KEY STUFF CHAPTER 4 Flashcards
difference in protection for MiFID vs non MiFID
MiFID - all clients protected
non MiFID - only retail protected
three investments not included as designated investments
deposits
insurance
mortgages
are pensions MiFID
no
how do COBS relate to FCAs statutory objectives
allow the FCA to discharge its operational objectives
large undertaking conditions for mifid
2/3 of:
balance sheet 20
turnover 40
own funds 2m
large undertaking conditions for non MiFID
2/3 of:
balance sheet 12.5m
turnover 25m
250 employees
+ also company with share capital over 5m
+trustee of occupational pension scheme with 50 members and 10m under management
can a large undertaking become an elective ECP
yes
three conditions for relying on info from a non-mifid firm
info in writing
non mifid firm is independent
non mifid firm is competent
which legislation covers financial promotions and what is max penalty
FSMA2000
2 years jail + unlimited fine
FCA rules on communications do not cover which 5 things
exempt under FPO
from outside Uk and cant have effect in UK
subject to takeover code
personal quotes or illustrations
one off promos that are not cold calls
what 3 types of cold calls are permitted
to an existing client - always permitted
generally marketable packaged products that are not high vol
services to readily realisable securities OTHER THAN WARRANTS
what are the 5 packaged products (CLIPS)
CIS (regulated only)
Life policy
Investment trust savings scheme
Personal pension
Stakeholder pension
difference between info disclosure generally versus client agreement
all clients get general info in an IID before business
retail and professional get client agreement before biz unless distance comms then immediately after
what is the excluded activity from the client agreement rule
when a firm acts as principal in insurance business
what three retail investments are not also packaged products
unregulated CIS
share in an investment trust
structured capital at risk products
what 4 things are considered PRIIPS and what info document applies to them
investment funds
insurance based investment products
retail structured securities
structured term deposits
KID
under RDR, firms making personal recommendations to retail clients must be what
either independent or restricted
what must a firm disclose to retail client under RDR and by when
adviser status and costs, before providing the service or the client is bound by an agreement
suitability applies to which 2 things only
discretionary services
advisory services
when is a suitability report needed, for which clients and products and by when (forget about exemptions for now)
only for retail clients for advisory services only for all products
provided in a durable medium before the contract is concluded
5 exemptions to suitability report (when is it not needed)
firm acts as investment manager for retail and makes a recommendation in connection to a regulated CIS
client is resident outside EEA and not in UK at time of ack
small life policies below 50pa
if recommendation is to increase regular premiums to an existing account
if investing further premiums to an existing packaged product where contributions have already been paid
suitability report timing for personal pension and how long the advisor keeps it
no later than 14 days after the contract is concluded
keep for 5 years
when and who does appropriateness apply to
applies to MiFID business for both RC and PC
applies to direct offers only to RC
only applies when product is complex
only applies to execution only
order execution policy type of agreement and how often reviewed
two way agreement monitored annually
two conditions for when limit order not executed immediately needs to be made public
customer says
order is greater than normal market size (greater than 10% of daily volume)
which 3 things do the CASS rules not apply to
ICVC and UCITS schemes
BCD credit institutions
what 3 types of money do CASS rules not apply to
coins held for value of the metal
DvP
money payable to firm
which COBS rules include ECPs (there are 5)
client categorisation
most info disclosure rules
conflict of interest rules
occasional and periodic reporting rules
client assets
which COBS rules apply only to retail clients
financial promotion rules
suitability REPORT
retail investment product disclosures e.g. KID
