Surveillance Flashcards
Best Execution and Open Orders (Quarterly) - rules
• Rule - COBS 11.2 (COBS 11 is for dealing and managing)
To achieve the best overall result for the client (not just the price)
Specifies a number of execution factors to be taken into account to show you are getting the best result for the underlying client. E.g. price, speed of execution, likelihood for execution (for very illiquid stock)
Timely Execution (Quarterly) - Rules
• Rule – COBS 11.2 and 11.3 (Client Order Handling)
Ensuring an order has been promptly and accurately recorded and allocated
Comparable orders must be carried out sequentially and promptly unless prevailing market conditions etc
Client Order Priority - rules
• COBs 11.3 – execute in a fair and expeditious manner
should execute in due turn or aggregate the order and trade as one
Same Day Trading (Quarterly) - rules
• COBs 9.3.2 - Churning and Switching - best interests of the client, client should have agreed investment strategy in determining frequency of transactions.
• APER 4.1 – Statement of Principle 1 – an approved person must act with integrity
APER 4.1.11 – non-compliance is carrying out unjustified trading on client accounts to generate a benefit (i.e. churning).
Cross Trades - rules
- MAR 1.6 (Market Abuse – Manipulating Transactions) – where transactions where both buy and sell orders are entered nearly at the same time, with the same quantity and price – check it complies with the relevant rules
- REC 2.6.28 – cross trades executed for improper purposes
- COBS 11.3.1 – prompt, fair and expeditious execution of client orders, relative to other orders or the trading interests of the firm.
Pro rata allocation - rules
- COBS 11.3.11 – the firm must have procedures in place to prevent the reallocation in a way that is detrimental to the client
- COBS11.3.12 – reallocation of transactions should be considered as detrimental to a client, if, as an effect of the reallocation, unfair precedence was given to the firm
Cancelled and Amended Orders (Quarterly - Rules
• COBS 11.3 – Client Order Handling
New Issues
- COBs 11.3 – Client Order Handling
- 11.3.8 – Aggregating
- 11.3.10 – partially executed allocations
Market Abuse - Price Sensitive News
• MAR 1.3 (Market Abuse – Insider Dealing)
MAR 1.3.2 – to influence, directly or indirectly the decision to engage in the dealing/had any involvement
Window Dressing and Portfolio Pumping
• MAR 1.7.2 – The FCA consider the following market abuse - 3) Pump and dump – taking a long position in a qualifying investment and then disseminating misleading positive information about the qualifying investment with a view to increasing its price
Market Abuse – Market Manipulation (Front Running)
• MAR 1.6 (Market Abuse – Manipulating Transactions) – trades/transactions which are likely to give a false or misleading impression as to the supply/demand/price of the qualifying investment
• MAR 1.7.2 (Market Abuse – Manipulating Devices) – transactions designed to conceal the ownership of a qualifying investment for disclosure requirements so that disclosures are misleading in respect of the true underlying holding – market risk remains with the seller.
Pump and dump
StopList Monitoring - rules
- COBS 11.7.1R –
- MAR 1.3.2 (1) - If the decision to deal was made before the person possessed the relevant inside information
- MAR 1.4.2 – Improper disclosure
- MAR 1.5.2/3 – misuse of information
PA Dealing – post trade
- COBS 11.7.1
- MAR 1.3.2 (1) - If the decision to deal was made before the person possessed the relevant inside information
- MAR 1.4.2 – Improper disclosure
- MAR 1.5.2/3 – misuse of information
Market Abuse – Profitable Trades
• MAR 1.3 – Insider Dealing
