Market Ethics

Question 1

What an ethical professional is committed to do?

Answer 1

• Takes the rules of fair and responsible conduct seriously and takes all the necessary steps to abide by them,
• Exercises independent judgment in determining the appropriate conduct in a given situation,
• Creates relationships of trust and demonstrates courageous behaviors when personal ethics are tested.

Question 2

What are the core principles of Ethics?

Answer 2

• Beneficence: do good,
• Nonmaleficence: do not harm,
• Autonomy: control by the individual
• Justice & Fairness

Question 3

Different financial scandals

Answer 3

• Bernie Madoff pyramid scam
• Lehman Brothers disaster
• Kerviel unauthorized trading
• Goldman Sachs’ fraud in structuring CDO tied to subprime mortgages (Abacus)
• Libor interest rates manipulation by a collusion of various banks.
• Wells Fargo’s faked account fraud
• BNP Paribas embargo violation

Question 4

5Ps’

Answer 4

• People,
• Property,
• Peace,
• Partnership,
• Planet.

Question 5

Sapin II

Answer 5

French anti-regulation law,
Law on transparency, modernisation of economic life and fight against corruption.

Question 6

Date Sapin II Law

Answer 6

December 2016.

Question 7

AFA

Answer 7

French Anti-Corruption Agency.
National service that assists authorities andindividuals to prevent and detect acts of corruption, trading in influence, bribery, taking an unlawfulinterest, misappropriation of public funds and favouritism.

Question 8

3 pillars of the AFA Anti-Corruption program

Answer 8

• Pillar I : Senior management’s commitment to corruption-free performance
• Pillar II: Risk mapping to raise awareness of the entity’s exposure to corruption risks
• Pillar III: Corruption risk management measures and procedures

Question 9

Money laundering

Answer 9

Money laundering is the process by which money obtained from illegal activities is converted to appear legitimate.

Question 10

Terrorist financing

Answer 10

Terrorist financing involves the solicitation, collection or provision of funds with the intention that they may be used to support terrorist acts or organizations. Funds may stem from both legal and illicit sources.

Question 11

FATF (GAFI in French)

Answer 11

The International Financial Action Task Force.
The global money laundering and terrorist financing watchdog

Question 12

EBA

Answer 12

The European Banking Authority,
Independent EU Authority which works to ensure effective and consistent prudential regulation and supervision across the European banking sector.

Question 13

What is the main task of EBA?

Answer 13

Its main task is to contribute, through the adoption of binding Technical Standards (BTS) and Guidelines, to the creation of the European Single Rulebook in banking.

Question 14

ESMA

Answer 14

The European Securities and Markets Authority

Question 15

ESMA’s 3 objectives

Answer 15

• Investor protection,
• Orderly markets,
• Financial stability.

Question 16

ESMA’s 4 activities

Answer 16

• Assessing risks to investors, markets and financial stability
• Completing a single rule book for EU financial markets
• Promoting supervisory convergence
• Directly supervising specific financial entities

Question 17

Paradigm of self-regulating markets

Answer 17

• Professional ethics was superflous in investment banking,
• Assumed that the “invisible hand” would make sure that markets were efficient and socially beneficial,
• Monetary incentives.