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REVALIDA PREP > REVALIDA > Flashcards

REVALIDA Flashcards

1
Q

QUESTIONS FOR REVALIDA

A

Answers

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2
Q
  1. What are the three objectives of the bank that the policies and procedures point to?
A
  1. Execute transactions in financial products safely and responsibly
  2. Uphold best interests of customers by ensuring suitability and appropriateness
  3. Manage the Bank’s risks in transacting financial products with customers
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3
Q
  1. What are the requirements of personnel with regards to complexities and risks involved in selling various products?
A

They should have more specialized knowledge and training compared to other sales and marketing personnel of the bank.

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4
Q
  1. What does the proper procedures ensure? These are four (4) items.
A
  1. Customers are classified according to available information
  2. Suitable products are offered 3. Risks are disclosed 4. Transactions are compliant
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5
Q
  1. If the customer type is inappropriate, do we reject the transaction?
A

Not necessarily. If proper (higher) approvals and assessments are conducted, then an unsuitable product may be allowed.

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6
Q
  1. What is RA 9160 all about?
A

Anti-money laundering act of 2001

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7
Q
  1. What is RA 1405 about?
A

Banking Secrecy Act

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8
Q
  1. What is RA 6426 about?
A

Foreign Currency Deposit Act of the Philippines

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9
Q
  1. What do we call the SEC manual?
A

Securities Regulation Code (Implementing Rules and Regulations)

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10
Q
  1. Simply, what is the IVF?
A

Investment Viewing Facility is a web-based intranet application which serves as repository of client records, risk profiles and outstanding investments in the Bank.

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11
Q
  1. What are the 7 activities that the IVF allows the MSG-ASP?
A
  1. View clients’ the total outstanding treasury and time deposit placements 2.View clients’ information such as addresses, contact numbers
  2. View clients’ outstanding placements that are already in-the-
    money or profitable to sell.
  3. Generate a Portfolio Summary per OPICS Customer
    Mnemonic
  4. Create client records and input or download client account
    information from RM (3270) and link the same to an OPICS
    Customer Mnemonic
  5. Create a Suitability Assessment Score/Profile record indicating the date of Suitability Assessment Form (SAF), SAF expiry date, client’s resulting suitability profile, SAF numerical score and remarks, if any.
  6. Input Sales Call Report details and other pertinent client information.
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12
Q
  1. What does the wealth manager help with?
A

WM is a web-based banking facility that allows enrolled customers to view their fixed income and derivative products (including the current indicative quotes/ prices), invested from the Bank.

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13
Q
  1. What can enrolled customers do in WM?
A
  1. Bond calculations 2. Request for a call with the Investment Specialist to facilitate orders. 3. Tracks requests made by customers
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14
Q
  1. What is MOSE?
A

Metrobank Operations Support Engine is an online facility that allows MSG Authorized Sales Personnel to transmit transaction documents to customers and secure their acceptance electronically in lieu of physically-signed hardcopies of deal documents.

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15
Q
  1. What aspects of the customer must the bank establish before dealing?
A

Identity and Authority to deal

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16
Q
  1. Which types of customers is the bank required to be cautious before dealing with?
A

Accounts that are high-risk or anyone that can put the bank’s reputation and integrity at stake

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17
Q
  1. What is the meaning of KYC?
A

Know your customer

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18
Q
  1. What are the three documents needed for individual customers?
A
  1. Certification of KYC Reliance
  2. Copy of Valid ID
  3. Copy of AMLA Form (with list of 11 minimum information required by AMLA)
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19
Q
  1. What are the five documents needed for institutional customers?
A

1 Certification of KYC Reliance
2. Copies of IDs of operative signatories (those designated by
corporation to execute transactions)
3. Relevant Secretary’s Certificate authorizing financial products
transactions and the authorized dealers / signatories
4. Copy of first page of the SEC Certificate of Registration, or the Articles of Incorporation and By-Laws with SEC Registration Number as alternative, or its equivalent for international
counterparties
5. Copy of AMLA Form (with list of 11 minimum information required by AMLA) or its equivalent (i.e. Wolfsberg AML Form for Financial Institutions)

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20
Q
  1. Given the available customer information, and the ability of the ASP to obtain additional customer details, what are the purposes of these data to the ASP?
A
  1. Understand the nature of the customer’s business and the risks arising from such business 2. Establish the source of funds 3. Identify the decisionmakers 4. Determine if the customer is a Related Party, which subjects transactions with such customer to comply with Compliance – L3 – 204 – Related Party Transactions OR if a person is an employee of FMS, Compliance – L3 – 205 – Personal Account Dealing 5. Understand the nature of the relationship with institutions INCLUDING with Metrobank Group 6. Identify the LEGAL, REGULATORY, INTERNAL,ETC. restrictions that apply to the customer 7. Other information relevant to performing due diligence
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21
Q
  1. What does the ASP, with the help of his SMO, do before dealing a new account?
A

