FCA - REGULATORY EXAM
COBS - Answers- Conduct of business rules
Per se professional - Answers- Gov
Auth/regulated firm
Supranational
Central bank
Large undertaking
Large undertaking - Answers- 2/3
Net turnover EUR 40m
Own funds EUR 2m
Balance sheet EUR 20m
MIFID designated investments - Answers- Shares
Bonds
Derivatives
non-Mifid designated investments - Answers- packaged products
retail investment products
Elective professional clients - Answers- all business - qualitative exam
MIFID only business - quantitative exam
eligible counterparties - Answers- per se professional
(authorized/regulated/gov/supra/central bank) or an elective counterparty
elective eligible counterparties - Answers- any undertaking that is a per se professional
client (except INDIVIDUAL) (i.e. large undertaking)
procedure to become an eligible counterparty - Answers- obtain client confirmation
acting as agent - Answers- where the person with whom the firm is dealing (A) is acting
as an agent of another person (B), than A should be regarded as the client
exception to acting as agent - Answers- -written agreement between the firm and the
agent to treat B as the client
-the purpose of the agency is to avoid duties owed to B
Reliance on others - Answers- MIFID firm - can rely on info
non-MiFID firm - can be relied on IF (a)info is in writing; (B) non-MiFID firm is
independent; (C) non-MiFID firm is competent (MiFID firm accountable)
, S21 FSMA 2000 - Cannot communicate a financial promotion unless - Answers- it is an
authorized person; or
content has been approved by an authorized person
Firm communicating a financial promotion produced by a third party never in breach if: -
Answers- -established an authorised firm has approved the promtion
-communicates the promotion only to those it was intended
-promotion has not ceased to be fair, clear and not misleading
Quantitative test for professional clients - Answers- 2/3
average trade frequency ten per quarter over previous four quarters
portfolio > 500k EUR
works or worked in financial sector for > or equal to 1 year in professional capacity
procedure to become professional client - Answers- written intent
written warning to client explaining lost protection
written client consent to lost protection
The FCA rules on communications do not cover communications - Answers- -exempt
under the FPO (financial promotions order)
-from outside the UK, and cannot have an effect within the UK
-subject to Takeover Code or any similar code
- personal quotes or illustrations
-One-off promotions that are not cold calls
non-written communications - Answers- real time comms (phone, in-person)
communicating with clients exceptions - Answers- if its a financial promotion made
solely to professional clients or eligible counterparty
communicating with retail clients - Firms must ensure that - Answers- 1. name of firm is
included
2. details are accurate and fair
3. the promotion is comprehensible
4. the promotion does not obscure important items, statements or warnings
including past performance in promotions - Answers- 1. can't be most prominent feature
2. Cover at least five years (or life of investment) in complete 12-month periods
3. reference periods and sources must be clearly shown
4. state this is not indicator of future performance
5. disclose fees if gross performance
simulated past performance must - Answers- 1. based on actual performance of similar
investment/index
2. comply with general rules
COBS - Answers- Conduct of business rules
Per se professional - Answers- Gov
Auth/regulated firm
Supranational
Central bank
Large undertaking
Large undertaking - Answers- 2/3
Net turnover EUR 40m
Own funds EUR 2m
Balance sheet EUR 20m
MIFID designated investments - Answers- Shares
Bonds
Derivatives
non-Mifid designated investments - Answers- packaged products
retail investment products
Elective professional clients - Answers- all business - qualitative exam
MIFID only business - quantitative exam
eligible counterparties - Answers- per se professional
(authorized/regulated/gov/supra/central bank) or an elective counterparty
elective eligible counterparties - Answers- any undertaking that is a per se professional
client (except INDIVIDUAL) (i.e. large undertaking)
procedure to become an eligible counterparty - Answers- obtain client confirmation
acting as agent - Answers- where the person with whom the firm is dealing (A) is acting
as an agent of another person (B), than A should be regarded as the client
exception to acting as agent - Answers- -written agreement between the firm and the
agent to treat B as the client
-the purpose of the agency is to avoid duties owed to B
Reliance on others - Answers- MIFID firm - can rely on info
non-MiFID firm - can be relied on IF (a)info is in writing; (B) non-MiFID firm is
independent; (C) non-MiFID firm is competent (MiFID firm accountable)
, S21 FSMA 2000 - Cannot communicate a financial promotion unless - Answers- it is an
authorized person; or
content has been approved by an authorized person
Firm communicating a financial promotion produced by a third party never in breach if: -
Answers- -established an authorised firm has approved the promtion
-communicates the promotion only to those it was intended
-promotion has not ceased to be fair, clear and not misleading
Quantitative test for professional clients - Answers- 2/3
average trade frequency ten per quarter over previous four quarters
portfolio > 500k EUR
works or worked in financial sector for > or equal to 1 year in professional capacity
procedure to become professional client - Answers- written intent
written warning to client explaining lost protection
written client consent to lost protection
The FCA rules on communications do not cover communications - Answers- -exempt
under the FPO (financial promotions order)
-from outside the UK, and cannot have an effect within the UK
-subject to Takeover Code or any similar code
- personal quotes or illustrations
-One-off promotions that are not cold calls
non-written communications - Answers- real time comms (phone, in-person)
communicating with clients exceptions - Answers- if its a financial promotion made
solely to professional clients or eligible counterparty
communicating with retail clients - Firms must ensure that - Answers- 1. name of firm is
included
2. details are accurate and fair
3. the promotion is comprehensible
4. the promotion does not obscure important items, statements or warnings
including past performance in promotions - Answers- 1. can't be most prominent feature
2. Cover at least five years (or life of investment) in complete 12-month periods
3. reference periods and sources must be clearly shown
4. state this is not indicator of future performance
5. disclose fees if gross performance
simulated past performance must - Answers- 1. based on actual performance of similar
investment/index
2. comply with general rules
