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SEC Certification Phase 1 > Module 1: Market Professional > Flashcards

Module 1: Market Professional Flashcards

1
Q

Registration Requirements for a Broker Dealer, Investment Company Adviser/Fund Manager, Associated Person, Compliance Officer, Certified Investment Solicitor and Salesman are under the Licensing Unit of the ______________________________

A

Company Registration and Monitoring Department (CRMD)

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2
Q

The Market Participants are Regulated by the _____________________

A

Market and Securities Regulation Department (MSRD)

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3
Q

Who are the different Market Participants/Professionals?

A
  1. broker
  2. dealer
  3. associated person
  4. salesman
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4
Q

is a person engaged in the business of buying and selling
securities for the account of others.

A

broker

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5
Q

means any person who buys and sells securities for his/her
own account in the ordinary course of business.

A

dealer

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6
Q

any person employed full time by the Broker Dealer whose responsibilities include internal control supervision of other employees, agents, salesmen, officers, directors, clerks and stockholders of such Broker Dealer for compliance with the SRC and its IRR.

A

Associated Person

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7
Q

is a natural person hired to buy and sell securities on a
salary or commission basis endorsed to the Commission by the employing Broker Dealer.

A

Salesman

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8
Q

Other Market Participants/Professionals

A

a. Government Securities Eligible Dealer (GSED)
b. Investment House/Underwriter of Securities
c. Transfer Agent
d. Exchange
e. Clearing Agency

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9
Q

a person or entity engaged in buying and selling of government securities such as Treasury bills, Treasury notes, and Treasury bonds.

A

Government Securities Eligible Dealer (GSED)

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10
Q

a corporation which engages in the underwriting of securities of another person, including securities of the government or its instrumentalities.

A

Investment House/Underwriter of Securities

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11
Q

any person who engages on behalf of an issuer of securities in, among others, registering the transfer of such securities.

A

transfer agent

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12
Q

is an organized marketplace that brings together buyers and sellers and executes trades of securities and/or commodities.

A

exchange

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13
Q

any person who acts as an intermediary in making deliveries upon payment to effect settlement in securities transactions.

A

clearing agency

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14
Q

Registration of Brokers and Dealers: No person shall engage in the business of buying or selling securities in the Philippines as a broker or dealer, or act as a salesman, or an associated person of any broker or dealer unless _____________________________

A

registered as such with the Commission.

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15
Q

Section 28 -SRC

A

Registration of Brokers and Dealers

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16
Q

Registration of Brokers and Dealers: No registered broker or dealer shall employ any ____________ or ______________________ who is not registered as such with the Commission.

A

salesman or any associated person

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17
Q

Registration of Brokers and Dealers: If a natural person, the applicant must satisfactorily pass a _________________ as to his proficiency and knowledge in the area of activity for which registration is sought.

A

written examination

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18
Q

Registration of Brokers and Dealers: In the case of a broker or dealer, the applicant must satisfy a minimum _____________________ as prescribed by the Commission, and provide a bond or other security as the Commission may prescribe to secure compliance with the provisions of this Code.

A

RBCA requirement

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19
Q

shall refer to the minimum levels of capital that has to be maintained by firms which are licensed, or securing a Broker Dealer license, taking into consideration the firm size, complexity and business risk. Such risks that are considered in determining the capital requirement include, among others, Operational, Position, Counterparty, Large Exposure, Underwriting, and Margin Financing Risks.

A

Risk-based Capital Adequacy Requirement/Ratio

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20
Q

Registration of Brokers and Dealers: The registration of a salesman or associated person shall be automatically _______________ upon the cessation of his affiliation with the broker or dealer.

A

terminated

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21
Q

Registration of Brokers and Dealers: Promptly following any such cessation of affiliation, the registered broker or dealer shall file with the Commission a notice of __________
of such salesman or associated person.

A

separation

22
Q

Registration Requirements for Brokers and Dealers
(Some of the significant requirements:)

A

A person applying for registration as a Broker-Dealer under
Section 28 shall indicate in SEC Form 28-BDA
(Application for Registration as a Broker-Dealer) the
following matters:
• Act as a Broker or Dealer
• Trade, directly or indirectly, in an Exchange, in the Over-The-Counter Market or in an Alternative Trading System
• If an Exchange Trading Participant, whether:
- clearing or a non-clearing trading participant
- it shall engage in market making transactions

23
Q

Registration Requirements for Brokers and Dealers

• Market Making Transactions shall mean transactions in a particular security/ies:

A

 complies with the rules of the Commission and Exchange regarding its duty as a market maker;
 ensure two way quotes, provide liquidity, and maintain a fair and orderly trading market.