Create a customer account in OPICS

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22
Q
  1. What is OPICS?
A

Operations Processing and Integrated Control System

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23
Q
  1. To aid in determining suitability, the customer must establish a profile based on what three (3) criteria?
A
  1. Customer Knowledge and Experience 2. Customer Financial Situation/Capacity 3. Customer Objective and Risk Tolerance
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24
Q
  1. What information falls under the first criterion?
A

The ability of the customer to understand product nature, terms, conditions, mechanics, risks, based trading experience, professional experience, and education

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25
Q
  1. What information falls under the second criterion?
A
  1. Nature of income 2. Composition of assets 3. Financial commitments and obligations 3. Cushion against loss
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26
Q
  1. What information falls under the third criterion?
A
  1. Purpose of transaction 2. Tastes and preferences 3. Investment and risk management policy 4. Investment horizon 5. Tolerance to risk
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27
Q
  1. Can customers buy products that are outside his profile?
A

Yes, he must sign the WAIVER OF SUITABILITY RESULTS. HOWEVER, this waiver does not apply to derivatives and structured products.

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28
Q
  1. What if the product is within the scope of the profile, but seems to be detrimental to the customer goals, should we allow it to push through?
A

Not before to the explanation of the expected results of the transactions, and seeking more information as to why, despite the warnings, the client still intends to push through. If all that is done, refer to the higher ups such as the DIVISION HEAD or the MARKET SALES GROUP HEAD.

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29
Q
  1. In addition to KYC, what other 9 information must be extracted through interviews and/or questionnaires?
A
  1. Amount involved 2. Financial Situation 3. Knowledge of financial products 4. Investment experience 5. Financial Objectives 6. Risk appetite 7. Investment horizon 8. Regulatory and legal constraints 9. Liquidity needs
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30
Q
  1. In joint accounts, which client must be interviewed?
A

The primary client

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31
Q
  1. In corporate accounts, who must be interviewed?
A

The authorized dealer or signatory.

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32
Q
  1. The 9 items beyond the KYC will be the basis of which document?
A

Suitability Assessment Form

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33
Q
  1. What are the 2 types of SAF?
A

SAF for individual investors and SAF for institutions

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34
Q
  1. Who is assigned to validate the SAF?
A

RM or BH

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35
Q
  1. What are the four (4) types of FINANCIAL SOPHISTICATION PROFILES?
A
  1. Market Counterparty 2. Sophisticated (End-user) Individual Client 3. Sophisticated Institutional Client 4. Other End-User
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36
Q
  1. Who are market counterparties?
A

refers to any financial institution, only with respect to the instruments in which it is authorized to engage as a broker dealer

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37
Q
  1. Who are Sophisticated Institutional Client?
A

refers to an institution that is not a market counterparty but has the level of net worth, knowledge, expertise, and experience to deal in financial instruments

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38
Q
  1. Who are Sophisticated (End-user) Individual Client?
A

refers to an individual who has demonstrated that he has the level of net worth, knowledge and experience to deal in financial instruments

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39
Q
  1. Who are Other End-User?
A

refers to all other institutional or individual customers not categorized as market counterparty, sophisticated institutional end-user or sophisticated individual end-user.

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40
Q
  1. SAF is waived for which type of customer?
A

Market Counterparty

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41
Q
  1. Is a hedge-fund a market counterparty?
A

Yes. It uses advanced investment techniques to manage portfolios.

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42
Q
  1. Give examples of market counterparties.
A

Universal or Commercial Bank, Professional investor or financial intermediary, Hedge Funds, Agency/Supranational/Multilateral, SWF, Private Equity Fund

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43
Q
  1. Does being a QIB have access to ALL financial products given its financial sophistication?
A

Not outrightly, It needs to pass all of the knowledge and experience requirements of sophisticated investors in order to deal with complex products. It can, but it is not automatically endowed.

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44
Q
  1. What are the three (3) classifications based on risk tolerance?
A

Conservative, Moderate, Aggressive

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45
Q
  1. What is the goal of a conservative investor?
A

Preserve principal or the value of an underlying asset

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46
Q
  1. How many SAF profile combinations are possible for personal investors and corporate investors?
A

6 and 6

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47
Q
  1. What is the role of the ASP’s unit head with respect to SAF profiles?
A

The ASP’s Unit Head shall review consistency of information, accuracy of scoring and the suitability assessment results.

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48
Q
  1. In a joint account with multiple decision-makers, which SAF should be followed?
A

The more conservative profile. Higher risk products will just require WAIVER OF SUITABILITY RESULTS.

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49
Q
  1. Are the consent of borrowers to the SAF required?
A

No. The prerogative to approve the SAF rest on the ASP or RM. After approval, acknowledgement from the borrower will be sought through the borrower’s registered e-mail address.

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50
Q
  1. Do co-investors need to agree with the SAF done by its principal decision-maker?
A

Yes, a conforme from each co-investor is needed.

