who is the beneficial owner of stock in a stock loan situation?
The principal trader
When will a UK equities transaction, entered into after 5.15pm on the London Stock Exchange, normally be settled?
Three business days including the day of the tradeClearstream and Euroclear
Which of the following organisations clear/settle eurobonds?
Clearstream and Euroclear
An investor is considering the most cost-effective way of registering his shares. Which of the following would BEST meet his objective?
An omnibus account
Special cum-bargains in equities are permitted:
Up to the day before payment day
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?
Buyer’s broker
How would an international bank avoid settlement risk on a foreign exchange transaction?
Payment vs. payment
What is the standard settlement period for cash settlement?
T+1
Which of the following is usually a bearer instrument?
Eurobonds
Which of the following is TRUE of a global custody structure?
The investor deals with one custodian based in the UK
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?
Agent with the market maker and agent with the fund manager
Which of the following always describes the status of the person whose name is on the shareholder register?
Legal owner
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?
Their risk is reduced because you can use continuous-linked settlement
What is the standard settlement for UK corporate bonds in CREST after the trade?
Two business days
An investor wishes their broker to arrange a special-ex trade, which of the following would explain their motivation?
They wish to avoid additional income tax
Which of the following helps to eliminate Herstatt risk?
CLS
What is the settlement period for OATs?
T+2
A nominee holder of shares is all of the following, EXCEPT:
Beneficial owner
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?
Designated
Which of the following is not a centralised depository?
London Stock Exchange
A special ex-bargain allows an investor to:
Trade cum-dividend where the seller retains the right to the dividend
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 designated nominee account
The ‘safekeeping and administration of a client’s assets’ best describes which of the following?
Global custody
The central counterparty clearing agent for French equities is:
LCH.Clearnet
