Questions Flashcards
1
Q
What are thresholds for higher tax bracket
A
37.5k - 150k
2
Q
What is the maximum annual VCT subscription to attract tax relief?
A
£200,000
3
Q
What is additional tax rate on interest?
A
45% (with zero allowance)
4
Q
What is higher rate of income tax?
A
40% (on 37.5k - 150k)
5
Q
How much is personal allowance reduced above £100k?
A
£1 for every £2 above £100k
6
Q
What is full basic rate tax?
A
Not allowing for personal allowance - 20% of £37.5k is £7500
7
Q
What is FATCA?
A
Foreign financial institutions must report information to IRS. If you don’t participate, 30% withholding tax
8
Q
Who pays class 2 NICs?
A
Self-employed
9
Q
What is basic CGT?
A
10%
10
Q
What is higher/additional CGT?
A
20%
11
Q
What is CGT allowance?
A
£12,300
12
Q
What is CGT on residential property?
A
18%, 28% higher/additional - main home exempt
13
Q
What is CGT paid on?
A
ONLY YOUR PROFITS!
14
Q
What is personal savings allowance?
A
£1000 basic, £500 higher, £0 additional
15
Q
Do companies pay income or capital gain tax?
A
NO!
16
Q
What is max pension lump sum can take?
A
25% before taking annuity
17
Q
What is additional tax band?
A
45% on 150k+
18
Q
What is basic dividend rate?
A
7.5%, £2000 allowance
19
Q
What is higher dividend rate?
A
32.5%
20
Q
What is additional dividend rate?
A
38.1%
21
Q
What is top for personal income tax allowance?
A
£125,000
22
Q
What is corporation tax?
A
19%
23
Q
What are the three bands for income and savings?
A
20%, 40%, 45%
24
Q
What is income tax relief in EIS?
A
30%
25
Are portfolio management fees subject to VAT?
Yes
26
What is SDRT?
0.5% of sale proceeds - paid by buyer - Stamp Duty Reserve Tax
27
Do companies pay CGT?
Yes - and corporation tax
28
Do you pay CGT on your main home?
No
29
Do gifts to charities pay IHT?
No
30
When are gifts to kids exempt from IGT?
liable for tax if donor dies within seven years
31
How to you pay on gifts to discretionary trusts?
20% on payment, 20% on death
32
Do VCT and EIS pay CGT?
No
33
Do bonuses and cars count as income for tax?
Yes
34
How much can be taken from a life assurance bond annually tax-free?
5%, can be carried forward
35
How far can terminal losses be carried back?
Three years
36
What is a VCT most similar to?
Investment trust company
37
Are shares packaged products?
No - investment trust savings schemes are packaged products, but not shares in investment trusts.
38
What is a Retail Investment Product but not a Packaged Product?
Shares in investment trusts, unregulated collective investment schemes and structured products
39
What is tax status of investment trusts?
Pay corp tax but no CGT.
Investors pay tax on div income and CGT on sale
40
What is tax status of unit trusts?
Unit trusts pay tax on income at a fixed rate of 20%, but do not pay tax on capital gain. The investors receive distribution - they receive it gross and tax is based on dividend or savings income. The investors will pay capital gains tax on any capital gain.
41
Do AIM shares trade on SETS?
Only the most-traded, ie the most liquid
42
Where a financial adviser only provides advice, what is the VAT charge to the customer?
20% - execution only is VAT free though
43
How does personal allowance change above £100,000 income?
The personal allowance is reduced at a rate of £1 for every £2 of non-savings income above £100,000
44
Can the ICO impose custodial sentence?
No - only financial penalty (20m euros or 4% of turnover, whichever is higher)
45
What did MIFID II do?
Created organised trading facilities (OTF)
More control on algorithmic trading
Restrictions on third party research
Added requirement to consider investor's whole portfolio
46
Are there restrictions on trust activity?
Not if diversified and suitable investments
47
Are tangible assets covered by FSMA 2000?
No
48
Can the FCA jail people?
No - MoJ does that - but can issue fines
49
Non-MIFID business - who gets client agreements?
Only retail clients
50
If there is an appointed representative, who is responsible for all comms?
Firm
51
What is core MIFID business?
```
Orders
Execution
Dealing on account
Portfolio management
Investment advice
Underwriting and placing
Multilateral trading facilities (MTF)
```
52
To move from professional to retail client, do you need a risk warning?
No - only written agreement
You need a risk warning if you are OPTING UP, not down
53
Do you need to ID the regulator in a suitability report?
No
54
What is in KIID?
Costs
Time restrictions
What happens if provider can't pay
55
Is execution policy in KIID?
No
56
Who must specify which clients a product is suitable for?
Manufacturer
57
What must ensure individual clients are compatible?
Distributor
58
Fiduciary duty - is it ok to take on extra risk to attain projected returns?
No
59
Can you copy client list for personal gain?
No
60
How many shares does one shareholder need to have so they can force a meeting?
5%
61
What is takeover panel responsible for?
Only fairness - competition under remit of CMA
62
What can FOS force a compensation payment for?
Loss of reputation
Pain
Loss of cash
Distress
63
What is threshold for a whistleblowers' champion?
£250m net assets
64
Who do market abuse rules apply to?
Individuals AND members of public
65
What can you trade on personal account?
UCITs, life insurance policy, independent funds you do not work on
66
Who runs the Upper Tribunal?
Ministry of Justice
67
What are three stages of money laundering?
Placement, layering, integration
68
What stages of money laundering are investment managers most vulnerable to?