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51
Q
  1. What do customers need to agree on when it comes to the SAF?
A

That the SAF is 1. accurate, 2. it will be used as the basis for the dealings in financial products.

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52
Q
  1. What are the three (3) scenarios that hinders the ASP from transacting with financial products vis-à-vis the SAF?
A
  1. Client does not acknowledge the SAF 2. Client does not agree with the SAF and suitable products 3. Co-investors does not sign conforme on the SAF.
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53
Q
  1. The SAF cannot be adjusted internally by the bank. TRUE or FALSE?
A

FALSE. It can be, based on the historical dealings with the bank that are deemed to be negative, or with the presence of disputes.

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54
Q
  1. If the dispute is justifiable? What is the course of action?
A

The individual’s profile will be set to CONSERVATIVE/OTHER END-USER to provide the minimum number of products that can be transacted. This is subject for re-evaluation in 6 MONTHS.

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55
Q
  1. If the client is deemed to have a negative dealing history, what is the course of action?
A

He will be limited to traditional deposits and will NOT be allowed to transact any financial product.

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56
Q
  1. What are the types of negative dealing history?
A

Examples include did not honor contract, reneged on done deal, is known to be litigious, etc.

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57
Q
  1. Which database is the SAF encoded and verified?
A

Investment Viewing Facility

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58
Q
  1. Who encodes the SAF, and how long must it be accomplished?
A

ASP or SMO, within 3 business days. Checker of accuracy may be any ASP within the desk.

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59
Q
  1. Schedule of SAF renewal
A
  1. Three years for client with NO derivatives and structured products 2. At least annualy for clients with derivatives and structured products 3. Immediately for clients with material change in financial situation (known through any legal method), client wants to change profile and/or information, client intends to expand products dealt, joint accounts with a change in decision-maker, Corporate clients with a significant change in ownership, management, organizational structure or other events that may impact overall suitability profile
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60
Q
  1. Is there a limitation as to who is allowed to use the SAF?
A

It may be shared with the bank’s subsidiaries, affiliates, branches, UNLESS there is a WRITTEN withholding of consent.

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61
Q
  1. Who determines the suitable products for their respective suitability profiles?
A

The bank.

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62
Q
  1. What are the three complexity types of financial products?
A

Vanilla, Non-Vanilla, Complex

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63
Q
  1. What are VANILLA products?
A

Products generally accessible though banks like deposits, spot foreign exchange and simple fixed income instruments.

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64
Q
  1. What are non-VANILLA products?
A

Products with pay-offs that may be reasonably thought to be more difficult to understand or where valuation is not readily available; or Vanilla products / combinations that result to leverage or unlimited loss.

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65
Q
  1. What are COMPLEX products?
A

Exotic derivatives or structured products that cannot be broken down into vanilla components or pay-offs.

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66
Q
  1. Are there VANILLA derivatives? If so, how do these work?
A

In VANILLA Derivatives, the basic building blocks, and their simple
combinations that do not result to leverage or unlimited loss, as long as valuation of each leg/component is readily available.

67
Q
  1. Who are allowed to deal VANILLA products? Are there restrictions?
A

All classifications according to Financial Sophistication, but with restrictions specific to products and according to Risk Tolerance.

68
Q
  1. Who are allowed to deal non-VANILLA products? Are there restrictions?
A

Only Market Counterparty, Sophisticated Institutional Client and Sophisticated End-User, but with restrictions specific to products and according to Risk Tolerance.

69
Q
  1. Who are allowed to deal COMPLEX products? Are there restrictions?
A

Only Market Counterparty, Sophisticated Institutional Client and Sophisticated End-User, but with restrictions specific to products and according to Risk Tolerance, and subject to Section V.C.7

70
Q
  1. Who are responsible for the updating of the PRODUCT COMPLEXITY TABLE at the onset of new products?
A

TREASURY GROUP, MARKET SALES GROUP, RISK MANAGEMENT GROUP

71
Q
  1. Product recommendations and offers by the ASP must be in accordance to what six (6) considerations ON TOP of the appropriateness of the suitable profile?
A
  1. Customer’s understanding of the risk of the proposed product/solution 2. Complexity of transaction relative to historical activity
  2. Transparency of the transaction economics, and whether the transaction is for hedging or speculative purposes
  3. Whether size of transaction is unusually large in relation to normal activity and financial profile
  4. Possible impact on investment portfolio or financials
  5. Ability of both parties to comply with applicable policies and regulations
72
Q
  1. What does the WAIVER OF SUITABILITY RESULTS DECLARE?
A

The Waiver documents that the client fully understands that the risk of the intended transaction is higher than what the Bank deems appropriate based on his suitability assessment results.

