Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

old > Industry Regulation > Flashcards

Industry Regulation Flashcards

1
Q
  • What are the 5 Objectives and Benefits of Regulation
A

CONFIDENCE - Increasing the confidence and trust in financial markets, systems and products.

ECONOMIC GROWTH- Establishing an environment to encourage economic development and wealth creation.

-LOWER RISK- Reducing the risk of market and system failures including their economic consequences.

PROTECT COSUMERS Enhancing consumer protection by giving them the reassurance they need to save and invest.

-LESS FINANCIAL CRIME Reducing financial crime by ensuring financial systems cannot easily be exploited.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q
  • What are the two types of market regulation
A
  • Rules-Based
  • Principles-Based
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q
  • Explain Rules based
    1) What does it consist of?
    2) What does leave little room for?
    3) How many approach are there to implementation?
    4) What difficulty is experienced by regulators in respect to this?
    5) What is the major shortfall of this type of regulation
A
  • precise rules & prescriptive procedures
  • little allowance for interpretation.
  • Single approach to implementation
  • Maintain this is challenging for
    regulators
  • Hard for rules based regulations to adapt to new technology & market change
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q
  • Explain Principled based
    -What does it consist of?
  • How many approach are there to implementation?
  • What is the major shortfall of this type of regulation
A
  • Principles focused
  • Mulpleapproachs to implementation
  • Allows for multiple approach’s to implementation
  • Harder to monitor/ prove regulatory compliance
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the different forms of Self-Regulatory Organisations?

A
  • industry self-regulatory organisations
  • exchange self regulatory frameworks
  • professional bodies.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q
  • What are the 3 main International regulatory organizations
A
  • Bank for International Settlements (BIS)
  • Financial Stability Board (FSB)
  • International Organization of Securities Commissions (IOSCO)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q
  • What is the Bank for International Settlements (BIS), what it’s role
A
  • Central bank for central banks
  • serve central banks in their pursuit of monetary and financial stability
  • set the capital adequacy standards for banks worldwide.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q
  • What is the Basal Process,
A
  • systems of committees hosted by the Bank of international settlement
  • Produces a internationally agreed guidance.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q
  • What are the 3 committees of the Basal process and what do they produce
A
  • includes the Committee on Banking Supervision (BCBS) = : develops global regulatory standards for banks.
  • Committee on the Global Financial System (CGFS): = monitors and analyses issues relating to financial markets and systems.
  • Committee on Payments and Market Infrastructures (CPMI) = establishes and promotes global regulatory/oversight standards for payment, clearing, settlement.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q
  • What is the purpose of the Financial Stability Board (FSB), 3 Purposes
A
  • promote financial stability
  • developmenting of internationally accepted economic,
    financial and statistical standards
  • implementation of internationally accepted economic,
    financial and statistical standards,
  • decisions not legally binding
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are the 3 objectives are the International Organization of Securities Commissions (IOSCO) 38 principles based off?

A
  1. The protection of investors.
  2. Ensuring that markets are fair, efficient and transparent.
  3. The reduction of systemic risk.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What does European Securities and Markets Authority (ESMA) do

A

develop the technical standards that national regulators in EU countries use to implement EU Directives

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q
  • What are the UK main regulators
A
  • Prudential Regulation Authority (PRA)
  • the Financial Conduct Authority (FCA).
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q
  • What is the PRA a part of
A

part of bank of England

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q
  • What 3 things is the PRA responsible for
A
  • financial soundness of deposit-taking institutions.
  • financial soundness of insurers.
  • financial soundness significant investment firms.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What 3 things is the FCA responsible for

A
  • prudential regulation of firms not supervised by the PRA.
  • day-to-day regulation of all firms in retail and wholesale financial markets
  • regulation of the infrastructure that supports these markets
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q
  • What 4 tools do regulators have to aid in the supervision of regulated firms,
    Explain each tool?
A
  • Diagnostic tools – designed to identify, assess and measure risk.
  • Monitoring tools – to track the development of identified risk, wherever it arises.
  • Preventative tools – to limit or reduce identified risks and so prevent them happening or increasing.
  • Remedial tools – to respond to risks when they have happened.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What 4 methods can be used by regulators

A
  • setting of prudential requirements= ensuring firms have sufficient capital resources commensurate with the level of risk they are running.
  • Establishing business conduct rules, evident provisions and guidance that will govern an authorized firm’s relationship with its customers or counter parties.
  • Providing detailed product regulations, i.e set minimum standards aimed at the protection of retail investors and establish dispute resolution and compensation arrangements.
  • Enforcement, setting of requirements and processes for investigation, supervision and enforcement of the rules.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q
  • Define . Financial Crime
A
  • no single definition of financial crime,
  • any kind of criminal conduct relating to money or to financial services or markets
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q
  • What are the 5 main areas of Financial Crime
A
  • money laundering
  • terrorist financing,
  • market abuse,
  • fraud,
  • bribery and corruption.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q
  • Define Money Laundering
A

Money laundering (ML) is the process of turning dirty money (money derived from criminal activities) into money that appears to be legitimate.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What does Money Laundering Legislation typically include

A

Any involvement or handling of the proceeds of crime

23
Q
  • What is the purpose of FATF
A

Primarily to combat Money Laundering

24
Q
  • How does the The Financial Action Task Force (FATF) combat Money Laundering.
A
  • Setting standards for national anti-money laundering and counter-terrorist financing (CFT)
    programmes.
  • Evaluating how effectively member countries have implemented the standards
  • Identifying money laundering and terrorist financing methods and trends
25
Q

What other Organizations play a role in combating money laundering and the
financing of terrorism.