Layering, integration
69
In best execution, are costs to the firm relevant?
No
70
Do you need to do another fact find if circumstances change, eg after an inheritance?
Yes
71
What is an advantage of an investment trust over a unit trust?
Flexibility
72
What can invest in a REIT?
ISA, SIPP, client trust fund
73
Who regulates Eurobonds?
ICMA
74
Who has more fixed income in pension funds - UK or France/Germany?
France/Germany
75
Does FTSE take ordinary listings?
No, only premium
76
What does a quote driver system offer?
Bid/offer spreads
77
What happens in an order-driven system?
Orders are matched automatically or by market makers. No guarantee of execution
78
What is benefit of AIM?
Lower regulatory threshold
79
What does CREST do?
Settlement - delivery vs payment. Payment is before delivery
80
How long does NYSE take to settle?
T+2
81
What is benefit of OTC market?
Flexibility
82
Do emerging markets correlate with developed markets?
Not very much
83
What are thresholds for premium listing?
PLC
Three years audited trading history
12 months working capital
Market value: £700,000 equity, £200,000 debt
Experienced management
Sponsor
25% free float, max 20% in warrants or convertibles
84
What are thresholds for standard listing?
PLC
Market value: £700,000 equity, £200,000 debt
Experienced management
25% free float, max 20% in warrants or convertibles
ie. NO NEED for trading history or working capital minimums
85
What are thresholds for AIM?
PLC - and that's it?
| Needs a NOMAD - nominated advisor, usually investment bank
86
What are thresholds for high growth segment?
Incorporated in EEA
Only equity - no debt
Free float of 10% - owners retain control
Average growth of 20% over three years
87
Who decides re what kind of listing you get?
LSE - not UKLA/FCA
88
If you get pension tax relief, how is it calculated?
Topped up at highest marginal tax rate
For £100, higher rate taxpayer pays £60, basic rate payer £80
If a basic rate taxpaer contributed £10,000, they get 10000/0.8 = £12,500
89
Whose rates and allowances apply in a bare trust?
The beneficiary
90
What kind of tax is VAT?
Indirect
91
What is 'further dividend' code for?
That the allowances are all used up
92
What are IHT allowances?
£325,000, plus £175,000 for property - so £500,000 total
93
What is CGT allowance?
£12,300 - and losses can be carried forward indefinitely
94
When do you pay tax on an OEIC?
On disposal
95
How is a UK resident/domiciled taxed?
Arising
96
How is a UK resident but non-dom taxed?
Remittance
97
How is an overseas resident but UK domiciled taxed?
Only on UK income
98
Do CFDs, property, ETFs count for CGT?
Yes
99
How do insurance payouts get taxed?
No CGT, pay out net of tax already
If qualifying!
100
How is IHT on a discretionary trust?
20% on transfer, 20% on death
101
What is IHT on a charitable donation?
Exempt
102
What is tax relief on an EIS?
30% up to £1m
103
What is IHT on gifts?
People you give gifts to will be charged IHT if you give away more than £325,000 in the 7 years before your death.
104
What is gift with reservation re IHT?
Gift but owner retains benefit
105
How are occupational pensions taxed?
Deductible from employer profits
Exempt from CGT
Employee liable for income tax
106
What do wider bid/ask spreads say?
WIDER SPREADS = MORE LIQUIDITY
Quote spreads are wider in liquid markets.
In order-driven markets, liquidity can be judged by the difference between the best buy and sell prices in the order book.
107
What does transparency do to spreads?
Transparency reduces bid-ask spreads, which benefits investors
108
What does the GEMMA do?
The Gilt-Edged Market Makers' Association (GEMMA) provides data at the end of each day to the DMO relating to gilt prices.
NOT the gilt regulator
109
What must AIM companies disclose?
Scheduled interim and full-year results
| Price-sensitive information
110
Where do training and competency rules appear?
High-level Standards.
111
Where do Conduct of business rules, Code of market conduct, Client assets rules appear?
Business Standards block of the Financial Conduct Authority's handbook
112
What does General Prohibition do?
The legal requirement that firms must be properly authorised before being permitted to carry out regulated activities
113
What new controls did MIFID II introduce to derivatives?
Establishing position limits on commodity derivatives
114
Under the Senior Managers' Regime, where will you find which directors are responsible for specific areas of the organisation as a whole?
The responsibility map
115
How often will a firm need to assess as fit and proper those staff who pose the risk of significant harm to the firm or its customers
Annually
116
Under MiFID II, when might a local authority be considered a professional client?
Only when acting for a local government pension scheme (opt up - usually retail clients)
117
What are responsibilities of distributor under product governance rules?
Determine the actual target market for the product
Have product governance controls in place to ensure compatible with the needs, characteristics and objectives of an identified target market and its distribution strategy is consistent with the identified target market
Ensure it can obtain all required information from the product manufacturers
Comply with the normal MiFID rules on disclosure, suitability and appropriateness assessment, inducements and conflicts of interest rules.
118
Does an aggregation policy appear on a KID?
No
119
What appears on a KID?
Complaints procedures
What happens if manufacturer can't pay
Risk/reward profile, inc summary
120
Can FCA take original documents?
No - only copies.
| Can enter premises with reasonable notice, interview ALL staff, demand printouts
121
What does a market order include?
Buy or sell
Volume
Will execute at current best price - immediately. So no price or expiry specified.
122
Who hears appeals re FCA?
Upper Tribunal
123
When does an EU directive apply?