73
Q
  1. In QIB transactions, which BSP circular discusses this?
A

BSP Circular 891

74
Q
  1. The ASP must establish what two (2) basic things before entering into financial products?
A

Capacity and Authority to deal

75
Q
  1. What establishes the capacity and authority for corporate clients?
A

Board Resolution or Secretary’s Certificate on authorized financial transactions that the entity may engage in, as well as the personnel authorized to execute and sign transactions

76
Q
  1. Is there an additional requirement for corporations intending to deal with complex derivatives?
A

The Board Resolution to include a statement that the corporation has the appropriate risk management techniques and systems sufficient to manage and monitor risks that will be taken

77
Q
  1. Must the ASP issue the documents to the client physically and electronically?
A

Any. As long as there is a way for the client to acknowledge the said documents.

78
Q
  1. Who performs the daily post-transaction monitoring?
A

The Sales Management and Support Division of Markets Sales Group (MSG-SMSD)

79
Q
  1. The Bank’s customer suitability assessment shall be documented by the:
A

Suitability Assessment Form

80
Q
  1. Who accomplishes, reviews, and validates the SAF?
A

ASP, ASP’s Boss, RM—respectively

81
Q
  1. Through with division does SAF revisions pass through?
A

Business Systems Division

82
Q
  1. Should these be made available all the time?
A

If it is required by auditors and financial regulators, yes. Physically or electronically.

83
Q
  1. There are five (5) risk disclosure policies. What is the FIRST?
A

The Bank shall not knowingly misrepresent or provide false impressions in any of its marketing materials, oral or written communication.

84
Q
  1. There are five (5) risk disclosure policies. What is the SECOND?
A

The Bank will ensure that the customer is adequately informed about the nature of and the risks involved in a financial transaction. The extent of discussion on product features, terms and condition, product risks and calculations will depend on the client’s knowledge and experience (sophistication).

85
Q
  1. There are five (5) risk disclosure policies. What is the THIRD?
A

Standard templates shall be adopted for product brochures, termsheets, disclosure statements and other marketing materials and presentations. These templates shall be reviewed periodically, and amended as necessary.

86
Q
  1. There are five (5) risk disclosure policies. What is the FOURTH?
A

Marketing materials and product brochures shall be in standard templates approved by Legal and Compliance, and shall meet the requisites of BSP Circular 891 on Disclosures for financial promotion to be considered clear, fair and not misleading.

87
Q
  1. There are five (5) risk disclosure policies. What is the FIFTH?
A

It supports the ASP explanation of a financial product prior to transacting.

88
Q
  1. Documents required for FIXED INCOME
A

Bond Order Form, Offering Circular or Prospectus (upon customer request)

89
Q
  1. Documents required for Derivatives, Structured Products and Alternative Investments
A

Term Sheet (Product Highlight Sheet in Circular 857), Product Specific Risk Disclosure Statement (Refer to exhibit in Product Programme of specific product type)

90
Q
  1. What is the purpose of BOF?
A

Provides security description and any special features / conditions
States terms of customer sale/purchase order, settlement amount at a given price, yield calculation, breakdown of charges, and other regulatory provisions. States risks and other disclosures.
Also serves as authority to debit / credit on settlement date

91
Q
  1. What is the purpose of offering circular?
A

Comprehensive information on the issuer and the security provided to brokerage houses and investors for new issues

92
Q
  1. What is the purpose of indicative termsheet?
A

Non- binding document outlining the purpose, description, material terms and conditions and scenario analysis of a possible transaction

93
Q
  1. What is the purpose of final termsheet?
A

States the agreed terms between Bank and customer upon execution, as well as all other relevant information in the Indicative Termsheet

94
Q
  1. What is the purpose of product specific disclosure statement?
A

States general risks involved in transacting derivatives / structured products / alternative investments
States risks that are specific to a product type
(credit, market, liquidity, etc)

95
Q
  1. What customer action required for BOF?
A

Sign acknowledgement on or before Deal Date

96
Q
  1. What customer action required for Final Termsheet?
A

Sign acknowledgement on Deal Date of each transaction

97
Q
  1. What customer action required for disclosures?
A

Sign acknowledgement on or before Deal Date of new product type

98
Q
  1. Do we still need a general disclosure statement?
A

No. We already have a specific one.

99
Q
  1. What are the 7 minimum product specific disclosures required under BSP Circular 891?
A
  1. Nature of financial product (underlying instruments and how they work)
  2. Investment horizon or tenor 3. Fees and charges, if any
  3. Details of issuer (if Bank only acts as broker/dealer and not the issuer)
  4. Returns or benefits expected or likely to be derived, whether guaranteed or not, and the amount and timing thereof
  5. Information on handling of product-related complaints
    Details of conflict of interest, if any
  6. All termination clauses, when appropriate, including charges and restrictions
  7. Any warning, exclusion, disclaimer related to product risk and reward, including (but not limited to) the following:
     The product carries higher risks than those associated with ordinary bank savings or time deposits;
     The product is risky and may not be appropriate if the client is not willing and able to accept the risk of adverse movements in the underlying securities or reference rates;
     Past performance of the product is not a guarantee of its future performance.
  8. Other disclosures that may be required by existing laws, rules and regulations. 10. Risk factors that may result in customer receiving less than expected or illustrated returns and factors affecting customer recoverable amount
100
Q
  1. Disclosures shall draw the client’s attention to what three (3) risks?
A
  1. The effect of early redemption of a product on the return (e.g., penalties and/or poor returns);
  2. The availability of maximum benefit advertised after a specified period; and
  3. The required conditions for the advertised growth rate of income to materialize.
101
Q
  1. What is the standard warning for complex products?
A

a standard warning that they are not suitable for all clients, and are intended for experienced and sophisticated clients

