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Investment Environment > Conduct of business and client asset rules > Flashcards

Conduct of business and client asset rules Flashcards

1
Q

COBS is in which block f the FCA handbook

A

Block 3

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2
Q

COBS is for what type of business

A

designated investment business + long-term insurance business in relation to home finance + accepting deposits

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3
Q

what is the clients best interest rule under COBS

A

acting honestly, fairly and professionally

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4
Q

what can a retail client be elected to

A

electIve proffessional client

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5
Q

subtypes of PER SE professional clients

A

authorised/regulated firms + government + central bank + supranational + large undertaking + other institutional investors

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6
Q

PER SE eligible counterparties

A

authorised/regulated firms + government + central bank + supranational

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7
Q

Elective eligible counterparties

A

large undertaking

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8
Q

clients include :

A

retail client, professional client, eligible counterparty

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9
Q

customers are:

A

retail client and professional client

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10
Q

large undertaking can be a …. and/or …..

A

mifid business + non-mifid business

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11
Q

a large undertaking conducting mifid business need to :

A

balance sheet of 20mill euro + net turnover of 40mill euro + own funds 2mill euro

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12
Q

a large undertaking conducting non-mifid business need to :

A

balance sheet of 12.5mill euro + net turnoover of 25mill euro + avg number of employees 250

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13
Q

RC to be elected to PC must do….

A

qualitative + quantitave test if mifid and qualitative if non-mifid business

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14
Q

quantitative test fir mifid business involves meeting 2/3 points

A

average trade frequency of 10 per quarter over previous four quarters + portfolio >500kEURO + worked in sector >= 1yr

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15
Q

eligible counterparty business

A

dealing on own account ,executing behalf of client , transmitting orders behalf of clients

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16
Q

what does S21 FSMA 2000 state

A

financial promotions cannot be communicated unless the content is approved by an authorised person or the communication is exempt under financial promotions order

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17
Q

what does FPO S21 FSMA 2000 state

A

communications are exempt if related to controlled activities, deposits, insurance and specific controlled activities

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18
Q

breach of S21 FSMA 2000 (FINANCIAL PROMOTION RESTRICTION)

A

penalty of two years and/or unlimited fine

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19
Q

COBS: General rule, territorial scope and types of communication

A

general rule: fair, clear and not misleading commnuication
territorial scope: rule to communications do not apply outside UK
types of communication: written and non-written

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20
Q

when commnucating with clients past performance should … amongst other things

A

cover at least five years

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21
Q

dirrect offer protomotions must contain relevant info

A

all designated investment business, non-mifid, additional info supporting the risk

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22
Q

permitted cold calls

A

existing client saying ok, retail clients where promotions relates to packaged products and/or services for readily realisable securities NOT warrants

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23
Q

packaged products are

A

life policy, regulated CIS, investment trust savings scheme, stakeholder pension, personal pension

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24
Q

Product governance requirements under MiFID II

A

target market analysis, stress testing scenario analysis, information sharing and disclosure, proportionality

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25
Product governance requirements and SYSC ensure
high standards of corporate governance
26
key information documents (KIDs) for PRIIP
retail clients and a max of 3 A4 sides
27
UCITS IV provide to retail clients
key investor information document
28
KFD and KFI for (PENSION PRODUCTS , CASH ISAS)
non-PRIIP
29
post-sale cancellation period for life products and pensions or other products DEPOSITS + DESIGNATED INVESTMENTS
30 calendar days, 14 calaendar days
30
inducements for mifid business
can accept if enhances quality of business and it is for the clients best interest
31
inducements for non-mid business
disclosures only for personal recommendations for packaged products disclosure not required if small monetary benefit dsclosure not required for stakeholder product
32
inducements and 3rd party research
mifid 2
33
client agreements required for
retail clients (mifid + non-mifid business) + proffessional clients (mifid)
34
suitability for advised services (personal recommendation) and discretionary mgmt services for
retail clients, professional clients (mifid)
35
fact find aids in understanding clients investment objectives
retail client + professional client
36
fact find aids in understanding clients ability to bear risk
retail client + elective professional client
37
fact find aids in understainding if client has the right knowledge
retail client
38
appropriateness for non-advised services i.e. execution business applies to
retail client (mifid) + professional client (mifid) + direct offers to retail client
39
appropriateness not necessary for
non-complex financial instruments
40
non-complex financial instruments:
shares or bonds, money mrkt instruments and units in UCITS scheme
41
SYSC 10 requires
written conflict of interest policy
42
conflict of interest applies to
all clients
43
best execution policy + order execution policy
all customers
44
OEP prescribed info for retail clients
execution venues, factors affecting choice of venue, warning that instruction from client can prevent best execution
45
OEP written agreement review annualy for
retail and professional clients
46
client order handling for
retail and professional clients
47
aggregation and allocation for
retail and professional clients
48
dealing and managing for
retail, professional and eligible clients
49
occasional reporting for
retail and professional client
50
occasional reporting for non-mifid business
life policy or personal pension annual valuations
51
periodic statements for
RC + PC
52
purpose of CASS
restrict comingling of firms and clients assets + minimise risk of client assets being used without their consent
53
CASS reconciliation for assets not held by the firm and assets held by the firm
monthly, six monthly
54
CASS 8
where a firm is given a payment mandate in relation to designated investm business, insurance mediation or debt management activities
55
record keeping
non-mifid 3 yrs, mifid 5 yrs, life policy or pension 5 yrs if FPO 6yrs, pension transfers optouts contributions indefinetly, CASS 6 + 7 5yrs
56
retail client periodic statment every
3mnths. In the case of the simplest portfolios, the client can get the statement annually, but this is only if information about transactions is given on a transaction by transaction basis..
57
record: determine total amount it is to hold for each client
two business days
58
suitability for non-mifid applies to
only retail clients and the if firm is managing assets in occupational pension scheme, stakeholder pension scheme or personal pension scheme
59
OEP reviewed
annually
60
medium and large firms must appoint
senior maanage for CASS oversight
61
designated investment business excludes
mortgages, home finance, general insurance or protection products
62
client agreement not required for
life policies
63
churning and switching
- overtrading in securities - overtrading in packaged products
64
CASS firm: large, medium, small
cash and assets large: > 1bill, > 100bill medium: 1mill-1bill, 10mill-100bill small: <1mill, <10mill
65
Non written financial promotion
Must be communicated by a authorised person
66
Readily realisable securities
A gvmnt or public security Security listed and regularly traded on an EEA exchange or RIE
67
Suitability reports not required for
Regulated CIS where firm is investment manager Client outside of EEA

Investment Environment (10 decks)

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