Need to know Flashcards
what are the statutory objectives of the FCA
- ensure that relevant markets perform well
- consumer protection
- integrity of financial system
- competition
what can the FCA not do
- delegate their legislative role
- put an individual into jail (they can prosecute)
- can not award an injunction
- can not award a restitution order
what is the FCA’s approach to regulation
principles based approach
what are the FCA’s 3 pillars of supervision
1 - firm systematic framework (prevent)
2 - event driven work (react)
3 - issues and products (resolve/fix)
who are the regulatory bodies
FCA
PRA
ESMA
Information Commissioners Office
CMA
TCCUT
Pensions regulator
FCA firms are assessed by the FCA for part 4a permisson
Location of offices
Effective supervision
Appropriate resources
Suitability
Business model
who assesses legal status for part 4a permission for dual regulated firms
PRA
who assesses the location of office for part 4a permission for dual regulated firms
PRA
who assesses effective supervision for part 4a permission for dual regulated firms
FCA / PRA
who assesses appropriate non financial resources for part 4a permission for dual regulated firms
FCA
who assesses prudent conduct for part 4a permission for dual regulated firms
PRA
who assesses suitability for part 4a permission for dual regulated firms
FCA/PRA
who assesses business model for part 4a permission for dual regulated firms
FCA / PRA
what are MiFID activities
deal, arrange, manage, advise
what is the purpose of EU MiFID legislation
to harmonise the trading rules in EEA member states
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
9: customer relationship of trust
how do you remember the business principles
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
for an individual what principle of business rules apply
I - integrity
See - skill, care and diligence
Many - management and control
Fair - financial prudence
Maidens - market conduct
principles for business for firms
I - integrity
See - skill, care and diligence
Maidens - management and control
Customer Interests
Cooperate with market regulators
what is the best execution criteria
- client categorization
- type of order
- type of financial instrument being traded
- characteristics of execution venues
what is in the investment policy statement
risk objective
return objective
liquidity needed
time horizon
tax
regulatory issues
other unique circumstances
if the trust deed does not specify trustee investment powers who are trustees governed by
the Trustees Act 2000
who has more assets under management UK, France or Germany?
the UK has 6 times more than Germany and 12 times more than France
who holds more fixed income UK or Germany, France in pension funds
Germany and France
when a financial advisor arranges a sale are they exempt from income tax
yes
arranging a sale counts as execution only
what do the information commissioner issue notices about
data breach issues
what is the max penalty for a breach of GDPR
fined up to 20 mill euro or
4% annual turnover
what are the changes brought in by MIFD II
- 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
who need to appoint a whistleblower champion
deposit takers with assets more than £250 mill
what is a product manufacturer required to do
- 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
does the know your customer policy include knowing expectations?
yes
rules on market abuse apply to who
regulated individuals and members of the public
are clients always permitted to opt down
yes
are purchase of share exempt from the insider dealing policy
no they are not
for non MIFID business who needs a client agreement
only retail clients
what sort of correlation does an emerging market have with a developing market
a low correlation
what type of risk occurs when there is a strong correlation between local currency and local equities
currency risk
are gilts subject to CGT
no
are corporate bonds subject to CGT
no
are permanent interest bearing shares subject to CGT
no
is taxable gain calculated before or after the annual exemption is applied
after
do net assets include loss and exemption
no
they do include any outstanding costs though i.e. mortage
is a transfer of 200,000 to a daughter exempt from IHT
yes as below the nil rate band
are transfers into a trust exempt from IHT tax
no - they are chargable if they exceed the nil rate band
is a gain on an insurance bond liable to capital gains tax
No only liable to income tax
examples of systematic risk
economic crash, interest rates rising, price of commodity falling