102
Q
  1. What are the six (6) economic risks for complex products?
A
  1. Loss of all or a substantial portion of the investment due to leveraging or other sophisticated practices;
  2. Mismatch between the change in the price of a hedge versus the change in the price of the exposure it hedges; 3. Volatility of returns;
  3. Lack of liquidity considering that there may be no secondary market for the
    instrument;
  4. Restrictions on transferring interests; and
  5. Absence of information on valuation and pricing.
103
Q
  1. What are the eight (8) minimum information required in the termsheet?
A

Parties to the Transaction Description of the Transaction
Purpose of the Transaction
 Customer objective (hedging, trading, investment, horizon)
 Underlying exposure, if any
Terms of the Transaction
Payoff Profile / Scenario Analysis Special Conditions
Governing Law
Others

104
Q
  1. What seven (7) information included in the terms of the transaction?
A
  1. Role of Parties
  2. Reference Asset
  3. Price / Yield
  4. Notional / Volume / Amount
  5. Term / Tenor
  6. Payment Frequency, Daycount Convention
  7. Others
105
Q
  1. What are the exceptions for the document requirements for any product for any market counterparty?
A

requirement for Bond Order Form, Termsheet and Product Specific Risk Disclosure Statement may be waived.

106
Q
  1. What are the exceptions for the document requirements for vanilla derivatives with sophisticated institutional client?
A

requirement for Termsheet may be waived as long as Product Specific Risk Disclosure Statement is signed

107
Q
  1. What are the exceptions for the document requirements for fixed income with sophisticated institutional client?
A

Bond Order Form may be waived for SEC Qualified Institutional Buyer facing the Bank as Dealer instead of Broker

108
Q
  1. What are the three (3) types of ASPs?
A
  1. Sales Traders
  2. Investment
    Specialists
  3. Other bank
    personnel authorized by Markets Sales Group (MSG)
109
Q
  1. What are the two types of ASPs?
A
  1. Investment Specialists 2. Sales Traders
110
Q
  1. Are there exceptions as to the personnel allowed to deal financial products?
A

Yes, persons from other banking units may be allowed limited authority to deal CERTAIN financial products by the MSG Head

111
Q
  1. What are the five (5) responsibilities of ASPs?
A

a. Obtaining relevant information and profiling the customer, typically with the
assistance of the Relationship Manager or Branch Head;
b. Determining the suitability of products based on results of suitability
assessment conducted and known objectives;
c. Establishing customer’s authority to enter into the transaction;
d. Determining whether it is appropriate for the Bank to enter into a proposed
transaction with the customer by analyzing the customer’s risk and return
objectives and;
e. Ensuring that customer understands the transaction, and that its nature,
mechanics and risks are sufficiently explained.

112
Q
  1. What should be the qualifications of ASPs when selling FIXED INCOME?
A
  1. Officer Level
  2. Licensed Fixed Income Salesman (SEC)
  3. Certified Treasury Professional (BAP)
  4. Advanced Core Treasury Banking Course (MBTC)
  5. With Approved Level 1 Product Verification Limits –
    (for Time Deposit, Spot Foreign Exchange, Fixed Income)
113
Q
  1. What should be the qualifications of ASPs when selling DERIVATIVES (FORWARDS AND SWAPS)?
A
  1. Officer Level
  2. Licensed Fixed Income Salesman (SEC)
  3. Certified Treasury Professional (BAP)
  4. Advanced Core Treasury Banking Course (MBTC)
  5. Basic Derivatives Sales Accreditation (MBTC)
  6. With Approved Level 2 Product Verification Limits –
    (Level 1 + Forwards and Swaps)
114
Q
  1. What should be the qualifications of ASPs when selling DERIVATIVES (ALL)?
A
  1. Officer Level
  2. Licensed Fixed Income Salesman (SEC)
  3. Certified Treasury Professional (BAP)
  4. Advanced Core Treasury Banking Course (MBTC)
  5. Advanced Derivatives Sales Accreditation (MBTC)
  6. With Approved Level 3 Product Verification Limits –
    (Level 2 + Options and Structured Products)
115
Q
  1. Are ASPs price-takers or makers?
A

For products not offered by the bank, they are price-takers.

