What business rules apply when a firm is trading using a passport under MiFID?
HOST state conduct of business rules apply
Compliance with prudential rules for MiFID firms is imposed by?
The home state
What are the key changes from MiFID to MiFID II?
- Organised trading facility (OTF)
- Strengthening the transparency requirements
- Limiting the size of positions held in commodity derivatives
- Stricter HFT rules for risk and disorder
- Increased information on products and services
What are the main requirements under AIFMD?
- Authorisation of AIFMs by their home state regulator where AUM exceed:
– €100m for AIF using leverage
– €500m for AIF not using leverage - Brokers selected by AIFMs should be regulated, financially sound and have necessary organisational structure to provide services
- Quarterly, semi-annual or annual regulatory reporting by AIFMs to their home state regulator
- AIFMs must disclose leverage and prove leverage is limited reasonably
Under the European Market Infrastructure Regulation (EMIR) what are the three main requirements for OTC trades?
- Standardised trade reporting to a trade repository
- Compulsory central counterparty (CCP) clearing
- Risk management procedure
How long must firms hold records under MiFID?
5 years
How does the Foreign Account Tax Compliance Act (FATCA) apply to non-US financial institutions?
All foreign financial institutions (FFIs) required to provide information about their US customers (reportable accounts). If they don’t then 30% withholding tax on payments of US source income to non-US financial institutions.
What investment instruments are covered under the regulated activities order in FSMA?
All except physical assets such as land, antiques, and commodities
Who are exempt persons from requiring authorisation under the FCA for FSMA?
- Appointed representatives
- Recognised investment exchanges (RIEs) and clearing houses (RCHs)
- Members of the professions: member of a designated professional body (DPB) carrying on incidental investment business
- Members of Lloyds
Under the Digital markets, Competition and Consumers Bill (May 2024) the Competition and Markets Authority (CMA) must investigate a merger under what conditions?
- The target company has turnover of £100m or more
- The merged company will control greater than 25% of the UK market (‘share of supply test’)
- New acquirer test: either have an existing share of supply of goods or services of 33% in the UK or a substantial part of the UK, and a UK turnover of £350m.
What is considered FAIR CONDUCT OF TAKEOVER BIDS?
- Compulsory bid - if they are going to acquire 30% or more of the voting rights, cash offer to all shareholders at the HIGHEST PRICE PAID IN THE PREVIOUS YEAR
- Any offer must remain open for at least 21 DAYS
- If a predator’s stake reaches 90% or more, the predator may force the remaining minority shareholders to sell
How much can fines for GDPR breaches be up to?
€20m or 4% of global annual turnover (whichever is the greater)
When must GDPR breaches be notified by?
72 hours
What did the Pensions Act 2004 introduce?
- New regulatory body (the Pensions Regulator)
- New Pension Protection Fund (PPF)
- Scheme specific funding requirements
What are the operational objects of the FCA?
- PROTECTION for consumers
- Promote COMPETITION
- INTEGRITY of the financial system
What are the 7 blocks of the FCA handbook?
HyPe
BaR
RuStLe
HPBRRSL
- Block 1 - H High level standards
- Block 2 - P Prudential requirements (NOT relevant to IMC syllabus)
- Block 3 - B Business standards
- Block 4 - R Regulatory process
- Block 5 - R Redress
- Block 6 - S Specialist sourcebooks (e.g. COLL)
- Block 7 - L Listing, prospectus and disclosure rules
What are the FCA principles for business?
IS
MoFo
MIC
CaR
CaR
C
ISMFMICCRCRC
- I - Integrity
- S - Skill, care and diligence
- M - Management and control
- F - Financial prudence
- M - Market conduct
- I - Customers’ interests
- C - Communications with clients
- C - Conflicts of interest
- R - Customers: relationships of
trust - C - Clients’ assets
- R - Relations with regulators
- C - Consumer duty
Under the consumer duty FCA principle firms will need to understand and provide evidence whether those outcomes are being met in terms of:
- Products and services
- Price and value
- Consumer understanding
- Consumer support
What are the threshold conditions for FSMA Part 4A permission?
- R - Registered office
- E - Effective supervision: structure of the group and close links must not inhibit supervision
- A - Appropriate resources
- L - Legal status
- B - Business model of the firm: affairs conducted in a sound and prudent manner
- A - Appointment of claims representative (insurance companies only)
- P - Prudent. Business to be conducted in a prudent manner
- S - Suitability: fitness and propriety of the applicant
What conduct rules apply to all ‘relevant employees’?
- I - act with integrity
- C - act with due care, skill and diligence
- O - be open and co-operative with the FCA, the PRA and other regulators
- R - pay due regard to the interests of customers and treat them fairly
- O - observe proper standards of market conduct.
- G - act to deliver good outcomes for retail customers’ where the activities of the firm fall within the scope of the consumer duty
What are the senior management conduct rules?
CCDD
Take reasonable steps to do the following
1. Control. ensure that the business is controlled effectively
2. Complies. ensure that the business complies with the relevant requirements of the regulatory system
3. Delegation. ensure that delegation of responsibilities is to an appropriate person and that you oversee the discharge of the delegated responsibility effectively
4. Disclose. disclose any information of which the FCA or PRA would reasonably expect notice
Under the retail distribution review (RDR), what do retail advisers have to do?
- Subscribe to a code of ethics
- Hold an appropriate qualification
- Carry out at least 35 hours of CPD a year
- Hold a statement of professional standing (SPS) from an accredited body
What is the criteria for MiFID business ‘large undertakings’
meet at least two of the following:
* €20m balance sheet total
* €40m turnover
* €2m own funds
What is the criteria for non-MiFID business ‘large undertakings’
meet either of the following:
* Called up share capital or net assets at least £5m OR
* Two of the following three:
– €12.5m balance sheet total
– €25m turnover
– 250 average number of employees
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NOT USED ---- Textbook Chapter 1 - Financial Markets and Institutions154
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NOT USED ---- Chapter 1 - Financial Markets and Institutions102
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NOT USED -- Chapter 2 - Ethics & Investment Professionalism37
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NOT USED ---- Chapter 3 - The Regulation of Financial Markets and Institutions77
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Chapter 4 - Legal Concepts36
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Chapter 5 - Client Advice34
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Chapter 6 - Taxation in the UK80
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Chapter 1 - Financial Markets and Institutions Part 172
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Chapter 3 - The Regulation of Financial Markets and Institutions Part 150
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Chapter 1 - Financial Markets and Institutions Part 234
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Chapter 3 - The Regulation of Financial Markets and Institutions Part 248
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Chapter 1 - Financial Markets and Institutions Part 350
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Chapter 3 - The Regulation of Financial Markets and Institutions Part 448
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Chapter 3 - The Regulation of Financial Markets and Institutions Part 355
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Chapter 3 - The Regulation of Financial Markets and Institutions Part 542
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Chapter 3 - The Regulation of Financial Markets and Institutions Part 649
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Chapter 1 - Financial Markets and Institutions Additional lecture info4
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Chapter 2 - Ethics & Investment Professionalism12
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Chapter 1 - Hard facts22
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Chapter 3 - Hard facts49
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Chapter 4 - Hard facts9
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Chapter 5 - Hard facts3
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Chapter 6 - Hard facts19