When the UK legislates
124
When must you notify company of holding of more than 3%
Two business days
125
What is the non-MIFID threshold for professional clients?
Companies with share capital or net assets of at least £5 million, are classified as professional clients for non-MiFID business.
This is also true for partnerships with net assets of at least £5 million.
126
What are regulated investment activities?
Dealing,
Arranging deals,
Managing investments,
Advising on investments,
Safeguarding and Administering investments, and
Establishing, Operating or Winding up a CIS [including unit trusts].
127
Is a decision not to deal on the basis of inside information an offence?
No
The criminal offence of insider dealing was created by the Criminal Justice Act 1993, not the Fraud Act 2006.
128
Are inducements covered by 11 Principles of Business?
no - COBS
129
Is an occasional report (confirmation) required for a discretionary managed portfolio?
No
Yes for selling ordinary shares, buying investment trust shares, writing options
130
How is market abuse judged?
Effect
131
Do all firms need a MLRO
Yes, regardless of size
132
Who handles Eurobond settlement?
Euroclear, Clearstream
133
If a shortfall in reconciliation, what must the firm do?
Make it up themselves - no need to report to FCA
134
What law established FCA rule on fair, clear and not misleading statements?
Financial Services Act 2012
135
Are commodities investments?
No - tangible assets. NOT SPECIFIED
136
What is minimum market cap for listing on LSE?
£700,000
137
Are general insurance companies taxed on their profits?
Yes
138
Are pension funds subject to tax
No
139
Are dividends paid pre or post tax?
Dividends paid from post-tax profits
140
Do execution policies need third party review?
no - but need customer consent
141
What are conditions for being non-resident of UK?
They visit the UK for fewer than 16 days during the tax year; or
They are non-UK resident in all of the previous three tax years and visit the UK for fewer than 46 days during the tax year; or
They work full-time overseas and visit the UK for fewer than 91 days during the tax year.
142
What are conditions for being resident?
They are present in the UK for 183 days or more during the tax year; or
They have their only home in the UK, This must be for a period of at least 91 days and they must live there for at least 30 days; or
They carry out full-time work in the UK.
143
Do unit trusts, OEICs, ETFs pay CGT?
No - but investors do on realised gains
144
What is problem with order-driven markets?
No guarantee of execution
145
First priority before recommending any investment products?
Determine the financial situation of the investor
146
What is scope of fit and proper test?
Any company, any jurisdiction
147
What are responsibilities when communicating a promo from overseas?
Must explain:
That the rules for the protection of investors will not apply
The extent to which the UK compensation scheme arrangements will be available (and if they will not, that fact), and
If the communicator wishes to do so, the details of any overseas compensation and/or the deposit protection scheme applicable.
The firm must not communicate and/or approve the promotion unless it has no doubt that the overseas firm will deal with its UK clients honestly and reliably.
148
Does corporate governance cover reporting?
No - it ensure shared management responsibilities and accountability
Reporting is an ongoing obligation, but NOT GOVERNANCE
149
Benefit of LSE CCP?
Settlement netting - ie multiple fills on order book will settle as one transaction
150
Who sets rules for LSE member firms?
LSE (not FCA)
151
Are gifts between spouses exempt from IHT
Yes
152
Are transfers to discretionary trusts exempt from IHT
NO - chargeable lifetime transfer
153
Does residential allowance apply to IHT if you have no children?
No! (ordinarily it would be 175k per spouse)
154
What is CGT rate for higher rate taxpayers?
20%
155
Who approves prospectus?
UKLA - (not LSE) - needed for retail clients.
156
Who do you apply to for MIFID passport?
FCA
157
What must a promotion be?
Fair, clear and not misleading
158
Is annoyance at being on a mailing list grounds for FOS?
No
159
Which trades are covered by criminal justice act?
Exchange and professional intermediaries -
160
What are investment brokers?
Eligible counterparties
As an authorised firm an investment broker would be classified as a per se professional client and as an eligible counterparty for eligible counterparty business.
161
Where are the COBS rules?
Block 3 of the FCA Handbook.
162
Does advice on tangible assets need authorisation?
No - cars, commodities
163
Does advice given to intermediary require authorisation?
No
164
Does advice to opt out of an occupational pension scheme require authorisation?
Yes
165
What is CGT on property?
18% for basic, 28% for higher/additional - NOT ON PRIMARY HOME
166
Are warrants subject to insider dealing reg?
Yes
167
Are currency derivatives subject to insider dealing reg?
No - OTC markets not covered
168
Are unit trusts subject to insider dealing regs?
No - because there is no secondary market
169
How long after making a complaint does the complainant have to wait to refer the matter to the Financial Ombudsman Service?
Eight weeks
170
Is this regulated: trustee of an authorised unit trust
Yes
171
Is this regulated: third party custodian
Yes
172
What is income tax relief on an EIS?
30%
173
What are requirements for standard listing?
25% free float, minimum £700,000 market ca - no need for working capital, three year trading record, sponsor
174
How are interest bearing securities taxed?
As interest - 20/40/45, allowance 1000/500/0
175
What is 'starting rate' of income tax?
i think it's under basic rate?
176
How does voting work at shareholder meetings?
On a show of hands, each member present at the meeting who is entitled to vote has one vote.
On a poll vote, due regard is given to those who hold a large number of shares
177
Is the European Systemic Risk Board a supervisory authority?
No - ESMA, EBA, European Insurance and Occupational Pensions Authority are
178
What do you pay if you buy a commercial property?
