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CISI Cards - Technology in Investment > Technology in Investment - Chapter 7 > Flashcards

Technology in Investment - Chapter 7 Flashcards

1
Q

What is chapter 7?

A

The role of the Financial Control Department (FCD)

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2
Q

What does FCD stand for?

A

Financial Control Department

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3
Q
A
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4
Q

What is the core function of an Financial Control Department (FCD)

A

To manage the financial resources of the business.

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5
Q

What are the 5 sub-departments of the Financial Control Department (FCD)

A

Management Reporting
Statutory Reporting
Regulatory Reporting
Tax Management
Financial Operations (Payables/Receivables)

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6
Q

What is the function of Statutory Reporting?

A

Reports the P&Ls and the balance sheets to internal and external audit

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7
Q

What is the function of Regulatory Reporting?

A

Produces the financial and statistical returns demanded by the firms regulator

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8
Q

What is the function of Tax Management ?

A

Minimizing tax liabilities

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9
Q

What is the function of Financial Operations?

A

Pays staff and suppliers. Ie manages costs

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10
Q

What is a corporate general ledger system?

A

A system used by the FCD to record all assets, liabilities, income and outgoings

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11
Q

If 5 developers are working on a settlement system, to which department will the cost be sent to?

A

Settlement team

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12
Q

If 3 developers are working on a settlement system and 2 developers are working help desks, to which department will the cost be sent to?

A

60% settlement team, 40% to the ‘General’ technology costs

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13
Q

For an mid-size firm working out solely out of the UK, what four trading systems will they use?

A

Equities Trading System
Bond Trading System
FX & Money Market Trading System
Derivatives Trading System

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13
Q

What is a regulatory accounting system

A

This system will be used to calculate the financial information that needs top be sent to the regulator

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14
Q

Equities trading system - 4 impacts

A

Calculating commissions
Trade processing errors
Human error
Technical error

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15
Q

-Bond trading system - 3 Impacts

A

Interest % error
Human trade errors.
Technical errors

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16
Q

FX and Money market trading system - 3 impacts

A

Calculating trade proceeds and interest rates
Human errors
Technical errors

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17
Q

Derivatives trading system - 3 impacts

A

Accuracy of market and reference data
Human error and technical error

18
Q

What type of analysis is used in the Derivatives Trading System?

A

What-if analysis

19
Q

When trades are executed across the four systems in the FCD, where are they forwarded to and in what way?

A

the trade details are forwarded to the main settlement system – usually electronically and in real time.

20
Q

What are the two development impacts on the technology department from the FCD?

A

For general ledger all systems must be continually enhanced
Interfaces between systems need to be maintained to be robust, automated & valid

21
Q

What is the Support impact on the technology department from the FCD?

A

Fixing complex errors within the General Ledger System

22
Q

What is another name for the general ledger

A

Nominal ledger

23
Q

What kind of bookkeeping convention does The general ledger system use?

A

Double-entry bookkeeping convention

23
Q

What 3 key informations should be held in a technology system that supports a general ledger account

A

Reference data items
Balance Information items
Transaction Information items

24
Q

What is the accounting equation for calculating Shareholders equity?

A

Assets - Liabilities = Shareholders equity

24
Q

What is double entry bookkeeping

A

Each transaction is recorded in at least two ledger accounts.
Each transaction results in at least one account being debited and at least one account being credited.

24
Q

What four attributes will be held in the system against reference data items?

A
  1. A unique alphanumeric code to identify the account.
  2. The name of the account.
  3. A code to represent the type of the account, ie, bank account or expense account.
  4. The identity of the currency in which postings are made for this account.
25
Q

What four attributes will be held in the system against reference data items?

A
  1. The opening balance of the account.
  2. The date of the opening balance.
  3. The closing balance of the account.
  4. The date of the closing balance.
26
Q

What type of convention does Stock record use?

A

Double Bookeeping

27
Q

What is the difference between Bookkeeping in a stock record and a general ledger system?

A

GLS is for cash transaction and balances
Stock Record is for stock quantities and balances

28
Q

What is a long position in terms of general ledger structure?

A

More shares purchased then sold

28
Q

What is a Short position in terms of general ledger structure?

A

Less shares purchased then sold

29
Q

What eight attributes will be held in the system against reference data items?

A
  1. Transaction date
  2. Value date
  3. Entry date
  4. Money value
  5. Description of transaction
  6. Code to represent type of transaction
  7. A configuration origin code
  8. A unique reference number
30
Q

Why do derivative contracts need to be revalued at the end of each business day?

A

In order that the bank can measure the market risk it is exposed to as a result of holding the position

31
Q

What is posting in terms of the general ledger?

A

The process of recording amounts as credits and debits

32
Q

The rules for deciding to which account a money amount of a transaction should be posted are held within?

A

An explosion table

33
Q

Equation for assets?

A

Assets = Liabilities + Shareholders’ Equity

34
Q

What accounts are effected by the Stock record system (4)

A

Ledger Account
Book Account
Depot Account
Client Account

34
Q

Specialist reconciliation systems are primarily developed to compare settlement records with who?

A

Front office systems and externally transmitted transaction details

35
Q

What are the 6 columns in an explosion table?

A

Transaction type
Operation
Amount code
Account type
Market code
Account code

36
Q

A stock record is a component of what other system?

A

Main settlement system

37
Q

WhatWhich of the following accounts is NOT mentioned as a type affected by postings in a stock record?
Select one:

Book Account

Client Account

Depot Account

Revenue Account

A
38
Q
A

CISI Cards - Technology in Investment (20 decks)

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