24
Q

Registration Requirements for Brokers and Dealers (continuation)

A

• Deal with Equity Securities, Fixed Income/Debt Securities, Proprietary Shares, Non-Proprietary Shares, Government Securities, Derivatives or other Instruments.

• An applicant for registration as a Broker Dealer shall be solely engaged in the business of a Broker Dealer, unless otherwise authorized by the Commission to engage in another business.

• The Broker Dealer shall segregate the operational and financial books and records of the other businesses, if any.

• Every application for registration as a Broker Dealer shall be filed on SEC Form 28-BD and accompanied by supporting papers and documents.

25
Q

Registration Requirements for Brokers and Dealers
(Some requirements for registration)

A

• Written supervision and control procedures (WSP), including “Chinese Wall” provisions, requirements of the Anti-Money Laundering Act of 2001 (RA 9160, asamended) and the Code of Corporate Governance (SEC Memorandum Circular No. 2, Series of 2002);
• Detailed description of Organizational and Functional Charts, names and designations of the officers, including branch offices;
• A yearly schedule/timetable on the implementation of the training program for the staff;
• Risk Management Manual & Internal Control Procedures;
• Business Continuity and Disaster Recovery Plan;
• Comprehensive Information Technology Plan;
• Copies of proposed contract of any activities or services
that are being outsourced.
• Website which shall contain basic information about the firm including services offered, the names, current photos and contact details of its directors, principal officers, associated persons and salesmen.
• Submit list of directors, officers, salesmen and employees together with their photos

26
Q

T or F.

Registration Requirements for Brokers and Dealers: Registration of Broker Dealer license shall remain valid
unless otherwise revoked for cause or suspended or
voluntarily surrendered by the Broker Dealer.

A

T

27
Q

Registration Requirements for Brokers and Dealers: Broker Dealer shall pay the annual fee every ________ of each year of registration. Filing and payment of the required annual fee after the prescribed period shall be subject to a penalty that shall be determined by the Commission.

A

November

28
Q

Registration Requirements for Brokers and Dealers: Failure to pay the annual fee shall, after notice and hearing result in the ____________________, as the circumstance may warrant.

A

suspension or revocation of the license

29
Q

No sale or transfer of assets and liabilities of an existing Broker Dealer to an entity or any form of reorganization or change in management of a Broker Dealer, de facto or otherwise, shall be effected without prior approval by the Commission.

A

Registration Requirements for Brokers and Dealers:

• Registration of Successor to broker dealer

30
Q

Request for withdrawal of business and/or cancellation of
registration as a Broker Dealer shall be filed on SEC Form 28-BDW.

A

Registration Requirements for Brokers and Dealers:

• Withdrawal of business and/or Cancellation of Registration as Broker Dealer

31
Q

Registration Requirements for Brokers and Dealers
(Capitalization Requirement)

A

Capitalization requirement of OneHundred Million Pesos
• (Php 100,000,000.00)

32
Q

Other Market Participants/Professionals Investment Company Act (ICA) ([R.A. No. 2629])

A
  1. Investment Company Adviser or Fund Manager
  2. Investment Company
  3. Mutual Fund Distributor
  4. Certified Investment Solicitor
  5. Compliance Officer
33
Q

the firm that manages the funds of an Investment Company

A

Investment Company Adviser or Fund Manager

34
Q

a company that pools funds from numerous
investors through the issuance of its shares to the public

A

Investment Company

35
Q

Investment Company Types:

A

– open-end investment company (mutual fund)
– closed-end investment company

36
Q

distribute shares or units of an Investment Company as either principal distributor or sub-distributor

A

Mutual Fund Distributor

37
Q

agent or employee of an Investment Company Adviser/Fund Manager/Distributor who solicits or procures investments or applications for investment in an Investment Company/Mutual Fund Company

A

Certified Investment Solicitor

38
Q

Compliance Officer Responsibilities

A

a) To have a system designed to achieve compliance with the SRC, ICA and their IRR, SEC Memorandum Circulars, Corporate Governance Rules, Anti-Money Laundering Act, Data Privacy Act;

b) Oversee the compliance with the requirements of the Commission relative to the closure of the business of an Investment Company and Fund Manager.