SDLT - not CGT
179
What is the SDLT on properties up to £125,000?
Zero (+3% if second home)
180
What is the SDLT on properties 125k - 250k??
2% (+3% if second home)
181
What is the SDLT on properties 250k - 925k?
5% (+3% if second home)
182
What is the SDLT on properties 925k - 1.5m?
10% (+3% if second home)
183
What is the SDLT on properties 1.5m plus?
12% (+3% if second home)
184
What is the minimum for stamp duty?
£1000
185
How long after a trade for CGT to kick in?
30 days
186
Are depositary receipts standard or premium listings?
Standard
187
What is power of ESMA?
Investigate non-compliance with EU law
188
What are the three pillars of FCA supervision?
Pillar 1: Firm systematic framework – preventative in nature
Pillar 2: Event-driven work – reactive work
Pillar 3: Issues and products – campaign focused on specific sectors or issues within a sector, e.g. market abuse in asset management
189
Is governance and culture FCA pillar of supervision?
No
190
How does MIFID II increase consumer protection?
Enhanced product disclosures
Enhanced product governance
Remuneration of intermediaries
191
Is a misleading impression a market conduct issue?
Yes
192
Who can become an elective counterparty?
Per se professional client, not SPV
193
Who can't be elective counterparty?
Individuals, elective professionals
194
Who collects stamp duty on equity trades?
CREST
195
What are retail investment products?
Life policies, regulated unit trusts, investment trust savings schemes and personal pension plans
196
What does the Scheme Specific Funding Requirement, introduced by the Pensions Act 2004, apply to?
Certain occupational defined benefit schemes
197
What does churning violate?
Customers' interests
198
Who regulates the Eurobond market?
ICMA
199
Do LSE market makers need to offer continuous bid and offer prices?
yes - and indicate max number of shares they will trade
200
Is a prospectus required for a takeover?
No - or up to 150 people
201
Apart from the Competition and Markets Authority, who else decides whether or not a merger should go ahead?
Secretary of state - takeover panel only monitors
202
What is the most suitable risk warning stated on an advert for an income and growth unit trust?
The value of your units may go down as well as up
203
What should the risk warning be for contingent liability transactions, e.g. futures?
You might lose more than you originally invested
204
How often should directors evaluate own performance?
Annually
205
Which investment services are exempt from the client agreement rules?
Transactions with authorised persons
Acting as the trustee of a unit trust scheme
The supply of published recommendations
206
What is the dual capacity of LSE member firms?
They may choose to act as an agency broker for some deals and as a principal for others
207
Are CFDs regulated?
Yes, but if for risk management
208
Are physical investments regulated?
No
209
Where does conduct of business rules appear?
Block 3 of the FCA Handbook
210
What are the FCA high level standards (Block 1)?
The Statement of Principles for businesses
The Conduct Rules for certified persons
The fit and proper criteria for certified persons
211
Are authorised CIS professional clients?
yes, always
212
What is clearing?
Recording and matching trades and maintaining positions
213
What is settlement?
Ensure legal obligations resulting from a trade are met
214
Is it insider dealing if you tell someone not to trade?
Not really - if you don't expect them to trade, or normal course of business
215
What tax is deducted by foreign countries?
Withholding tax
Withholding tax is, literally, the tax withheld by the country in which the income is earned. Despite this, tax will be due in the country of residence for the investor too. Often there is a tax treaty between nations allowing investors to claim a relief on the lower of the two tax liabilities. Clearly, if withholding tax is greater than the tax in the country of residence, there will be no refund.
216
How do you handle conflicts of interest?
manage them - only disclose if you can't manage
217
Low risk for a maturing investor?
With profits bonds offers a guaranteed capital return plus a share in any profits.
It also has a life assured element, should the investor die during the term of the bond thus offering an element of protection for his family.
218
What does an unregulated scheme deliver?
Unregulated funds tend to be more aggressive in the market causing more market activity, higher fees but a potentially higher return (or bigger loss!).
Regulated funds have more restrictions placed upon them including how much they can charge.
This tends to lower overall cost of investment, but also potentially give lower returns.
219
What must you do after reporting unethical activity and if there is no action?
Dissociate yourself
220
Is a fact find a regulatory requirement?
The nature and content of the Fact Find are not governed by regulations
221
How do you deliver best execution?
Adhere to order execution policy
222
Can capital losses on an EIS be used to offset against income tax?
No
223
What are tax benefits of EIS?
Income tax relief of up to 30% on shares held for over three years
Exempt from IHT if held for over two years
Exempt for CGT if held for over three years
224
What do GIPS apply to?
Global Investment Performance Standards (GIPS) apply to investment management firms. They are intended to serve existing and prospective clients of investment firms.
225
How long are records required to be kept?
Five years
226
Is stamp duty paid on gilts or units in a unit trust?
No
227
Investment bond - what triggers a chargeable event?
Cumulative withdrawals of 5% of the original capital do not trigger chargeable events.
£80,000 x 5% = £4,000 per year. After four years the cumulative total of potential withdrawals is £4,000 x four years = £16,000.
Actual withdrawals have been £2k + £3k + £4k = £9k. This means Emily has the potential to withdraw £16,000 - £9,000 = £7k without triggering a chargeable event.
228
Do you pay SDRT on Eurobonds?
No
229
Do market makers/intermediaries pay SDRT?
No
230
What do you do if you can't disclose exact costs?
Disclose the basis on which the fee will be calculated
231
How much SDLT on non-residential leases of less than £150,000?
