MCQ - Chapter 6

Question 1

In which scenario would the extensibility feature of FpML and XBRL be most useful?

Select one:

When needing to follow a strict predefined format.

When requiring customization to meet specific needs within their respective domains.

When avoiding the use of a standardized messaging format.

When adhering to the basic principles of double-entry bookkeeping.

Answer 1

When requiring customization to meet specific needs within their respective domains.

Question 2

What is Extensible Markup Language (XML)?

Select one:

A flexible way to create common information formats and share both the format and the data via the web, intranets and elsewhere

A message standard for OTC derivatives industry

A message standard for exchanging information about corporate data between the company concerned and interested parties

The standard user and application program interface to a relational database

Answer 2

A flexible way to create common information formats and share both the format and the data via the web, intranets and elsewhere

Question 3

What is the name of SWIFT’s interactive communications service that allows the sending of files between parties?

Select one:

SWIFTNet FileAct

SWIFTNet Inter Act

SWIFTNet Link

FIX File Protocol

Answer 3

SWIFTNet FileAct

Question 4

After both parties have sent their instructions, ABC Investment Firm realizes it does not have the stock to deliver for the trade. The custodian updates the trade status to reflect this issue. What status code does the custodian assign to the trade under these circumstances?

Select one:

UNM1

USEC

CUNM

OK

Answer 4

USEC

Question 5

If the process of delivery of the securities is to be directly in exchange of funds the transaction instruction is known as..

Select one:

DvP

FoP

SvP

PoF

Answer 5

DvP

Question 6

Which section of the Client Asset Rules (CASS) relates to the reconciliation of clients’ securities?

Select one:

Section 6.5

Section 5.6

Section 7.1

Section 2.4

Answer 6

Section 6.5

Question 7

SWIFTNet FileAct and SWIFTNet InterAct are both interactive communication services provided by SWIFT. While they serve the purpose of facilitating communication between parties, they have different operational methodologies. Which of the following statements accurately captures the distinction between SWIFTNet FileAct and SWIFTNet InterAct based on their described functionalities?

Select one:

SWIFTNet FileAct is primarily used for direct application-to-application transactional messaging, while SWIFTNet InterAct is utilized for the transmission of mass payments or reporting information.

SWIFTNet FileAct operates on a request-response basis for file transfer, with the initiator sending a request first before transmitting the file, while SWIFTNet InterAct allows for either synchronous or asynchronous message exchanges between two parties.

SWIFTNet InterAct is utilized only in a ‘push’ architecture, while SWIFTNet FileAct is used for synchronous messaging in financial settlements.

SWIFTNet FileAct and SWIFTNet InterAct both operate solely on a synchronous message exchange basis, with SWIFTNet FileAct being more suitable for mass payments transmission.

Answer 7

SWIFTNet FileAct operates on a request-response basis for file transfer, with the initiator sending a request first before transmitting the file, while SWIFTNet InterAct allows for either synchronous or asynchronous message exchanges between two parties.

Question 8

In the context of repos and stock loans, what distinguishes the types of collateral accepted in repo transactions?

Only high-yield corporate bonds are accepted as collateral in repo transactions.

A wide variety of consumer loans are acceptable as collateral in repo transactions.

Only a select number of OECD government bonds are acceptable in repo transactions.

Any form of tangible asset can be used as collateral in repo transactions.

Answer 8

Any form of tangible asset can be used as collateral in repo transactions.

Question 9

Which entity is primarily responsible for managing the FpML standard?
Question 9Select one:

XBRL International

World Wide Web Consortium

International Swaps and Derivatives Association

PricewaterhouseCoope

Answer 9

XBRL International

Question 10

Which of the following status codes is most likely associated with the scenario where a trade is matched, but the counterparty has no stock to deliver?
Select one:

USEC

NSTD

COLL

CSEC

Answer 10

CSEC

Question 11

A maturity ladder is defined as…
Select one:

A cash flow projection module which is incorporated into a settlement system, that shows how much funding is needed to pay for purchases

A module that is built into a settlement system that calculates the maturity date of bonds

A cash flow projection module which is incorporated into the clearing system, that shows how much funding is needed to pay for purchases

A module that is built into the clearing system that calculates the maturity date of bonds

Answer 11

A cash flow projection module which is incorporated into a settlement system, that shows how much funding is needed to pay for purchases

Question 11

Which of the following is NOT a feature provided by SWIFTNet Link through its XML-based Application Programming Interfaces (APIs)?
Question 13Select one:

Enabling customer applications to access SWIFTNet services.