116
Q
  1. Where do ASPs conjure their income from?
A

Personnel charge spreads on certain products and fees / commissions on others to achieve customer revenue objectives, based on the Markets Sales Group Pricing Guidelines in Annex 5.2

117
Q
  1. Are fees and commissions fixed?
A

Fees and commissions are usually fixed, and requires the ASP to seek exception approvals, if at all allowed, prior to granting any reduction or waiver. For brokerage of securities, the Bank charges brokerage commissions commensurate to best execution services, administrative fees for settlement/reporting/other services and custody fees that are in turn paid to the relevant Securities Custodian.

118
Q
  1. For products that are priced by the market in general, how do ASPs garner commissions?
A

For other products such as foreign exchange and derivatives, the ASP builds in a sales spread above the trader’s price that takes into account factors such as counterparty risk, competition, customer relationship, among others. In addition, the ASP receives “flow credit” — an amount that represents the monetary value of the customer flow to the relevant trading desk — as his/her fractional share of trading income

119
Q
  1. Who is responsible for PROSPECTING AND PRE-CALL PLANNING?
A

ASP

120
Q
  1. What is the process behind prospecting and pre-call planning?
A
  1. Identify target customers that are consistent with chosen markets per business strategy.
  2. Obtain available public and internal information on the customer. Know the state of customer relationship with the Bank and which units / persons they interact with.
  3. Check on whether the customer has been previously onboarded by the Bank and whether KYC requirements are complete.
  4. At this early stage, coordinate closely with the Relationship Manager, Branch Officer and any other Bank personnel that may be influential to the customer.
  5. Know the key personnel and decision-makers of the customer.
  6. Identify possible needs and opportunities based on preliminary
    information, and possible value proposition.
121
Q
  1. What is the process behind Setting the Appointment and Conducting the Call?
A
  1. Set up an appointment with the customer
  2. Prepare the necessary materials such as: Suitability Assessment Form, product presentations, onboarding requirements, transaction documents, etc.
  3. Validate information obtained during Pre-Call Planning and probe further.
  4. Obtain the necessary information to conduct suitability assessment.
  5. Present the appropriate product/s or solution/s.
  6. Immediately record customer discussions in a Call Report for good order.
122
Q
  1. What is the process behind AT ORDER TAKING?
A

When Customer leaves an order to buy or sell a financial product, the ASP shall:
1. Communicate indicative market levels to Customer and
disclose protocols and market conventions.
2. Ensure that in cases where the Customer seeks brokerage of
securities that the Bank does not trade (no Issuer Limits), additional risk disclosures are made and that the Bond Order Form for Reverse Inquiry (Exhibit 6.8-C) is used instead of the regular Bond Order Form.
3. Accept and acknowledge firm and valid orders. Likewise for order cancellations. Indicate time of order in Blotter.
4. Log immediately with the relevant provider of the product (TG Trader, MSG Securities Brokering Specialist or MSG Structurer)
 See Operating Manual of the Securities Brokering Desk for detailed procedures in fixed income brokerage
5. If order is unfilled, inform the customer.
6. If filled, see At Deal Execution.