Zero
232
What are benefits of fee-based advice?
With fee-based advice, it is clear what is being paid for the advice and how much is being invested
As the client is paying a fee, it will avoid product and provider bias in the advisor
Commission not in exit fees, but it can be hidden.
No guarantee paid advice will be better!
233
What is penalty for insider dealing?
up to 14 years in prison, unlimited fine
234
What is penalty for front-running, ie. dealing on research produced specifically for clients?
unlimited fine
235
Who can be prosecuted for financial crime?
anyone
236
What makes a fact find inadequate?
Not appreciating change in circumstances
237
Who needs a suitability report?
Retail clients, after a test
238
What tax is liable on an investment bond?
Income tax
239
What happens if someone dies with a will - testate?
Executors get grant of probate
240
What happens if some dies intestate - ie no will?
Act according to the national intestacy rules
241
After you die, what is threshold of debt to qualify for a bankruptcy order?
£5000
242
Administering will - do you need to be authorised?
Firm needs need to be authorised for the advice, but not for the custody
243
Who creates a trust?
The settlor creates the trust and puts property in at the start.
244
How are the values of exchange traded futures calculated for accounting purposes?
According to the market value of the future
245
Do investment powers of trustees apply to authorised unit trusts, occupational pensions schemes or life insurance companies?
No - Trustee Act 2000
246
What does an 'at best' order include?
buy or sell, volume of shares - executes immediately, no limit price
247
What is characteristic of a a fund able to passport under the Undertakings for Collective Investments in Transferable Securities Directive?
Open-ended
248
What is only bond where SDRT is payable?
Convertible
249
What is VAT on children's clothes?
0%
250
What is VAT on energy?
5%
251
Spouse transfer - gap for CGT?
0 days, not 30 as with normal buys and sell
252
What are goals of FSAP - financial services action plan?
* To create a single EU wholesale market
* To achieve open and secure retail markets
* To create state-of-the-art prudential rules and structures of supervision
253
How is a flexible portfolio firm supervised?
Thematic work - smaller firms
254
What happens with a contract if the client has been misled?
Two options:
Enforce the contract: rely on the agreement and sue for damages if any loss is suffered
Avoid the contract: the investor has the right to their money back
255
How does MIFID II cover physically delivered commodities?
Traded on Exchange, MTF and OTF contracts only
256
How often must senior management disclose details of an authorised firms remuneration policy?
Annually
257
When are guaranteed bonuses ok?
Exceptional circumstances only
New hires only
One year only
258
What shows which director has taken on which responsibility?
Statement of responsibility.
Enhances firms must have responsibilty map
259
RDR - do accredited bodies provide gap fill training?
No, but they do ensure ethics and sample checks of CPD
260
Is image advertising exempt from financial promo rules?
yes
261
What are shared responsibilties of manufacturer and distributor under product governance rules?
Effective control over product governance processes
Compliance function oversees the governance arrangements
Relevant staff understand the products
262
Who is a KIID for?
KIIDs must be clear, fair and not misleading, and should only include information that a RETAIL INVESTOR needs in order to make informed investment decisions
263
What does the CRS - common reporting standard - set out?
The financial account information to be exchanged
• The financial institutions required to report under the Standard
• The different types of accounts and taxpayers covered
• Common due diligence procedures to be followed by financial institutions
NOT national tax authorities
264
What is the required notice for an FCA enforcement visit?
None
265
Can FCA/PRA remove documents?
No - only copies
266
Is it market abuse if info is disclosed through RIS?
No
267
Are OEIC shares included in estates re IHT?
Yes
268
How often must a listed company have a general meeting?
Annually
269
What kind of client is a UK listed company?
Professional client
Must be at least two of:
- Balance sheet min €12.5m
- Net turnover min €25m
- Average number of employees 250 min
270
Are there automatic enforcement actions by FCA?
No
271
What are factors re fitness?
Suitable qualifications
Past employment record with other firms in the financial services industry
Any criminal record
Their position in the firm
272
Does the FCA authorise the Bank of England?
No
273
How must a prospectus be made available for official list of LSE?
Have a prospectus approved by the UK Listing Authority
Publish its prospectus
Advertise the prospectus in at least one national newspaper
274
How often must complaints be reported to FCA?
Twice yearly
Must report complaints closed in 4 weeks, 8 weeks, plus more than 8 weeks and outstanding
275
What are defences for communicating a financial promotion if not authorised or approved by authorised person?
Reasonably believed that the communication was prepared by an authorised person
Reasonably believed that the communication was approved by an authorised person
Exercised due diligence
276
What must pre-trade information be in?
Durable information
277
What is difference between money laundering and terror funding?
Terror funding can come from legit sources
278
What is the principal-to-principal guarantee?
The guarantee operates between the clearing member and the clearing house. The clearing house guarantees trades between itself and the clearing member only.
279
What do you do if client wants lower level of protection?
First assess the client and then, if necessary, warn them of the additional risks
280
What is priority in recommending a life insurance policy?
Affordiability for the investor
281
Does tax bracket effect attitude to risk?
No - income/capital are the factors
282
Can you unilaterally break a trading restriction if you think it is unjust?
No
283
Does UK corporate governance include provisions on environmental impact?
No
284
What happens if you terminate a life policy early?
Terminating a life policy early will lead to a surrender value below the prices the policy is linked to.
285
How long must responsibility records be kept?
Six year
286
Do training and competency requirements apply to arranging?
No
The rules apply for advising, dealing, managing and overseeing on a daily basis.
