Module 5

Question 1

Advantages of Joining and exchange?

Answer 1

Raising finance
Enhanced status 
Higher profile 
Employee benefits 
Exit route

Question 2

Disadvantages of joining an exchange

Answer 2

Cost
Public scrutiny
Dilution
Ongoing responsibilities

Question 3

Trading of top stocks in form by

Answer 3

A fully electric order book known as stock exchange electric trading service

Question 4

LSE regulates trading on the secondary markets for both

Answer 4

Main market

AIM

Question 5

LSE regulated by what three bodies?

Answer 5

FPC Financial policy committee
PRA prudential regulation authority
FCA financial conduct authority

Question 6

Criteria for admission to the main market premium listing

Answer 6

Min market cap 700000
Min shares in public 25%
Audited financial information 3 years
Appoint sponsor Yea

Question 7

Criteria for admissions to standard listing of main market

Answer 7

Min market cap 700000
Min shares in public 25%
Audited financial info N/A
Appoint sponsor no

Question 8

Advisers

Answer 8

Sponsor
Broker
Lawyers
Accountants

Question 9

Admission to Aim

Answer 9

Legally established
Publish annual and interim accounts
Issuer must appoint and retain a nominated adviser

Question 10

What are primary market transactions?

Answer 10

Raise finance by selling either equity securities or debt securities

Finance raised in a primary market by either selling shares through an exchange or by raising private equity

Question 11

What are sales in the secondary market?

Answer 11

When first buyer wishes to sell the security

Provides cash for the security holder not the organisation that originally issued: secondary market

Question 12

If a company wishes to trade on the LSE it must be?

Answer 12

Approved by the UK listing authority UKLA to be added to list of UK securities and then the LSE to be allowed to trade

Question 13

The role of exchange is two fold:

Answer 13

Providing trading and information services, and regulation

Question 14

Trading of top stocks is done by?

Answer 14

A fully electronic order book trading mechanism, the Stock exchange Electronic Trading Service SETS

Question 15

The electronic order book automatically matches orders for the?

Answer 15

FTSE-100
FTSE-250
FTSE Small Cap
Index constituents and other liquid stocks

Displays willingness to buy or sell quantities of shares at specific prices or to execute against orders

Executions occur automatically in accordance with strict price and time priority

Question 16

What is order driven price?

Answer 16

When there is frequent buying and selling of a particular share

Based on real world transactions

Question 17

What is quote driven?

Answer 17

Trading of less liquid UK equities largely  quote driven and supported by market markets;
through SETSqx (quotes and crosses) or SEAQ Stock Exchange Automated Quotation systems

Question 18

Role of market makers?

Answer 18

Providing buying and selling prices in the securities in which they are registered

Have to be member firms of the exchange

Question 19

How do market makers make income?

Answer 19

From the difference between the buying and selling prices they offer

Question 20

LSE regulated by three bodies established under what?

Answer 20

Financial services act 1 April 2013

Question 21

Companies issuing securities on the main market are generally

Answer 21

Large companies with strong trading records

Question 22

The main market is for

Answer 22

All sectors and all counties

31/01/18 1260 companies with £4.5 trillion combined market cap

Question 23

Who are requirements for entry into main market set out by and in?

Answer 23

In ‘The Listing Rules’ issued by the UKLA, a division of the FCA

Question 24

What is the two stage process for companies that wish to list in London?

Answer 24

Application to list from the UKLA
Admission to trade from the LSE

Once admitted by UKLA, an official list notice will be issued and once an admission to trading notice is also issued by LSE ready to buy and sell securities

Question 25

Criteria for admission to main market?

Answer 25

Premium 
700000 market cap
25% public hands
3 years audited
Sponsor

Standard
700000 market cap
25% in public hands

Question 26

What is a prospectus?

Answer 26

Directors that wish to list securities must prepare a detailed document called a prospectus to give to potential investors

Question 27

Content of prospectus?

Answer 27

Content prescribed by UKLA

three years of audited accounts for premium

Details of working capital and indebtedness, major contacts and shareholders for both premium and standard