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International Introduction to Investment > Regulation and Ethics > Flashcards

Regulation and Ethics Flashcards

1
Q

What is the main reason for regulation and codes of conduct?

A

The risk of losing money.

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2
Q

Who does regulation protect?

A

Investors and the general public.

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3
Q

What is self regulation?

A

Where a company would create and impose rules for its own parties.

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4
Q

What was the reason for self regulation to move to a statutory approach?

A

The development of global markets.

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5
Q

What does a statutory approach mean?

A

That rules are laid down by law ans breaking them is a criminal offence.

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6
Q

What does IOSCO stand for?

A

The International Organisation of Securities Commission.

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7
Q

What is the main responsibility of the IOSCO?

A

To design objectives and standards that are used by world regulators and to set a benchmark for securities markets.

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8
Q

What do the EU directives aim to do?

A

Create a single market across the EU where each country operates under the same regime.

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9
Q

Who is responsible for deciding the role of regulator?

A

Governments.

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10
Q

How do EU governments operate their regulations?

A

Regionally.

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11
Q

How do EU governments encourage cross boarder regulation?

A

By standardizing and harmonizing each countries approaches.

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12
Q

What does ESMA stand for?

A

European Securities and Markets Authority.

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13
Q

In Asia what regulatory group are most countries part of?

A

The International Organisation of Securities Commission.

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14
Q

How does regulation in Dubai typically come about?

A

By taking examples from the UK/Australia and then adapting them to local markets.

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15
Q

Who gives regulators their objectives?

A

Governments.

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16
Q

What do regulators promote?

A

Fairness, efficiency, competitiveness, transparency, orderliness and public understanding.

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17
Q

Who do regulators protect?

A

Members of the investing public.

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18
Q

What does a regulator try to minimize?

A

Crime and misconduct.

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19
Q

What do regulators try to maintain?

A

Market stability.

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20
Q

What do regulators try and reduce?

A

Systematic risks.

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21
Q

Who is the US securities regulator?

A

The SEC.

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22
Q

Who is the UK regulator?

A

The PRA and FCA.

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23
Q

Who is the Dubai securities regulator?

A

The Dubai Financial Services Authority.

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24
Q

What does DFCA stand for?

A

The Dubai Financial Services Authority.

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25
Q

Who is the Chinese securities regulator?

A

The Chinese Securities Regulatory Commission.

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26
Q

What does CSRC stand for?

A

The Chinese Securities Regulatory Commission.

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27
Q

What is the definition of money laundering?

A

The process of turning money derived from criminal activities into money that appears to have been legitimately acquired.

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28
Q

What types of activity can money laundering come from?

A

Criminal activity, handling proceeds of crime, stolen goods, criminals investing proceeds of crime and terrorism.

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29
Q

What are 2 differences between money laundering and terrorist financing?

A

Only small sums of money are usually required for terrorist activities and if legitimate funds are used for terrorist activity then it is difficult to identify when they became terrorist funds.

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30
Q

What does FATF stand for?

A

Financial Action Task Force.

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31
Q

Which regulatory body imposes sanctions on certain countries?

A

The UN.

32
Q

Which private banking group published guidance on money laundering?

A

The Wolfsberg Group.

33
Q

What are the 3 stages of money laundering?

A

Placement, Layering and Integration.

34
Q

What does placement in money laundering mean?

A

Place dirty money into a bank or financial institution.

35
Q

What does layering in money laundering mean?

A

Moving the dirty money around making it difficult to identify the UBO.

36
Q

What is integration in money laundering?

A

When the dirty money appears legitimate and is integrated back into the financial system.

37
Q

What is it an offense to do if you suspect money laundering?

A

Fail to disclose the suspicion.

38
Q

What is the requirement of staff in regards to money laundering?

A

To be trained to recognize and deal with money laundering.

39
Q

Who would an employee report a money laundering suspicion to?

A

The appointed MLRO.

40
Q

What does MLRO stand for?

A

Money Laundering Reporting Officer.

41
Q

If a sufficient money laundering suspicion is given to the MLRO who do they pass this onto?

A

Legal authorities.

