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CISI Cards - Technology in Investment > Technology in Investment - Chapter 3 > Flashcards

Technology in Investment - Chapter 3 Flashcards

1
Q

What is a multi-lateral-trading facility (MTF)

A

Type of system or service that brings together multiple parties interested in buying and selling financial instruments, especially those that may not have an official market.

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2
Q

Are MTF’s regulated by a body or self regulated?

A

self regulated

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3
Q

What is an investment exchange

A

A firm or organization that provides the platform for investors to invest in different products. (Bonds, Equities, Derivatives & Commodities mainly)

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4
Q

Are investment exchanges regulated by a body or self regulated?

A

Regulated by the local governing body. (FCA in UK)

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5
Q

What type of new investment platform did MiFID 2 introduce?

A

Organized trading facility

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6
Q

What is an organized trading facility?

A

An unregulated market place to trade everything EXCEPT EQUITIES

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7
Q

Are OTFs regulated by a body or self regulated or unregulated

A

Unregulated

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8
Q

What is a Systematic Internalizer (Si)

A

When investment firms execute client orders outside a OTF,MTF or investment exchange.

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9
Q

What must an SI publish?

A

Bid/offer quotes for liquid instruments
disclose quotes on request for ill-liquid instruments

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10
Q

What did SI replace?

A

BCN - Broker Crossing Networks

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11
Q

What is an Recognized Investment Exchange (RIE)

A

A UK Based Exchange recognized by the FCA

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12
Q

What is an Recognized Overseas Investment Exchange (ROIE)

A

One that is outside of the UK, but has UK business and is recognized by the FCA.

Eg. NASDAQ & AUS EX

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13
Q

What is an Designated Investment Exchange (DIE)

A

Overseas exchange that is not regulated by the FCA. However the FCA may add them to their list of designated exchanges

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14
Q

What is a funds platform

A

Service used by financial advisors to manage their investment portfolios

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15
Q

How many types of order handling systems are there

A

3

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16
Q

What is an order driven system?

A

When the buyers price matches that of the sellers sell price, a trade is matched confidentially and executed

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17
Q

What is a quote driven system?

A

When the market maker sets the price.. The identity is always known

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18
Q

What is a hybrid system?

A

A system that offers both quote driven and order driven abilities

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19
Q

What is the LSE

A

London Stock Exchange

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20
Q

How many trading systems will LSE offer to its members firms

A

4

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21
Q

Name the four trading systems that LSE offer

A

SETS
SETSqx
SEAQ
Order Book for retail bonds

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22
Q

What is SETS

A

The main order system for LSE, it is a hybrid system

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23
Q

What is SETSqx

A

Q - Quotes X- Crosses. It offers four quote driven auctions a day. G. (HYBRID SYSTEM)

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24
Q

What is SEAQ

A

Quote driven system for securities not traded on SETS or SEAqx (QUOTE DRIVEN)

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25
Q

What is the order book for

A

Government bonds and retail bonds trading

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26
Q

What type of investment system is the order book

A

Hybrid System

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27
Q

What type of investment system is SETSqx

A

Hybrid System

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28
Q

What type of investment system is SETS

A

Hybrid

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29
Q

What type of investment system is SEAQ

A

Quote Driven

30
Q

What is the Regulatory News Service

A

Companies who have shares or bonds on the listed exchange have a legal duty to make announcement about price sensitive information (Newsflash)

31
Q

What is the corporate events diary

A

A online calendar for marking events that will effect securities traded on the LSE

32
Q

What is the SEDOL Masterfile

A

Database of securities that provides a common ID code (SEDOL code). This code is used worldwide

33
Q

Participant Services

A

Supplies member firms with information about their market share or quality of execution

34
Q

What is European Regulatory Trade Reporting

A

Broker-Dealers in EU have a legal obligation to report all their trades electronically

35
Q

What are the two key things that technology departments may be involved in when connecting Investment exchanges to their systems?

A

Developing trade capture applications or implementing package systems

36
Q

What is a data exchange specification (DES)

A

They cover the message format for data that is to sent or received from the investment exchange

37
Q

What is a package system?