287
What is a benefit of the LSE CCP service?
Settlement netting
Multiple fills on an order book will settle as one transaction with the central counterparty (CCP).
288
Do FCA listing rules apply to AIM companies?
No
289
What is the ethical priority?
Putting customer first
290
How do you pass assets to spouse but make sure a third party gets them on the spouse's death?
Interest in possession trust
291
Does FOS cover accepting deposits in foreign currency savings and current accounts?
No - specified investments do not cover foreign currency
292
How is FX settled?
PvP
293
Can companies commit offences under Criminal Justice Act 1993?
No
294
Does Criminal Justice Act 1993 cover commodity derivatives?
No
295
What is a limit order?
A limit order is to buy or sell a volume at a price or better.
296
What NIC do self-employed people pay?
2 and 4
297
What NIC do employees pay?
1A and 1B
298
What NIC do employers pay?
1
299
What are top up NICs?
3
300
What is the the SDLT on first homes up to 125k?
0%
301
What is the the SDLT on first homes between 12k and 250k?
2%
302
What is the SDLT on first homes between 250k and 925k?
5%
303
What is the SDLT on first homes between 925k and 1.5m?
10%
304
What is the SDLT on first homes above 1.5m?
12%
305
How much extra SDLT is there on second homes?
3%
306
What is the bed and spouse practice?
Use CGT allowance on sales
307
What characterises a VCT?
The maximum investment is £200,000 with a 30% income tax relief (£60,000). The scheme invests in smaller, newer companies that are more likely to be higher risk.
308
Who allocates a debtor's assets following bankruptcy?
The Receiver
309
How must pension fund trustees invest?
According to statement of investment principles - NOT Trustee Act 2000
310
A beneficiary is subject to life in interest. On their death the second beneficiary is known as the:-
Remainderman
311
How is it described if If the beneficiaries have the legal right to all the income of the property, but not to the property itself?
Interest in possession
312
What do life insurance companies mainly invest in?
Equities
313
Can you invest for people with little experience?
yes - if you are clear about experience and basis of fund
314
How long must pension transfer record be kept?
Indefinitely
| Also opt-outs and free standing additional voluntary contributions (FSAVC's)
315
Are funeral plans subject to COBS?
No, not designated business
316
Are corporate bonds or Eurobonds subject to tax at source?
No, but coupons are
317
What is settlement for equity corporate bonds and Eurobonds?
T+2
318
What is name for a proxy instructed to vote according to specific set of instructions?
Special (two-way) proxy
319
What does the Universal Trading Platform do on the NYSE?
It is an order processing system that delivers orders to the trading post
320
Are shares in an investment trust a retail investment product or a packaged product?
Retail investment product
Other investments that are considered retail investment products and not packaged products include unregulated collective investment schemes and structured products
But investment trust savings schemes ARE packaged products
321
Part 4A permission - what is sole responsibility of FCA?
Appropriate non-financial resources
322
When are Eurobond sales confirmed and settled?
Confirmed T+1; settled T+2
323
How is the PPF funded?
The PPF is funded by levies on eligible defined benefit pension schemes
324
What are notification periods for disclosures from PDMRs?
Most notify listed company within four days, and the company must notify the market through PIP not more than one business day after
325
What needs to be published for a market to be pre-trade transparent?
Real-time data about quotes and orders.
326
What is market abuse an offence under?
EU regulation
327
Are futures used for risk management regulated?
No
328
Where are the high level competence requirements laid out?
The Senior Management Arrangements, Systems and Controls sets out the requirements for ALL firms.
329
Do training and competence sourcebook rules apply to all firms?
No, only retail firms
330
When retired, what is usually the priority for investments?
Generating income
331
When can a UK firm communicate an unsolicited real time financial promotion to a client in another EEA country?
When it complies with the UK COBS
332
What is the most important feature of an interest in possession trust?
The beneficiary of the income differs from the beneficiary of the assets
333
Can bribery be a corporate offence?
Yes
334
Do derivatives always require risk warnings?
Yes
335
What can you do if client cannot provide enough info for you to judge appropriateness?
If the client still wishes to do business with the firm, the firm must warn the client that it is unable to judge appropriateness
336
What is CGT on NON-MAIN HOME?
18% basic, 28% higher/additional
337
What sets apart SETSqx?
SETSQX is for less liquid securities - hybrid system
It provides both quote and order driven matching and has four auctions per day.
338
What is threshold for requiring a prospectus?
Fewer than 150 persons PER EEA STATE
339
What does an AIM listing need?
NOMAD - nominated advisor
340
Maximum lifetime transfer without IHT consequences a year?
£3000, £5000 for wedding
341
What is max charge for accessing credit reference agency?
£2
342
How is a fixed portfolio firm supervised?
On-going by dedicated FCA supervisor
343
Where is guidance on process for authorisation for regulated activities?
FCA Perimeter Guidance Manual (PERG).
344
Does the FCA recognise the NYSE?
No!
345
Does the FCA recognised the LME?
Yes
346
What is Aquis Exchange?
New name for NEX Exchange
347
How is variable remuneration handled?
Adjusted according to risk
348
What is the Senior Manager's Regime?
A statutory duty of responsibility
349
Do ancillary staff need to follow code of conduct?
No
350
How does FCA see social media?
Financial communication, covered wherever it appears
ie not just firm's account
351
Is car insurance a packaged retail investment and insurance product (PRIIP)?
No - no general insurance is
352
When is research not an inducement?