42
Q

What happens once the employee has disclosed their money laundering suspicion?

A

They have fulfilled their legal duty.

43
Q

What is the punishment for insider trading?

A

A fine and or jail time.

44
Q

What constitutes inside information?

A

Information that relates to a particular issuer or securities and has not been made public and if it were to be made public would have a significant effect on the price of the securities.

45
Q

What is inside information also known as?

A

Price sensitive information.

46
Q

What are the securities in insider trading known as?

A

The price affected securities.

47
Q

When does information become public?

A

When it is published.

48
Q

When does a person have price sensitive information?

A

If they are an insider and or known it is inside information from an inside source.

49
Q

What or constitutes as an inside source?

A

An employee or director, by virtue of their employment eg. auditors, or from any of those sources directly or indirectly.

50
Q

What is the definition of insider trading?

A

When an insider acquires or disposes of price affected securities while in possession of unpublished price sensitive information or if they encourage another person to deal in price affected securities or disclose the price sensitive information to another person.

51
Q

What securities can be used in insider trading?

A

Bonds, shares, warrants, depository receipts, options and futures or commodities that are based on securities.

52
Q

What securities aren’t covered in insider trading?

A

Commodities, derivatives based on commodities and units/shares in OEICs.

53
Q

What is the definition of market abuse?

A

When an investor has been unreasonably disadvantaged, directly or indirectly by others who behave unlawfully.

54
Q

Name the 3 main market abuses.

A

Market manipulation, public disclosure requirements and insider dealings.

55
Q

What punishments can be implemented for market abuse?

A

Fines and sanctions.

56
Q

Who introduced market abuse regulations?

A

FSMA 2000.

57
Q

What led to MAR 2016?

A

Market distortion concerns.

58
Q

Who does MAR 2016 affect?

A

All EU countries.

59
Q

What does MAR 2016 include?

A

More instruments and venues as well as attempted market manipulation and abusive behavior in relation to benchmarks.

60
Q

What are public disclosure requirements?

A

The requirement for issuers to inform the public as soon as possible about inside information.

61
Q

Who must directors and executives notify of transactions relating to the issuers securities?

A

The issuer and the FCA.

62
Q

What are Issuers obliged to do in regards to inside persons?

A

Maintain a list of inside persons.

63
Q

Which article of MAR 2016 relates to market manipulation?

A

Article 12.

64
Q

What does market manipulation cover?

A

Giving false/misleading signals about the supply or demand or price of securities. Using fictitious devices to affect prices. Disseminating information including circulating rumors. Creating unfair trading conditions or collaborating to secure a dominant position.

65
Q

What do data protection regulators govern?

A

How personal data is stored and mareted and how information can be accessed from public authorities.

66
Q

When was GDPR introduced?

A

May 2018.

67
Q

What does GDPR stand for?

A

General Data Protection Regulation.

68
Q

What does GDPR apply to?

A

Personal data and both automated and manual filing systems.

69
Q

GDPR says data should be….

A

Processed lawfully and fairly, collected for legitimate and explicit purposes, relevant and limited to what is necessary, accurate and kept up to date and processed with the appropriate security.

70
Q

What is any firm that collects or processes personal data called?

A

A Data Controller.

71
Q

What must a data controller do?

A

Register with the country’s data regulator.

72
Q

What are the 6 lawful reasons for processing data?

A

Consent, public interest, contractual, legal obligation, vital interest and legitimate interest.

73
Q

What must a data controller protect against?

A

Unlawful processing, accidental loss, damage or destruction.

74
Q

What must be included in a data controller’s register of data processing?

A

Which of the 6 lawful reasons it falls under and justification.

75
Q

What are some recommendations for data controllers to further protect personal data?

A

The controlling and monitoring of all flows of information, removable media should be disabled,portable devices should be encrypted and wiped, software should be downloaded that tracks all activity, blocking access to web-based communication sites, conduct due diligence on 3rd parties, keep a visitors log for 12 months.

76
Q

What is the definition of a personal data breach?

A

A breach of security leading to the destruction, loss, alteration, unauthorized disclosure of or access to personal data.

International Introduction to Investment (9 decks)

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