Week 5A

Question 1

Explain what a primary market is

Answer 1

-Investors buy directly from the issu. company
-securities (e.g: shares)

Question 2

Explain what a secondary market is

Answer 2

-When securities are traded, after already being put on prim. market

Question 3

List the three main types of Investment services

Answer 3

-Execution-only
-Investment firm only executes order (don’t make decision)

-Investment advice
-If you want advice for investments, investment firm advices you to make certain decisions/ investment based -on your goal

-Portfolio management
-compl. management of portfolio–> makes decisions

Question 4

What was the main legal problem in the woekerpolis scandal

Answer 4

• lack of info. (terrible information asymmetry)
  -con. spent a lot more money than they would think to

Question 5

Give an example of a mis-seling of an investment to a vulnerable group of ppl

Answer 5

HSBC fined for mis-selling bonds to elderly people

Question 6

Explain what the regulatory dilemma is

Answer 6

-stimulating innovation v. protecting inv. from risks
-empower to make invest. v. protection

Question 7

Explain what product disclosure regulation is

Answer 7

-disclosing certain things about the financial product so they can make informed decisions

Question 8

Explain what distribution regulation is

Answer 8

-regulates on the level which
-investment products are sold (distributed) to investors

Question 9

Explain what product regulation is

Answer 9

-regulates the characteristics of the product itself

Question 10

Give an example of a disclosure regulation regulatory tool and explain your choice.

Answer 10

-Packaged Retail and Insurance-based Investments Products Regulation
-have to give info. doc. (key investor Information Document) 2 pot. investors

Question 11

Give an example of distribution regulation and explain your choice.

Answer 11

• MiFD II
  -Gen. duty of loyalty
  - have to act in the best interests of client when advising/ invest. for them

Question 12

List examples of distribution regulation

Answer 12

-MiFiD II- Act in Best Interest of Your Client, general duty of loyalty
-‘Know your customer’ Rules
-Third Party Commission Ban

Question 13

Explain what a principle agent problem is

Answer 13

-conflict in priorities between the owner of an asset + the person who cont. of the asset has been delegated

Question 14

Give an example of Product Regulation Regulatory Tools and explain your choice.

Answer 14

• MiFD II (Ex ante Product Governance) should include: **review this
  
  • review of app. of each fin. instrument which provides for major adaptations
    -Criterion for targ. market of end clients
    -cat. of clients for each financial instruments

Question 15

List examples of Product Regulation Regulatory Tools

Answer 15

-MiFD II (review of approval of each financial instrument, which provides for major adaptations)
-(Ex post) Product Intervention
-(Ex ante) product authorisation

Question 16

List the categories of Product Regulation

Answer 16

-Ex ante product authorisation
-Prodoc. gov. (intern. oversight
-Ex post product intervent.

Question 17

Explain what ex post product intervention is

Answer 17

Measures taken after product. has been released to the market

Question 18

Explain what Fintech is?

Answer 18

• Tech. enabled innov. in fin. services that could result:
  -new business models, processes, products

Question 19

What are the opportunities provided by the development of FinTech

Answer 19

• effcient supp. of accurate ESG data from firms (i.e: ESG reportin)
  -quicker + efficient translation into standardised data
  -Increase access to sus. financial products and services for ret. inv.

Question 20

Explain the Risks of FinTech

Answer 20

• Inf. assymetries worsened because of tech. systems investors don’t understand
  -Lack of sufficient data protection
  -Price discrimination (alg. who gets best interest of loan, based on money they have)
  -Financial exclusion (no access to FinTech cus no access to tech. devices)