Facilitating communication between local and remote applications.

Establishing end-to-end integrity, authentication, and confidentiality between local and remote applications.

Providing real-time status updates through a Push architecture.

Question 12

How does the mechanism employed by SWIFTNet InterAct contrast with a typical Pull architecture?
Select one:

SWIFTNet InterAct uses SWIFTNet PKI to pull updates at regular intervals, while a typical Pull architecture waits for a user request.

SWIFTNet InterAct utilizes a Push architecture to provide immediate updates without a request, while a typical Pull architecture requires a request to retrieve updates.

SWIFTNet InterAct relies on SWIFTAlliance for manual retrieval of updates, contrasting with the automatic retrieval in a typical Pull architecture.

SWIFTNet InterAct uses SWIFT Gateways to filter update requests, while a typical Pull architecture processes all requests equally.

Answer 12

SWIFTNet InterAct utilizes a Push architecture to provide immediate updates without a request, while a typical Pull architecture requires a request to retrieve updates.

Question 13

What is the name of the standard that was developed during the 1980’s that governs all the series within the FIN messages?
Select one:

ISO

IOS

FCD

ACK

Answer 13

ISO

Question 14

A global bank uses MT messages for its transactions. It wants to update its messaging standard to align with modern ISO standards. Which of the following should be the bank’s primary focus?
Select one:

Transitioning to ISO 15022

Implementing SWIFTML

Adopting ACCORD frameworks

Addressing Y2K distractions

Answer 14

Transitioning to ISO 15022

Question 15

When was the first SWIFT msg sent?

1969
1977
1987
1999

Answer 15

1977

Question 16

What is the purpose of a maturity ladder?

To determine which ETD or OTC positions are due to mature
To determine which repo positions need to be rolled
To determine how much funding is required
To determine the hierarchy of client positons

Answer 16

To determine how much funding is required

Question 17

For a repo transaction, what is the advantage of the lender of the stock?

Provided a method for improving liquidity
Enhances security
Cheaper method of obtaining funding
The firm obtains an increase in return on investment while retaining securities

Question 18

A settlement agent is usually to ‘Settle within tolerance”. Although the degree of tolerance may vary from market to market. What is the threshold in USD

20
25
30
35

Answer 18

25

Question 19

An individual maturity ladder page should be provided for which of the following?

Each bank account
Each currency
Each CREST account
Each Euroclear account

Answer 19

Each bank account

Question 20

Of the following pairs, which are the most common MT Messages used by securities firms?

MT400 & MT721
MT700 & MT295
MT300 & MT900
MT320 & MT190

Question 21

What is the significance of the ‘Our reference field’ on the settlement instruction

It is always the same reference as the trade number
It is the same reference that the counterparty uses
IT is the reference to be quoted by the settlement agent
It is the same reference used in reg trade reporting

Answer 21

IT is the reference to be quoted by the settlement agent

Question 21

Firms that are part of a Member-Administered Closed User groups can use the SWIFT network to send & receive?

FIN Messages
XML Messages
All standard messages with SWIFT standards
All standard messages without SWIFT standards

Answer 21

All standard messages without SWIFT standards

Question 22

Under the FCA client assets rule, client assets can only be used in repo transactions if:

FCA grants permission
Value of transaction is less then 70% of the security
The client has provided express prior written consent
The client agreement clearly sets out that the firm can engage in these transactions

Answer 22

The client has provided express prior consent

Question 23

From what point is interest accrued?

From the day of the last interest payment, up to but not including the value date
From the day of the last interest payment, up to and including the value date
From the day after the last interest payment, up to the value date
From the day after the last interest payment, up to but not including the value date

Answer 23

From the day of the last interest payment, up to but not including the value date

Question 25

The tag on MT950 is?

Tag 25
Tag 28
Tag 26
The header line

Answer 25

Tag 28