Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

UK Regulation > The Regulatory Infrastructure of the UK Financial Services (6/80) > Flashcards

The Regulatory Infrastructure of the UK Financial Services (6/80) Flashcards

1
Q

What was the main change implemented by the Financial Services and Markets Act (FSMA) 2000?

A

Replacing a number of self-regulatory organisations with a single statutory regulator, the Financial Services Authority (FSA).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What was the major regulatory change in 2013?

A

The government split the FSA into a dual regulatory system (FCA + PRA)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is the role of the PRA?

A

The PRA is a focused prudential regulator, with responsibility for the prudential supervision of deposit-takers, insurers and major investment firms.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is the role of the FCA?

A

The FCA has a single strategic objective, to ensure that the relevant markets are functioning well.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the 3 operational objectives of the FCA?

A
  • Secure an appropriate degree of protection for consumers
  • Protect and enhance the integrity of the financial system
  • Promote effective competition in the interests of consumers.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

How does the FCA’s approach to supervision differ from the FSA?

A

The FCA carries out in-depth structured supervision work with those firms with the potential to cause the greatest risks to their objectives. This means fewer supervisors allocated to specific firms – but allows them greater flexibility to carry out more reviews on products and issues across a particular sector or market-thematic reviews.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Who has overall regulatory authority over the UK Financial System?

A

HM Treasury

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is the role of the Bank of England?

A

The BoE controls Interest Rates and Monetary Policy

It also has oversight over the PRA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is the role of the Competition and Markets Authority (CMA)

A

The CMA promotes competition for the benefit of consumers, both within and outside the UK. Its aim
is to make markets work well for consumers, business and the economy. It is not solely a financial services regulator.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the core responsibilities of the CMA?

A

• investigating mergers that could restrict competition
• conducting market studies and investigations in markets where there may be competition and
consumer problems
• investigating where there may be breaches of UK or EU prohibitions against anti-competitive
agreements and abuses of dominant positions
• bringing criminal proceedings against individuals who commit the cartel offence
• enforcing consumer protection legislation to tackle practices and market conditions that make it
difficult for consumers to exercise choice
• cooperating with sector regulators and encouraging them to use their competition powers
• considering regulatory references and appeals.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

How did the CMA come into effect?

A

A merger of the the Competition Commission (CC) and the Office of Fair Trading (OFT) in 2014

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the role of the Independent Commissioner’s Office (ICO)?

A

The Information Commissioner’s Office (ICO) is the UK’s independent authority set up to uphold
information rights in the public interest, promoting openness by public bodies and data privacy for
individuals.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the role of the Financial Ombudsman’s Office?

A

The Financial Ombudsman Service (FOS)
is designed to provide quick resolution of disputes between eligible complainants and their product/
service providers with a minimum of formality, by an independent person

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is the the Financial Services Compensation Scheme (FSCS)

A

If an authorised financial services firm (for example, a bank) becomes insolvent, or appears likely to cease
trading and fall insolvent, the customers of that firm (for example, the people with money deposited at
the bank) can make a claim under the FSCS for compensation for any loss.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the role of the Upper Tribunal (Tax and Chancery)

A

The Tax and Chancery Chamber has UK-wide

jurisdiction in tax cases and references against decisions of the FCA, PRA, TPR, HM Treasury and BoE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is the Financial Policy Committee (FPC)

A

The Financial Policy Committee (FPC) is an official committee of the BoE. It focuses on the macroeconomic and financial issues that may threaten the stability of the financial system and economic
objectives including growth and employment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What are the key market failures the FCA attempts to avoid?

A
  • Unilateral market power
  • Barriers to entry and expansion
  • Coordinated conduct by firms
  • Vertical relationships
  • Weak customer response
  • Principal-agent problems
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Who supports the UKLA?

A

The FCA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What additional powers did the Financial Services Act of 2012 give the FSA (and now the FCA)?

A

The ability to ban financial products that pose unacceptable risks to consumers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What method does the FCA use to assess a firm’s Conduct Risks?

A

The Firm Systematic Framework (FSF) which aims to answer the question: ‘are the interests of customers and market integrity at the heart of how the firm is run?’.

21
Q

How does the PRA achieve it’s objectives?

A

• seeking to ensure that any firms that fail do so in a way that avoids significant disruption to the
supply of critical financial services
• emphasising resolution planning to permit orderly failure
• cooperating closely with the FPC and the FCA to ensure macro- and micro-prudential regulation is
aligned across the markets, and
• working with the FCA and others to ensure the UK authorities have a strong voice in international –
particularly European – policy-making.

22
Q

What is the structure of the PRA?

A
  • Banking:
    • domestic UK banks
    • international UK banks
    • investment banks and overseas banks.
  • Insurance:
    • general insurance
    • life insurance.
  • Policy:
    • banking policy
    • insurance policy.
23
Q

Which Regulatory Body has primary responsibility for Financial Crime?

A

The FCA

24
Q

Does the CMA have sole responsibility for Competition Regulation?

A

No, the FCA and the CMA have concurrent powers

25
Q

What are the FCA’s 11 Principles for Business?