123
Q
  1. What is the process behind AT DEAL EXECUTION?
A
  1. When customer is ready to deal, quote only based on live or dealable price / yield and in accordance with MSG Pricing Guidelines (See Annex 5.2). Only approved pricers or calculators may be used.
  2. If Customer accepts the price / yield, or if his order is filled, execute the deal by explicitly stating “Done” followed by main deal details by any of the following acceptable modes of communication:
     Verbally on recorded line
     Eikon Messenger
     Bloomberg Chat
     Bank email to be acknowledged by Customer
  3. When applicable, issue Final Termsheet, Bond Order Form or its equivalent for Customer’s signature, to be verified by authorized bank personnel. For deals executed on the above acceptable modes of communication, scanned signed copies shall be sent to TOSD on or before value date (settlement date). If deal via unrecorded line, face-to-face or other alternative modes of communication, scanned signed copies
    shall be submitted to TOSD on deal date.
  4. Spot or close out exposure immediately with the relevant
    product provider (not applicable to filled orders), and with the
    liquidity desk if beyond threshold amounts.
  5. Input Done deal or filled order immediately in Blotter.
  6. Accurately input Done deal or filled order in OPICS before
    12nn for AM deals, and before 5PM for PM deals. Best practice is to input each deal within 30 minutes of execution. Department Head approval is required for inputs / reversals after 5PM.
  7. Indicate OPICS deal reference number for each item in the Blotter.
  8. If deal amount is beyond ASP’s product verification limit, seek higher authority to verify transaction.
  9. Coordinate with processing units for smooth settlement
  10. Check for any open positions before close of business.
    Ensure all deals have been captured.
  11. Deals not inputted on deal date for valid reasons shall be
    governed by Held Over Deals Policy.
  12. For any Related Party Transactions, submit required deal
    details to MSG-SMD as described in Annex 5.3.
124
Q
  1. What is the process behind AT DEAL EXECUTION FOR TOSD?
A
  1. Check compliance with pre-deal documentary requirements
  2. Ensure that each deal input by ASP is supported by the signed Final Termsheet, BOF, Risk Disclosure Statement, email communication and other required supporting
    documents on deal date, as appropriate.
  3. Check accuracy of OPICS deal input against submitted
    documents.
  4. Notify ASP or Unit Head of any error / discrepancy for
    immediate correction within the business day.
  5. Report any breaches in limits, and seek ASP response within
    24 hours.
  6. Process and settle based on valid customer instructions.
    Unless with approved exception, all payments received from or made to individual customers shall be through a designated settlement account.
  7. For any Related Party Transactions, check with MSG-SMD for approval and utilization.
125
Q
  1. What is the process behind AT DEAL EXECUTION FOR MSG-SMD?
A
  1. Perform product suitability check by generating customer fixed income and derivative transactions of the day and comparing against Suitability Profile per customer.
  2. Notify Department Heads of any non-compliant transaction.
  3. Monitor and report Related Party transactions according to
    Annex 5.3.
126
Q
  1. What is the process behind DEAL REVERSAL/AMENDMENT/CANCELLATION?
A
  1. Any deal reversal shall comply with the Deal Reversal Policy
  2. “Done deals” cannot be undone or amended, unless there is legal, regulatory or compliance reason and other acceptable
    circumstances.
  3. Unwind or amendment of deals shall be at market cost, which
    may entail crossing bid-offer spreads. If there is market loss, decision on whether the Bank or the Customer takes it shall depend on the unwind/amendment reason. Financial loss to the Bank shall require approval of the Group Head.
  4. No deal amendment unless:
     With Customer’s knowledge
     With product provider’s consent
     Coordinated with TOSD, RSK and Controllership
    (depending on timing and impact)
127
Q
  1. What is the process behind POST-DEAL?
A
  1. Assist TOSD in completing document deficiencies.
  2. Investigate any unsigned confirmations beyond prescribed
    period as this may warrant deal cancellation.
  3. Arrange MTM Reporting with FMS Strategic Support per
    Customer request.
  4. Conduct periodic portfolio review according to agreed
    schedule with relevant Customers. Regularly monitor
    customer exposures.
  5. Monitor deal-related events to ensure timely communication
    and fulfillment of necessary requirements.
     Deal Maturities, Coupon Payments, Fixes, Option
    Expiries, Swap Exchanges
     May be generated via OPICS Access Reports
  6. Monitor possible new business opportunities.
128
Q
  1. What is the process behind POST-DEAL FOR TOSD?
A
  1. Issue deal confirmation to customer within the required period for the specific product.
  2. Ensure that signed confirmation is returned to the Bank within the required number of business days.
  3. Report document deficiencies so that MSG personnel may assist in following up.
129
Q
  1. Where should customers file complaints?
A

Customer Incident Management System

130
Q
  1. Which guideline is used in handling customer incidents?
A

Annex 5.6: Handling of Customer Incidents Related to Financial Products

131
Q
  1. Which department serves as the designated CUSTOMER SERVICE UNIT for customer incidents related to financial products?
A

MSG – Sales Management Department (MSG-SMD)

132
Q
  1. What is the maximum turn-around time for simple incidents?
A

9 calendar days

133
Q
  1. What is the maximum turn-around time for complex incidents?
A

47 calendar days

134
Q
  1. How long should the customer complaint be acknowledged by the receiving units?
A

24 hours MAX

135
Q
  1. Who approves the tagging of incidents as resolved?
A

MSG Division Head

136
Q
  1. What is the frequency that the MSG-SMD submits the monthly report on all incidents and corresponding status of broker-dealer transactions?
A

Every 5th banking day.

137
Q
  1. What is the first classification of an RPT?
A

a. DOSRI – Bank’s Directors, Officers, Stockholders and their related interests

138
Q
  1. What is the second classification of an RPT?
A

b. Bank’s Subsidiaries/Affiliates

139
Q
  1. What is the third classification of an RPT?
A

c. Any party controlled by the Bank/has control over the Bank

140
Q
  1. What is the fourth classification of an RPT?
A

d. Close family members of Bank’s Directors/Officers (w/ ranks of SVP and above ) and
individual substantial stockholder

141
Q
  1. What is the fifth classification of an RPT?
A

e. Corresponding persons in affiliated companies - Director, principal officer (SVP & above)
and/or substantial stockholder and/or any of their close family members, of the Bank’s subsidiaries/affiliates/any party, including their subsidiaries and affiliates, that the Bank exerts direct/indirect control over or those that exert direct/indirect control over the Bank

142
Q
  1. What is the sixth classification of an RPT?
A

f. Bank’s direct/indirect linkages:
i. Ownership, control or power to vote, of ten percent (10%) to less than twenty percent
(20%) of the outstanding voting stock of the borrowing entity, or vice-versa;
ii. Interlocking directorship or officership (with rank of SVP and above), except in cases involving independent directors as defined under existing regulations or directors
holding nominal share in the borrowing corporation;
iii. Common stockholders owning at least ten percent (10%) of the outstanding voting
stock of the Bank and ten percent (10%) to less than twenty percent (20%) of the
outstanding voting stock of the borrowing entity; or
iv. Permanent proxy or voting trusts in favor of the Bank constituting ten percent (10%)
to less than twenty percent (20%) of the outstanding voting stock of the borrowing
entity or vice-versa.

