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IMC > IMC II > Flashcards

IMC II Flashcards

1
Q

Appropriateness needs to be assessed for…

A

non-advisory services in complex products (=derivatives and warrants)

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2
Q

3 Pillars of FCA Supervision

A

Firm systematic, Even Driven & Issues and Products

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3
Q

Exempt from Authorisation?

A

Lloyds Syndicate Members, Appointed Representatives, Designated Professional Bodies and Recognised Exchange and Clearing Houses

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4
Q

Penalty for breaking general prohebition

A

2 years prison & unlimited fine

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5
Q

MiFID Professional Client

A

2/3 of
* Balance sheet €20mn
* Net Turnover €40mn
* Own funds €2mn

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6
Q

Professional Client Non-MiFID

A

*company or LLP with called up share capital of at least £5mn OR
(2/3)
* Balance Sheet 12.5mn
* Net Turnover 25mn
* 250 average n.o. employees

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7
Q

Always Professional Clients

A
  • Insti Investor whose main activity = invest in financial instruments
  • National or regional government, Central bank, international or supernational institution
  • Organisations required to be regulated or authorised to operate in financial markets
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8
Q

For a merger to qualify for further investigation any of these must happen

A
  • The combined enterprise more than 25% of market share
  • Turnover of acquired entity exceeds £70mn
  • Any other substantial lessening of competition
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9
Q

Must not provide a suitability report for a retail client when selling

A

UK gov bonds

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10
Q

Suitability report must be sent to client when for pensions?

A

no later than 14 days after contract is concluded

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11
Q

Suitability report must be sent to client when for life policy?

A

before contract is concluded

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12
Q

High net-worth individual

A

Income over £100,000 per year and/or net investible assets of at least £250,000

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13
Q

How often does periodic statements need to be provided for retail clients?

A

Every 6 months, or 3 if requested

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14
Q

Remittance Basis Charge - how much and when paid?

A

If UK resident for 7/9 last years if they choose to have their oversea income taxed on a remittance basis. £30,000 per year. If 12/14 years then £60,000

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15
Q

When can no longer use remittance basis?

A

From the 16th/20 years

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16
Q

Max tax relief of pension contributions per year?

A

40k, can be carried over for 3 years

17
Q

Taxation for Trusts

A

First £1000 = taxed at basic rate, Above £1000 = taxed at additional rate

18
Q

How are bare trusts taxed?

A

The tax is paid at the beneficiaries margin. Liable on trust assets irrespective of whether income is paid out or not

19
Q

CGT Allowance

A

12,300 per year, use it or lose it

20
Q

No capital gains tax on?

A
  • Bonds that pay coupon including gilts, corporate bonds etc.
  • Primary residence
  • Shares in enterprise investment fund schemes
21
Q

Chargeable lifetime transfers

A

20%

22
Q

Inheritance tax exemption

A

3000 per year, if unused can be carried forward one year

23
Q

Inheritance tax % above nil band

A

40%

24
Q

VAT is exempt for what stockbroker service?

A

Execution Only

25
Q

EIS, OEIC, GIPS

A

x

26
Q

LSE Market Makers must

A

Quote continuous bid and offer prices & indicate a maximum number of shares they will trade

27
Q

When are prospectuses required?

A

When issuing new shares to the public, not required for script issues or for issues up to 150 people in the UK

28
Q

What is a Eurobond

A

A security where the currency of the bond and the country of issue are different. Interest is paid gross of withholding tax

29
Q

Who must you report dealings in Eurobonds to?

A

ICMA

30
Q

Main derivative exchange in the UK?

A

ICE Futures Europe

31
Q

What does acting as principal mean?

A

Firs is taking a position “running a book” to make a turn on the trade ex. buy low sell high

32
Q

What are OTC contracts

A

One-to-one agreements where the contract is completely flexible and non-standardised

33
Q

Benefit to OTC trading

A

When hedging, the contract can be tailored to this without needing to be continuously rebalanced. Less stringent regulation

34
Q

EMIR Imposes what 3 requirements, on whom?

A

On those who trade OTC derivatives:
1. To clear through a central counter party
2. To put in place risk management for those OTC derivs that are not centrally cleared
3. Report derivatives to a trade repository

35
Q

What type of system does CREST operate?

A

Delivery vs. payment

36
Q

What is clearing? Benefits?

A

Sn organisation becomes counterparty to both buyer and seller of the trade, guaranteeing settlement and eliminating default risk. Also promotes anonymity. Process known as novation.

37
Q

Counterparty risk

A

The risk that once a contract has been agreed, at least one of the parties will not meet their obligations

38
Q

How is counterparty risk typically managed?

A

By a clearing house acting as a central counterparty

39
Q
A

IMC (4 decks)

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