Regs Flashcards
FCA objectives
Strategic:
Ensuring that relevant markets function well
Operational:
Consumer protection, integrity & competition
***FCA principles for business
- Integrity
- Skill, care & diligence
- Management & control
- Financial prudence
- Market conduct
- Customers’ interest
- Communications with clients
- Conflicts of interest
- Customers: relationship of trust
- Clients’ assets
- Relations with regulators
- Consumer duty (where this applies it replaces 6 & 7)
FCA assesses the success of a firm’s consumer duty against four outcomes
- Products and services outcome
- Price and value outcome
- Consumer services outcome
- Customer understanding outcome
CISI professional code of conduct
- Personal accountability
- Client focus
- Conflict of interest
- Respect for market partners
- Professional development
- Aware of capabilities
- Respect others and the environment
- Speak up and listen up
Other financial bodies
- CMA
- Information Commissioner’s Office
- Pensions Regulator
- Pension Protection Fund
- HMRC
- Upper Tribunal
Regulated and prohibited activities (equivalent to MiFID investments)
- shares/depositary receipts/warrants
- debt instruments
- units in collective investment schemes
- options
- futures
- CFDs
- dealing in investments
- arranging deals in investments
- managing investments
- advising on investments
- operating a multilateral or organised trading facility
Exempt persons
- appointed representatives
- Lloyd’s syndicate members
- members of Designated Professional Bodies
- Recognised Investment Exchanges
- Recognised Clearing Houses
- Other exempt bodies
‘Fit and proper test’
- honesty, integrity & reputation (6 years employment history, criminal convictions, breaches of FCA/PRA rules, complaints)
- competence & capability (exam success, experience & training)
- financial soundness (bankruptcy)
*firms use form A to apply for approval on behalf of senior managers. Firms should be informed within 90 days
Individual conduct rules
- Must act with integrity
- Must act with due care, skill and diligence
- You must be open and co-operative with the FCA, the PRA and other regulators
- You must pay due regard to the interests of customers and treat them fairly
- You must observe proper standards of market conduct
- You must act to deliver good outcomes for retail customers (where consumer duty applies it replaces 4.)
Criminal & Civil Offences
Insider dealing > S52 Criminal Justice Act 1993
Market abuse > UK MAR & FCA Sourcebook
Misleading statements & impressions > S89-91 FSA 2012
Insider dealing
- Covers shares, ADRs, warrants, tradable debt, options, futures and CFDs
- maximum penalty 10 years
Misleading statements & impressions
- max 10 years/unlimited fine
- misleading statements: e.g. lying to persuade someone to deal
- misleading impressions: e.g. abusive squeezes
- misleading statements in relation to benchmarks e.g. LIBOR
Market abuse
- civil in the UK
- scope of MAR (market abuse regulation): applies to financial instruments - Traded, (admitted to trading or for which a request for admission to trading on a regulated market and multilateral trading facility (MTF) or organised trading facility (OTF)) & traded over-the-counter which and which have an affect on the price or value of the above
Behaviours that qualify as market abuse
- insider dealing
- improper disclosure
- manipulating transactions
- manipulating devices
- dissemination
- benchmark manipulation
STOR (suspicious transaction & order report)
- Identity of reporting person submitting STOR
- Description of the order or transaction
- Reasons for which market abuse is suspected of the order or transaction - Means of identifying any person involved in the order or transaction
- Any other supporting documents needed by the FCA for investigation
Managers’ transactions (market manipulation)
MAR PDMR:
- Persons discharging managerial responsibility (PDMRs) (i.e. employees and directors) dealing in their own company’s shares must disclose to both their company, and to the FCA, within three business days of the transaction
- PDMRs must not deal during closed periods
* Year-end or half-yearly results: 30 days prior to announcement
*breach does not constitute a criminal offence
Money laundering: control framework
- Proceeds of Crime Act 2002:
- Amended by Serious Organised Crime and Police Act 2005
- Criminalises money laundering and set out the offences and penalties
- The Money Laundering Regulations 2017:
- Detailed regulation setting out administrative provisions for companies at risk of
handling funds for money laundering - Complies with the money laundering directive
- Senior management arrangements, systems and controls (SYSC) - High-level rules and guidance for authorised firms:
- Makes reference to JMLSG guidance
- Joint Money Laundering Steering Group guidance:
- Guidance on how to implement anti-money laundering provisions - Not binding
Money laundering 3 stages
- Placement
- Layering
- Integration
(proceeds of Crime Act 2002, as amended by Serious Organised Crime and Police Act 2005 and Criminal Finances Act 2017)