143
Q
  1. What is the seventh classification of an RPT?
A

g. Entities that belong to the Directors/Officers (w/ ranks SVP and above) and individual
substantial stockholder and/or any of their close family members with at least 15% ownership of the outstanding voting stock of such entities.

144
Q
  1. What is the difference between the FIFTH and SEVENTH classification?
A

The FIFTH classification pertains to persons with the rank SVP and above, including any of their close family members of the bank’s SUBSIDIARIES/ AFFILIATES/ ANY PARTY that the bank controls or controls over the bank. The seventh classification pertains to entities that are OWNED by METROBANK’s officers with ranks SVP and above.

145
Q
  1. What are covered transactions?
A

Covered Transactions are deals that are not traded on an organized exchange, deals where rates are not determined by competitive bids in the market or traded in an active market, and deals with credit exposure to the bank

146
Q
  1. What are the two (2) important types of covered transactions?
A
  1. Derivatives – Asset Swaps, FX Options, Cross Currency Swaps, Structured Investments,
    Interest Rate Options (Caps/Floors), Credit Default Swaps, Bond Forwards, Bond Options 2. Leveraged Investments – Loans Against Securities, Leveraged Securities, Leveraged
    Asset Swaps
147
Q
  1. What is the first step of RPT checks that the ASP needs to do?
A

determine whether a Customer or Counterparty is a Related Party prior to entering into any transaction that will give rise to credit exposure (example: Pre-Settlement Risk from Derivatives, Direct Credit Exposure from Leverage), whether collateralized or clean

148
Q

164.1 Where do we check RPTs? Which database?

A

Internal Data Bank System (IDBS)

149
Q

164.2 If the ASP is unsure, but infers RPT, what should he do first?

A

Inquire if the person or entity has a relative or affiliation with any Metrobank officer or Metrobank affiliated institution.

150
Q

164.3 If the ASP is unsure, but infers RPT, what tool must he use to determine if the client is in fact an RPT?

A

RPT QUESTIONNAIRE Tool by the Compliance Division. This is a questionnaire to determine if the client is indeed an RPT. This must be attached to the SAF.

151
Q
  1. If the client has always NOT been an RPT, should checks still be made?
A

Yes. This must be done periodically.

152
Q
  1. What is the responsibility of the ASP to the MSG-Sales Management Department pertaining to RPT?
A

Submit list of RP accounts to MSG-Sales Management Department.

153
Q
  1. If the account is deemed an RPT, but is not tagged in IDBS, what should the ASP do?
A

Inform Compliance Division to have the account swiftly updated.

154
Q
  1. The pre-deal approval must be sought for which five information?
A

a. The transaction type
b. The maximum exposure amount (PSR amount of derivative, loan amount for
leverage)
c. The maximum tenor of exposure
d. Credit Risk Mitigant (e.g. collateral type if any, documentation)
e. The validity period of execution

155
Q
  1. From whom should the pre-deal approval be sought?
A

a. Executive Committee (EXCOM) ; AND
b. For transactions below PHP10Mln, Related Party Transactions Management
Committee (RPTMC)
For transactions of at least PHP10Mln, Related Party Transactions Committee
(RPTC)

156
Q
  1. Can the ASP deal any covered transaction without pre-deal approval?
A

No.

157
Q
  1. The ASP can transact in various tranches as long as (3):
A

It is within the approved maximum amount, maximum tenor, and validity period

158
Q
  1. If the transaction intended is beyond the maximum amount, what should the ASP do?
A

Either deal up to the maximum amount OR, wait for approval regarding the intended amount.

159
Q
  1. What is our term as to how should we price transactions with our RPT?
A

Shall price transactions with Related Parties at arm’s length, following the pricing guidelines of MSG for similar transactions with other customers. All regular MSG Dealing Guidelines shall apply.

160
Q
  1. What four (4) items should the ASP submit to MSG-SMD after done deals?
A

 OPICS Deal Number
 Screenshots of deal entry
 Rate sheets used in pricing transaction
 Other relevant supporting documents, if any

161
Q
  1. Can done deals be reversed?
A

Done deals cannot be undone or amended, unless there is a legal/regulatory/compliance angle with which it can be allowed to.

162
Q
  1. Unwinding or amendment of deals shall be done at market cost. In case of loss, who should take the loss? The bank or the client?
A

It depends. And it needs approval of the GROUP HEAD if it is so.

163
Q
  1. A deal amendment can occur but not without these three (3) items:
A

Customer knowledge, product provider’s consent, coordination with TOSD, RSK, and Controllership

164
Q
  1. Enumerate the rank structure of IDD
A

Division Head, Department Head, Desk Head, Investment Specialists

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