A
  • United Nations (UN)
  • International Monetary Fund (IMF)
  • World Bank
26
Q
  • How does IMF combat money laundering and the
    financing of terrorism.
A

Many of its Aid programs incorporates full AML/CFT assessment.

27
Q
  • What are the 4 main types of offences involved in money laundering
A
  • Concealing of Criminal property
  • Acquisition, use and possession of Criminal property
  • Failure to disclose Money laundering
  • Tipping off The criminal
28
Q
  • Money laundering regulations usually place requirements on firms that cover 4 main areas:
A
  • AML Identity checks
  • train their staff adequately in the regulations.
  • train their staff adequately in the reporting.
  • Appointment of an money laundering reporting officer (MLRO).
29
Q
  • What 3 things is the MLRO responsible for?
A
  • receiving reports of suspicious activity
  • considering all reports and evaluating suspicious activity for M.L & T.F
  • Completing suspicious activity report (SAR)- Sending it to the National Crime Agency (NCA)
30
Q
  • What are the 3 stages of money Laundering? What does each stage entaill?
A

Placement

Layering

Integration

31
Q
  • What does Placement entail
A

placing the criminally derived cash into some form of bank account.

32
Q
  • What does Layering entail
A

moving the money around

33
Q
  • What does integration entail
A

the ultimate beneficiary receiving the now clean money

34
Q

What 3 checks must be carried out on all new clients

A
  • Customer identity Know your client checks
  • Source of funds checks
  • International suctions check
35
Q
  • What 3 checks must be carried out as part of Customer due diligence,
A
  • identifying the customer and verifying their identity
  • identifying the beneficial owner, where relevant, and verifying their identity,
  • obtaining information of the purpose and intended nature of the business relationship
36
Q

What is the a phrase used to describe customer due diligence checks

A

Know your client checks

37
Q
  • What 3 pieces of CDD/ KYC Evidence is relervent for individuals
A

Passport,

driving licence,

Utility bill.

38
Q
  • What CDD/ KYC 3 pieces of Evidence is relevant for corporate clients
A
  • constitutional documents (Articles and Memorandum of Association)
  • sets of accounts. (Larger company)
  • proof of the identity of the key individual stakeholders (Smaller company)
39
Q
  • What is an PEP
A

‘politically exposed person’ (PEP) is a term used by regulators to identify persons who
perform important public functions for a state

40
Q
  • What must we do with PEP in regards to KYC/CDD
A

enhanced due dillergance procedures must be applied

41
Q
  • What are the 3 conditions of insider information
A
  • unpublished information, not available to the market
  • that is price sensitive
  • Is specific/ Precise
42
Q
  • What is market abuse
A

is a set of behaviors that some market participants to benefit at the expense of other investors.

43
Q
  • Provide 7 examples of Market abuse II MMM DD
A
  • Insider dealing
  • Improper disclosure
  • Misuse of information
  • Manipulating transactions
  • Manipulating transactions
  • Dissemination
  • Distortion and misleading behaviour
44
Q
  • Explain the market abuse: Improper disclosure
A

insider improperly discloses inside information to another person

45
Q
  • Explain the market abuse: Manipulating transactions
A

trades or trade orders that conveys a false/ misleading impression about an investment.

46
Q
  • Explain the market abuse: Dissemination
A

Giving out false/ misleading information

47
Q
  • Explain the market abuse: Distortion and misleading behavior
A

Behavior that gives a false or misleading impression of supply/ demand of an investment

48
Q

Why are professional ethics important?

A
  • Ensure highest professional standards
  • Ensure ethical behavior
  • Aid in rebuilding trust in the financial sector
49
Q

What role does the investment chain perform?

A

Answer reference: Section 7. 7

50
Q

How does a traditional bank differ from a mutually-owned savings institution?

A

Answer reference: Section 7 .2. 7

51
Q

If an investment bank is trading in bonds, is it likely to operate in the wholesale or retail
market?

A

Answer reference: Section 7.2

52
Q

Who are the typical customers of an investment bank?

A

Answer reference: Section 7.2.2

53
Q

Which market participant is responsible for the safekeeping of assets?

A

Answer reference: Section 7 .2.5

54
Q

How does discretionary investment management differ from advisory investment management?

A

Answer reference: Section 1.3.3

old (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions