Excluded activity Flashcards
What provides exclusions for the requirement for authorisation?
The Perimeter Guidance Sourcebook
Dealing in investments as principal is a regulated activity only if:
The persons are holding themselves out to be market makers and regularly solicit the public with the purpose of inducing them to deal. Someone buying shares on their own account doesn’t need to be authorised or exempt. This exclusion relates to dealings in securities (shares and bonds) and contractually based investments (futures, options and CFDs)
What is a contract for difference CFD ?
A contract for differences (CFD) is a financial contract that pays the differences in the settlement price between the open and closing trades.
CFDs essentially allow investors to trade the direction of securities over the very short-term and are especially popular in FX and commodities products.
CFDs are cash-settled but usually allow ample margin trading so that investors need only put up a small amount of the contract’s notional payoff.
What are other exclusions, where dealing as principal is not classified as a regulated activity?
1) A bank providing finance to another person and accepting an instrument acknowledging the debt
2) A company or organisation issuing its own shares, warrants or debentures, or purchasing its own shares in accordance with certain provisions of the companies act
3) Using options, futures and CFDs for corporate risk management purposes - as long as the company’s main business is mainly unregulated activities and the main purpose of the deals is to limit identifiable risks
4) Entering into transactions as principal for, or in connection with: The sale of a body corporate, transactions between members of. group or joint enterprise, the sale of goods or supply services, while acting as bare trustee, in connection with an employee share scheme, an overseas person, an incoming European economic area (EEA) electronic commerce activity (ECA)
What are newspaper advice exclusions?
If a newspaper includes investment advice but that is not the paper’s principal purpose, there is no need for authorisation
what kind of paper would be regulated?
Periodicals, or tip sheets, (often sold as a subscription) - e.g. warrants alerts
What does the FCA’s guidance GC14/6 intend to do?
1) Clarify the approach to the supervision of financial promotions in social media
2) Help firms understand how to be compliant in media use
3) remind firms rules are intended to be media-neutral
4) set out specific areas the firm needs to consider and provides solutions / examples
Trustees, Nominees and Personal Representatives
An exclusion from the need for authorisation if the person carrying on the regulated activity is:
1) acting as a representative of another party
2) Not holding themselves out as a carrying on a regulated activity
3) Not receiving additional remuneration for providing these services
These exclusions can apply to the following investment business:
1) Dealing in investments as principal
2) Arranging investment deals and making arrangements with a view to the transaction in the investment
3) MAnaging Investments
4) Safeguarding and administering investment
5) Sending dematerialised instructions
6) Advising on investment
7) Assisting in the administration and performance of a contract of insurance which is a life policy
(This exclusion is not available where the person is carrying on, dealing, arranging or advising activity in connection with a contract of insurance
Employee Share Schemes
Schemes that allow company employees to hold shares in their company. The exclusion applies to the company, any company in the group or trustees that hold certain types of securities or debentures under the scheme.
Exclusion isn’t available to 3rd parties who are involved, such as third-party administrators
The exclusion covers 4 types of activity:
1) Dealing in investments as principal
2) Dealing in investments as agent
3) Arranging deals in investments and making arrangements with a view to transactions n investments
4_ Safeguarding and administrating investments
Overseas Person
Exclusions apply to an overseas person carrying on exempt business providing they do not dos o from a permanent place of business n the UK. Exclusions apply only if the business is carried out through an authorised, or exempt, UK person, or if they are the result of a legitimate approach, such as a UK client making an unsolicited approach to an overseas person. Exclusions mainly cover the following designated investment business:
1) Dealing in investments as principal
2) Dealing in investments as agent
3) Arranging deals on investments
4) Advising on Investments
5) Agreeing to carry on the regulated activities of managing investments, safeguarding and administrating investments or sending dematerialised instructions
6) Operating an MTF