When it is directly paid for
353
Can research budget be linked to volume/value of transactions?
NO
354
How many years interest in shares requires disclosure?
Three years
355
What does CREST provide?
Delivery versus payment - ie settlement
356
When do equities and corporate bonds settle?
T+2
357
Who performs the role of counterparty to the buyer of an exchange-traded futures contract?
Clearing house
358
What do you need to confirm you want opt up to elective professional client once you have met the conditions?
Two way written warning, demo of understanding
359
What is threshold for disclosing director interest in shares?
3%
360
When must interest be paid on client money accounts?
Always - unless written arrangement
361
Who do you appeal to re Part 4A permission?
Tax and Chancery Chamber of the Upper Tribunal
362
What is exempt from financial promotions order?
Solicited real time communications for non-derivative products with associations of high net worth individuals Unsolicited non-real time communications to an authorised firm
Non-real time promotions to high net worth individuals
Not exempt: Non-real time communications with a company categorised as a retail client
363
is it OK to allow aggregation to work to client disadvantage?
NO
364
What balance sheet total must a company have in order to be categorised as a professional client for MiFID business?
€20 million
365
Do inducement payments count for COBS when client is paying the firm?
No
366
Can you seek to make future appointments unless the client requests it over the phone?
Yes - but must give opportunity to cancel
367
Who is responsible to unit holders of a trust re investment objectives?
Trustee
368
Whose trades does a clearing house guarantee?
All member firms - but not their customers
369
What is best for young taxpayer who wants no risk?
S&I Capital bonds
370
Once a clearing house has performed novation, what is the relationship between the parties involved?
The buyer and the seller each become contractually bound to the clearing house
Novation is where the clearing house acts as central counterparty to the trade, dealing as principal to both sides.
371
Do you need to disclose compensation from outside sources
All compensation from outside sources should be disclosed whether monetary or non-monetary.
372
What is a benefit of ITC market?
Confidentiality
373
If you cannot resolve a complaint in the allotted time, do you need to give client a summary of the investigations the firm has made into the complaint?
No
374
Where do corporate bonds mostly trade?
OTC
375
What happens re tax if you are a UK resident but are not domiciled here?
You are liable for UK tax on your UK income and gains.
Overseas income and gains will be taxed on a remittance basis if you elect for this treatment.
376
How do conflict of interest policies work?
The rules protect ALL types of client.
Where a firm is part of a group, the policy should take account any potential conflicts arising from that group
A description of the policy should be provided to retail clients and potential retail clients.
The policy itself does not require firms to maintain effective and administrative arrangements but shows how they will identify and manage conflicts.
377
How much can be withdrawn from an investment bond on a cumulative annual basis?
5% with no tax - CUMULATIVE
378
What does a preference towards cash suggest?
Risk-averse client
379
Can you receive a trust before 18?
No
The named beneficiary has an 'absolute entitlement' to the assets that are placed in trust, but they will be held in the name of the trustee until the child reaches the age of 18.
380
What is difference between qualifying and non-qualifying insurance policies?
Gains on qualifying policies do not incur any extra taxes.
Gains on non-qualifying policies incur extra income tax, not capital gains tax.
381
Do you pay CGT on unit trusts?
yes - 10% basic, 20% higher/additional
£12,300 allowance
382
What is it about Eurobonds and money laundering?
Money laundering is much easier through the use of bearer instruments
383
Do you need to tell FCA if MLRO reports to NCA?
No
384
Is being a a market maker acting in the normal course of business a defence against insider dealing?
Yes
385
Can you be anonymous with an IDB?
Yes - An interdealer broker allows a market maker to anonymously take on or off-load a position in a security.
386
How is the liquidity of AIM stock?
The liquidity of AIM stock is generally lower as the companies tend to be smaller and younger.
387
What is most vulnerable to inflation?
Conventional gilts
More vulnerable than a bank account - bank account interest is calculated on the BOE rate which can be changed in response to inflation and the rate benefits from compounding
388
What is insolvency?
A financial state where a company can no longer pay on time
State of being - bankrupty is a matter of law
You can be insolvency while not being bankrupt
389
How often does fund manager supply a short report and long report to unit holders?
Half yearly and annually
390
Does a payment system with a central counterparty get regulated?
No
Payment systems that are embedded in securities trading systems, clearing houses or central counterparties are excluded from PSR regulation
391
Is SEAQ a quote-based system?
Yes
392
What kind of order/quote systems are SETS and UTP?
Order-based
393
What does round trip transaction costs mean?
Buying and selling - NB SDRT is only on BUYING
Add to costs when buying, deduct from profits when selling
Don't forget takeover panel levy is over £10,000
394
What is key benefit of dark pools?
Sell side traders, as frequent traders, have an informational advantage
395
Who can call an AGM?
Only the board
396
Which LSE system is used for less liquid stocks?
SETSqx
397
Is a unit in a collective investment scheme a packaged product?
Yes
398
Who does MLRO report to?
NCA
399
How much will code staff generally have bonus deferred?
40% over three years
400
How do Eurobonds usually trade?
OTC
401
Under the Takeover Code an offer must remain open for how many days after posting?
21 days
402
When doing IHT on a house, do you include both spouse allowances up to £500k each?
yes
403
What is a systematic internaliser?
An investment firm deals on its own account by executing customer orders outside a regulated market or a multilateral trading facility.
404
Under the remuneration code, for how long will a proportion of the bonus of code staff typically be deferred?
Four years
405
Is an execution-only future likely to require appropriateness to be assessed?