A
  1. Integrity
  2. Skill, care and diligence
  3. Management and control
  4. Financial prudence
  5. Market conduct
  6. Customers’ interests
  7. Communication with clients
  8. Conflicts of interest
  9. Customers: relationships of trust
  10. Clients’ assets
  11. Relations with regulators
26
Q

What are the 8 fundamental rules of the PRA?

A
  1. conduct its business with integrity
  2. conduct its business with due skill, care and diligence
  3. act in a prudent manner
  4. at all times maintain adequate financial resources
  5. have effective risk strategies and risk management systems
  6. organise and control its affairs responsibly and effectively
  7. deal with its regulators in an open and cooperative way, and must disclose to the PRA appropriately
    anything relating to the firm of which the PRA would reasonably expect notice
  8. prepare for resolution so, if the need arises, it can be resolved in an orderly manner with a minimum
    disruption of critical services.
27
Q

Who is responsible for supervising exchanges and other forms of trading venues?

A

The FCA

28
Q

What is the difference between the RIE and an RoIE?

A

RoIE’s are overseas based exchanges

29
Q

Who is responsible for regulating clearing houses?

A

The Bank of England

30
Q

What is an MTF?

A

An MTF is described by the FCA as being any system that ‘brings together multiple parties (eg, retail
investors or other investment firms) that are interested in buying and selling financial instruments and
enables them to do so. These systems can be operated by an investment firm or a market operator.
Instruments may include shares, bonds and derivatives. This is done within the MTF operators’ system’.

31
Q

What is an OTF (Organised Trading facility)?

A

Within an OTF, multiple third-party buying and selling interests in bonds, structured finance products,
emission allowances or derivatives are able to interact in a way that results in a contract. Equities are
not permitted to be traded through an OTF.

32
Q

What are the two levels of the lSE?

A

The Official list, and the Alternative Investment market (AIM)

33
Q

Who decides if a company can enter the AIM?

A

The LSE

34
Q

Who decides if a company can enter the Official List?

A

The FCA

35
Q

What is the role of the Monetary Advice Service (MAS)?

A

In partnership with the government, the financial services sector, employers’ organisations, consumer
organisations and the not-for-profit sector, MAS is working to improve the financial capability of people
in the UK.

36
Q

What was the importance of the Investment Services Directive (ISD) was issued in 1993 in the EU?

A

It specified that if a firm had been authorised in one member state to provide investment services, this single authorisation enabled the firm to provide those investment services in other member states without requiring any further authorisation. This principle was, and still is, known as the passport.

37
Q

What replaced the Investment Services Directive (ISD) in 2007?

A

MiFID

38
Q

When was MiFID II introduced?

A

2018

39
Q

Which activities can be Passported in the EU?

A 
Arranging deals in investments
Dealing as agent
Dealing as principal
Managing investments
Advising on investments
Dealing as principal
Dealing as agent
Dealing as agent
Arranging deals in investments
Operating an MTF
Operating an OTF
40
Q

What does MiFID II apply to?

A

Securities
Money Markets
Derivatives

41
Q

Does MiFID II apply to loans?

A

No - not in their base form

42
Q

What does MiFIR cover?

A

It sets out the requirements for trade transparency, the mandatory trading of derivatives on organised venues and the provision of services by third-country firms without a branch. It also confers powers to European regulators.

43
Q

What is the difference between a Regulation and a Directive?

A

Unlike a directive, a regulation is directly applicable in the law of member states and does not require
national implementing legislation.

44
Q

What is the UCITS (Undertakings for Collective Investments in Transferable Securities)?

A

The UCITS Directive is aimed at securing a common set of regulatory standards for open-ended funds
(commonly known as OEICs) and unit trusts in the UK and Sociétés d’Investissement à Capital Variable
(SICAVs) in other parts of Europe) across the EU – with the aim of removing barriers to cross-border
trade.

45
Q

What is the Prospectus Regulation

A

The overarching aim of the Regulation is, therefore, to improve access to finance and to simplify
information to investors. It can be thought of as a single passport for issuers. This means that once a
prospectus has been approved by a home state listing authority (such as the FCA), it must be accepted
for the purpose of listing or public offers throughout all EU member states.

46
Q

What is the AIFMD – Alternative Investment Fund Managers Directive

A

The AIFMD effectively introduces a regulatory framework for managers of any collective investment
undertaking, other than those covered by the UCITS Directive, if the manager is domiciled in the EU, or if
the fund is domiciled or marketed within the EU.

47
Q

What are the 3 classes of Investment Firms?

A
  • Class 1 – systemically important investment firms.
  • Class 2 – non-systemically important investment firms.
  • Class 3 – small and non-interconnected investment firms below the Class 1 and 2 thresholds.
48
Q

What would classify a Firm as a Class 1 Investment Firm?

A

Firms that ‘deal on own account’ (ie, trade using proprietary capital), rather than acting on behalf of/as agent – so will exclude asset managers.

49
Q

What is the European Markets Infrastructure Regulation (EMIR)

A

EMIR is a regulation on over-the-counter (OTC) derivatives, central counterparties and trade repositories, which entered into force on 16 August 2012.

UK Regulation (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions