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IMC Unit 1 > Need to know > Flashcards

Need to know Flashcards

1
Q

what are the statutory objectives of the FCA

A
  • ensure that relevant markets perform well
  • consumer protection
  • integrity of financial system
  • competition
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2
Q

what can the FCA not do

A
  • delegate their legislative role
  • put an individual into jail (they can prosecute)
  • can not award an injunction
  • can not award a restitution order
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3
Q

what is the FCA’s approach to regulation

A

principles based approach

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4
Q

what are the FCA’s 3 pillars of supervision

A

1 - firm systematic framework (prevent)
2 - event driven work (react)
3 - issues and products (resolve/fix)

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5
Q

who are the regulatory bodies

A

FCA
PRA
ESMA
Information Commissioners Office
CMA
TCCUT
Pensions regulator

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6
Q

FCA firms are assessed by the FCA for part 4a permisson

A

Location of offices
Effective supervision
Appropriate resources
Suitability
Business model

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7
Q

who assesses legal status for part 4a permission for dual regulated firms

A

PRA

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8
Q

who assesses the location of office for part 4a permission for dual regulated firms

A

PRA

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9
Q

who assesses effective supervision for part 4a permission for dual regulated firms

A

FCA / PRA

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10
Q

who assesses appropriate non financial resources for part 4a permission for dual regulated firms

A

FCA

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11
Q

who assesses prudent conduct for part 4a permission for dual regulated firms

A

PRA

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12
Q

who assesses suitability for part 4a permission for dual regulated firms

A

FCA/PRA

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13
Q

who assesses business model for part 4a permission for dual regulated firms

A

FCA / PRA

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14
Q

what are MiFID activities

A

deal, arrange, manage, advise

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15
Q

what is the purpose of EU MiFID legislation

A

to harmonise the trading rules in EEA member states

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16
Q

the statement - a firm must take reasonable care to ensure the stability of its advice and its discretionary decisions for any customer who is entitled to rely upon its judgement - applies to which business principle

A

9: customer relationship of trust

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17
Q

how do you remember the business principles

A

I - intregrity
See - skill, care and diligence
Many - management
Fair - financial prudence
Maidens - market conduct
at the 5c’s - customer interest, communicate, conlficts of interest, client assets,
regatta - relationship with regulator

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18
Q

for an individual what principle of business rules apply

A

I - integrity
See - skill, care and diligence
Many - management and control
Fair - financial prudence
Maidens - market conduct

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19
Q

principles for business for firms

A

I - integrity
See - skill, care and diligence
Maidens - management and control
Customer Interests
Cooperate with market regulators

20
Q

what is the best execution criteria

A
  • client categorization
  • type of order
  • type of financial instrument being traded
  • characteristics of execution venues
21
Q

what is in the investment policy statement

A

risk objective
return objective
liquidity needed
time horizon
tax
regulatory issues
other unique circumstances

22
Q

if the trust deed does not specify trustee investment powers who are trustees governed by

A

the Trustees Act 2000

23
Q

who has more assets under management UK, France or Germany?

A

the UK has 6 times more than Germany and 12 times more than France

24
Q

who holds more fixed income UK or Germany, France in pension funds

A

Germany and France

25
Q

when a financial advisor arranges a sale are they exempt from income tax

A

yes
arranging a sale counts as execution only

26
Q

what do the information commissioner issue notices about

A

data breach issues

27
Q

what is the max penalty for a breach of GDPR

A

fined up to 20 mill euro or
4% annual turnover

28
Q

what are the changes brought in by MIFD II

A
  • created OTFs
  • new rules regarding transparency of algorithmic trading
  • imposed greater restrictions on the funding of 3rd party trading
  • introduced assessing a clients whole portfolio
29
Q

who need to appoint a whistleblower champion

A

deposit takers with assets more than £250 mill

30
Q

what is a product manufacturer required to do

A
  • stress test products
  • have a product approval process in place
  • identify target market and specify types of client that the product is compatible with
  • make appropriate info available to distributors
31
Q

does the know your customer policy include knowing expectations?

A

yes

32
Q

rules on market abuse apply to who

A

regulated individuals and members of the public

33
Q

are clients always permitted to opt down

A

yes

34
Q

are purchase of share exempt from the insider dealing policy

A

no they are not

35
Q

for non MIFID business who needs a client agreement

A

only retail clients

36
Q

what sort of correlation does an emerging market have with a developing market

A

a low correlation

37
Q

what type of risk occurs when there is a strong correlation between local currency and local equities

A

currency risk

38
Q

are gilts subject to CGT

A

no

39
Q

are corporate bonds subject to CGT

A

no

40
Q

are permanent interest bearing shares subject to CGT

A

no

41
Q

is taxable gain calculated before or after the annual exemption is applied

A

after

42
Q

do net assets include loss and exemption

A

no
they do include any outstanding costs though i.e. mortage

43
Q

is a transfer of 200,000 to a daughter exempt from IHT

A

yes as below the nil rate band

44
Q

are transfers into a trust exempt from IHT tax

A

no - they are chargable if they exceed the nil rate band

45
Q

is a gain on an insurance bond liable to capital gains tax

A

No only liable to income tax

46
Q

examples of systematic risk

A

economic crash, interest rates rising, price of commodity falling

IMC Unit 1 (11 decks)

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