Yes
406
Who doesn't pay NIC?
People above state pension age
407
Is gilt interest liable to income tax?
yes
408
When are tax bands determined?
AFTER deducting £12,500 allowance
409
Why do bonds not get CGT?
The capital is unchanged?
410
Do NS&I savings certificates pay income tax?
No
411
Do Eurobonds pay income tax?
Yes
412
Do convertible bonds pay income tax?
Yes
413
Do NS&I direct saver accounts pay income tax?
Yes
414
Can maintenance costs be offset against CGT?
No
415
Can acquiring, disposal and improving costs be offset against CGT?
Yes
416
What are trust rates?
first £1000 is at standard rate, above that 45% for property/interest, 38.1% for dividends
417
What are the savings allowances for interest?
basic £1000, higher £500, additional zero
418
When are self-assessment payments due?
31 January in tax year, July the next year
419
Can REITs be held in an ISA?
Yes
420
Can a REIT elect from property income to be exempt from income tax?
Yes
421
Is a REIT a listed company?
Yes
422
Are disposals of REIT shares subject to income tax?
Yes
423
Are gains in a currency trading account liable for CGT?
Yes
424
Can CGT exempt allowance be transferred to a partner
No
425
What happens with a gift with reservation?
Person gifts property and continues to benefit for free, or the person who gets it has conditions attached
426
Do cars get CGT?
No
427
Does fine wine get CGT?
Yes
428
How many years of audited accounts to UKLA for a premium listing?
Three
429
How long after the end of the half year must interim results be published?
Two months
430
Do disclosure requirements apply to money laundering?
No
431
Do shareholders need to be kept abreast of price sensitive info?
Yes - in reports
432
Material interest - 2% - by when should the COMPANY be notified?
T+2
433
What is a quorum for shareholder meetings?
2 persons
434
UKLA reports to who?
FCA - not LSE
435
Is there a minimum value for AIM?
No
436
What is minimum value for LSE?
£700,000
437
On AIM, what happens if you lose your NOMAD?
Suspended if not a new one within 30 days
438
What is free float for full listed company?
25%
439
Who regulates AIM?
LSE
440
When must changes in ownersip be disclosed?
Cross 3%, and cross a full % point above 3% in either direction
ie. 5.9 -6.1
441
What kind of proxy is assigned to vote a specific pre-determined way?
Two-way proxy
442
When do ex-dividend dates fall?
Thursdays
443
What are requirements for high-growth stock?
20% growth over three years, no need for previous AIM membership, can be incorporated in any EEA state
444
What is takeover panel levy level?
£1 after £10,000
445
What do wide spreads mean?
Less liquidity
446
How is SDRT rounded?
CREST - nearest penny
| paper-based - nearest £5 unit
447
Is SETS order or quote driven?
Order
No need for market maker for liquidity
LSE and most liquid AIM shares
448
Who is a a KIID for?
Retail investors
449
What is SEAQ?
Quote driven
Minimum volume quote - 1 EMS (exhange market size) - ie prices change if you want to trade more than volume quote
Needs market makers
450
What is SESTqx?
Hybrid
most AIM sares
451
What is a systematic internaliser?
Investment firms match orders with clients
Creates direct liquidity without need for external markets
452
Can an operator of platform take positions on MTF?
No - but they are allowed on OTF
453
How are Eurobonds settled?
Reported T+1, settled T+2
Euroclear and clearstream
454
What are thresholds to per se pro clients?
MIFID 2 of:
20m euro balance sheet
net turnover 40m euro
own funds 2m euro
Non-MIFID - 12.5m balance sheet, 25m turnover, 250 employees
OR gov or supranational body
455
What are quantitative criteria for elective professional client?
10 transactions a quarter for four quarters
500,000 euro portfolio
experience
456
What is an eligible counterparty?
dealing on accounts
execution for clients
transmission of orders
ie lots of institutions inc UCITs
457
Is FX excluded from FXMA 2000?
Yes
458
Are employee share schemes excluded from FSMA 2000?
Yes
459
Are physical property and FX excluded investments under FSMA 2000?
Yes
460
Are premium bonds and national savings certificates excluded investments under FSMA 2000?
Yes
461
Is custody a core activity under MIFID II?
No
462
Is FX a core activity under MIFID II?
No
463
What does remittance basis mean?
Overseas income is only taxed as it comes into the UK
£2000 or more - has to choose if remittance or arising
464
What is the remittance basis charge?
£30,000
or £60,000 if domiciled in UK for 12 out of last 14 years
465
What is the tax status of UK resident but non-dom?
UK income taxed on arising
Overseas income in either arising or remittance basis
466
What is the tax status of overseas resident?
UK income on arising basis
Overseas income not taxed
467
If you are taxed on remittance basis, do you lose your allowances for income and CGT?
Yes
468
What are the thresholds for automatic overseas resident?
One of:
Fewer than 16 days a year in UK
Not been resident in UK for past three years and in UK for 46 days or fewer this year
Work full time overseas
469
Are loss adjusters excluded investments?
No
| but general insurance is
470
What are thresholds for automatic UK resident?
One of:
In UK 183 days a year
Main home in the UK
Work full time in UK
471
What is the allowance for trust income?
£1000 per settlor at standard rate (20), income above at additional rate (45, 38.1)
472
What is SDLT for commercial property up to £150,000?
Zero
473
What is SDLT for commercial property between 150k and 250k?
2%
474
What is SDLT for commercial property above £500k?
5%