39
Q

Capital Market Professionals

A
  1. Investment Company Adviser/Mutual Fund Distributor
  2. Broker/Dealer
  3. Government Securities Eligible Dealer (IH/US)
  4. Certified Investment Solicitor
  5. Salesman
  6. Fixed Income MarketSalesman
40
Q

Registration Requirements for Capital Market Professionals

A

• SEC Forms
• Proof of Examinations: SEC Certification Program Examination
• Valid ID
• Letter from Employer

41
Q

Registration Requirements for Capital Market Professionals
(SEC Regulations)

A
  1. SEC Form 28-AP/28-AMD: Registration of Associated Person of a Broker Dealer
  2. SEC Form 28-S/28-AMD: Registration of Salesman of a Broker Dealer
  3. SEC Form IHU/GSED-CO-AP: Application for Registration of Associated Person/Compliance Officer of Investment House/Underwriter of Securities and Government Securities Eligible Dealers
  4. SEC Form ICA-CO Registration of a Compliance Officer of an Investment Company Adviser/Manager
  5. SEC Form ICA-CIS: Registration of a Certified Investment Solicitor of an Investment Company Adviser/Manager
42
Q

Registration of Capital Market Professionals

Terms and conditions for applicants for registration:

A

• Only natural persons can apply and be employed by a Capital Market Institution.

• Applicants for salesman/certified investment solicitor shall be at least eighteen (18) years of age and applicants for associated person/compliance officer shall be at least twenty one (21) years of age.

• Applicants for registration as a salesman/certified investment solicitor must have no disciplinary history that would subject them to disqualification from registration under Section 29 of the Code.

43
Q

Registration of Capital Market Professionals

Terms and conditions for applicants for registration:
( Applicants for registration as a capital market
professional must not have been:)

A
  • censured or reprimanded by a professional (e.g. IBP, PRC) or regulatory body (e.g. SEC, BSP) for negligence, incompetence or mismanagement OR
  • dismissed or requested to resign from any position or office for negligence, incompetence or mismanagement OR
  • be subject to any other disqualification under Section 29 of the SRC
44
Q

Registration of Capital Market Professionals: Any applicant applying for registration for the 1st time must have taken and passed the applicable examination within the last ________ immediately preceding the date of his application.

A

(3) years

45
Q

T or F.

Registration of Capital Market Professionals: No applicant for registration as capital market professional shall be registered unless he has completed the certification requirements.

A

T

46
Q

Registration of Capital Market Professionals: An applicant who is not registered as a capital market professional for ______________________, which shall be counted from the date of ____________________________ or from the date of his passing of relevant examinations, cannot apply for registration unless he has complied with the certification requirements of the Commission.

A

three (3) consecutive years or more; expiration or termination of his registration

47
Q

T or F.

Registration of Capital Market Professionals: An applicant who is in a condition/situation as described above (card 46) may not be required to take the earlier referred examination if he can prove to the Commission that he has continuously worked in an equivalent capacity in the local capital market or its related industries for the last three (3) years.

A

T

48
Q

Registration of Capital Market Professionals: The registration of a capital market professional shall cease when he is no longer employed by the Capital Market Institution identified in his registration application ______________________________ after discontinuance of employment)

A

(SEC Form 28-T) five (5) business days

49
Q

Registration of Capital Market Professionals: Every registered capital market professional who shall
change his registration category (license type) during
the year shall be assessed the _______________ for the
issuance of a new license.

A

appropriate fee

50
Q

Registration of Capital Market Professionals: Every registered capital market professional shall report in _________________, _______________ any change in the information provided in the application forms within _______ from such change.

A

SEC Form 28S/AP AMD; SEC Form ICA-CO/CIS; 7 days

51
Q

The license of a capital market professional shall remain valid unless otherwise _______________ or ____________ or ___________________, subject to compliance with the terms and conditions of registration. Each registered salesman or associated person shall pay the annual fee every November of each year of registration and must be cleared of all derogatory reports and cases. The filing and payment of the annual fee after the prescribed period will be charged a fee for ____________. Failure to pay is a ground to suspend ______________.

A

revoked for cause; suspended; voluntarily surrendered

late filing

registration

52
Q

Conditions for Continuing Registration of Capital Market Professionals

A

• Observe at all times the provisions of the Securities Regulation Code/Investment Company Act/Investment Houses Law, all rules and regulations adopted thereunder, and applicable Exchange, clearing agency and other SRO rules; and

• Demonstrate an on-going understanding of applicable regulatory requirements and Exchange, clearing agency, and other SRO rules.

SEC Certification Phase 1 (7 decks)

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