A

An over the counter system brought by the firm to provide a front-to-back for portfolio trading and management

38
Q

Whats a fund platform

A

one stop shop for wealth managers & financial advisors to manage portfolios

39
Q

What 3 types of messaging are commonly used by fund platforms?

A

Euroclear EMX, Calastones & SWIFTS

40
Q

What extra service does a fund platform sometimes offer an investment manager?

A

What-If analysis

41
Q

Whats the difference between Clearing houses and Central Counterparties?

A

None, just a new name

42
Q

What 2 services to Central Counterparties offer to their customers?

A

Settlement & Custody services
Central Counterparty (CCP) services

43
Q

For UK cash-settled securities, the settlement and custody services are provided by ?

A

Euroclear UK & Ireland (EUI)

44
Q

What are the four recognized clearing houses in the UK?

A

LME Clear LTD
CME Clearing Europe LTD
Euroclear UK & Ireland (EUI)
ICE Clear Europe LTD

45
Q

What system does the Euroclear UK & Ireland use to settle all UK/Ireland registered equities?

A

CREST

46
Q

What happens during Delivery vs Payment (DvP)

A

The buyer of securities takes delivery of the securities, and the buyer’s payment bank guarantees to pay the seller’s payment bank, which in turn is obliged to pay the seller.

47
Q

What are the four other services provided by the Euroclear UK & Ireland

A

Custody Services
Payment of dividends, to members
processing of corporate action entitlements to its members
Specialized facilities for stock lending and borrowing

48
Q

What manual can be used to understand how communication works within Euroclear UK & Ireland (EUI) ?

A

Data Exchange Manual (DEX)

49
Q

What 3 products do Central Counterparty Services deal with ?

A

Securities
Exchange Traded Funds & Options
OTC Derivatives

50
Q

What is novation?

A

‘The substitution of one party to a contract by another party’

51
Q

What are the three benefits to settling trades in a CCP?

A

Secrecy of trade
Netting of trades
Reduction of credit risk between the two parties

52
Q

What is offered by members to ensure CCPs meet there margin requirements

A

Collateral

53
Q

What does SPAN do? (Standardized Portfolio Analysis of Risk)

A

Used to calculate the margin payments

54
Q

Why might a member firm pay a CCP a margin payment

A

Because a futures contract has fallen in price and the maturity date is approaching

55
Q

What type of product does the Clearing Party ‘SwapClear’ deal with?

A

Swaps - Currencies

56
Q

What type of product does the Clearing Party ‘RepoClear’ deal with?

A

Sale & Re-purchase agreements

57
Q

What is the difference between a GCM and NCM

A

GCM needs connectivity to both systems, NCM needs one

58
Q

How many connections does GCM need?

A

2

59
Q

How many connections does NCM need?

A

1

60
Q

in SETS Trade flows what is an exchange member also

A

Exchange member is also a clearing member

61
Q

What companies are the two main supplies of real time fast data

A

Bloomberg & Refinitiv

62
Q

What type of financial products does RTS1 Reporting under MiFID 2 contain

A

Shares, depositary receipts, exchange-traded funds, certificates

63
Q

RTS1 is as near to real time as possible or within how many minutes?

A

1

64
Q

What type of financial products does RTS2 Reporting under MiFID 2 contain

A

Bonds & structured financial products

65
Q

RTS2 is as near to real time as possible or within how many minutes?

A

5

66
Q

Difference between transaction reports and trade reports?

A

Trade is public.
Transaction is private for regulation

67
Q

Who must MiFIR transaction reports be sent to

A

National Competent Authority (NCA)

68
Q

What financial product type does the EMIR transaction reports cover?

A

Derivatives

69
Q

Name 3 types of Transacting/Publication

A

MiFIR Transaction reporting
EMIR Transaction reporting
SFTR Transaction reporting

70
Q

The Securities Financing Transactions Regulation’s (SFTR) covers what financial products? (4)

A

Repurchase transactions
Securities/commodities
Buy/sell back transactions
Margin lending transactions

CISI Cards - Technology in Investment (20 decks)

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