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2 Universal Considerations > 2.2 Global Regulation > Flashcards

2.2 Global Regulation Flashcards

1
Q

What are the two theories of regulation? (Public interest and private interest)

A

The public interest theory of regulation is the idea that regulation should benefit society and reduce the collateral damage caused by free markets to competition and the environment.

Private interest theories of regulation consider that legislators, businesses, and industry groups may protect self-interests through regulation (e.g., limiting competition, limiting imports).

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2
Q

Despite varying regulations in the world, what are three basic and universal principles which go across many places? (t, fm, rol)

A

transparency, fair markets and the rule of law / use of law by governments to maintain social and economic systems

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3
Q

Increased regulation can be viewed as a positive or a negative - examples of each

A

It is viewed as negative when it restricts the activities of a business.

Can be viewed as positive when it creates new activities that are less regulated. e.g. increase in commercial lending regulations in the U.S. paved the way for the development of the shadow banking system which is less regulated and more efficient

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4
Q

What are qualified opportunity zones?

A

Qualified opportunity zones consist of tax cuts that are offered to investors for private equity and real estate investments in certain areas of the U.S. (or think DIFC). As a result, there was a surge in such investments after the legislative change.

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5
Q

What is the name for a zone in the US with tax and regulation cuts?

A

Qualified opportunity zone

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6
Q

What are the four main regulatory bodies in the US?

A
  1. SEC (Securities and Exchange Commission) - main oversight and regulatory authority in the U.S. securities markets
  2. FINRA (Financial Industry Regulatory Agency) - managed by the SEC, oversees activities of broker-dealers
  3. CFTC (US Commodity Futures Trading Commission) - oversight body for the commodity derivatives market
  4. National Futures Association - self-regulating body that oversees individuals and firms involved in trading futures
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7
Q

What is the name for state specific financial laws?

A

Blue sky laws

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8
Q

The Securities and Exchange Commission (SEC) has the ______ in the U.S. securities markets. The SEC’s responsibilities consist of SII, PCI, and ensuring the SF of markets. The SEC has PD DR, which means investors must be provided with crucial information about securities prior to investing.

A

The Securities and Exchange Commission (SEC) has the main oversight and regulatory authority in the U.S. securities markets. The SEC’s responsibilities consist of safeguarding investors’ interests, promoting capital investment, and ensuring the smooth functioning of markets. The SEC has principles-based disclosure requirements, which means investors must be provided with crucial information about securities prior to investing.

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9
Q

What does the SEC have which means investors must be provided with crucial information about securities prior to investing

A

Principles-based disclosure requirements

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10
Q

The National Futures Association (NFA) is a ______ body that oversees _______.

A

The National Futures Association (NFA) is a self-regulating body that oversees individuals and firms involved in trading futures.

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11
Q

The _________ (CFTC) is the oversight body for ________ to prevent any participants from suffering harm caused by fraud and other unethical behavior.

A

The U.S. Commodity Futures Trading Commission (CFTC) is the oversight body for the commodity derivatives market (both individuals and firms) to prevent any participants from suffering harm caused by fraud and other unethical behavior.

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12
Q

Name five key regulatory acts and 2 additional:
1. 1933
2. 1934
3. 1940
4. 1940
5. 2010

+2

A
  1. Securities Act of 1933 (Securities Act) - mandates securities (including private funds) registration with the SEC, subject to any relevant exemptions
  2. Securities Exchange Act of 1934 (Exchange Act) - oversees the trading activity in the secondary market with regulations for exchanges and broker-dealers
  3. Investment Advisers Act of 1940 (Advisers Act) - registering and regulating those who offer investment advice on securities (anyone offering paid investment advice or publishing analyst reports on securities)
  4. Investment Company Act of 1940 (1940 Act) - companies that invest and trade in securities and whose own securities are publicly traded, includes mutual funds
  5. Dodd-Frank Act 2010 - against predatory practices by financial institutions and disallowing taxpayer-funded bailouts for financial firms

Two others are Commodity Exchange Act for derivatives and the Employee Retirement Income Security Act (ERISA)

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13
Q

Dates of the following acts?

  1. Securities Act
  2. Securities Exchange Act
  3. Investment Advisers Act
  4. Investment Company Act
  5. Dodd-Frank Act
A
  1. Securities Act of 1933
  2. Securities Exchange Act of 1934
  3. Investment Advisers Act of 1940
  4. Investment Company Act of 1940
  5. Dodd-Frank Act 2010
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14
Q

Which act focuses on overseeing the trading activity in the secondary market with regulations for exchanges and broker-dealers?

A

Securities Exchange Act of 1934 (Exchange Act)

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15
Q

Which act focuses on registering and regulating those who offer investment advice on securities?

A

Investment Advisers Act of 1940 (Advisers Act)

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16
Q

Which act focuses on predatory practices by financial institutions?

A

Dodd Frank Act 2010

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17
Q

Which act covers companies that invest and trade in securities and whose own securities are publicly traded/mutual funds?

A

Investment Company Act of 1940 (1940 Act)

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18
Q

Private fund managers, who are considered investment advisers, are required to register with either the state or the SEC - depends on AUM:

AUM less than $25 million:

AUM of $25 million to $100 million and has a permanent establishment in a state that requires registration:

AUM of $25 million to $100 million and has a permanent establishment in a state that does not require registration:

AUM of $25 million to $100 million and has a permanent establishment in state that does not require examination by the state securities commissioner:

AUM greater than $100 million and has managed accounts:

AUM greater than $150 million and no managed accounts:

A

AUM less than $25 million: usually no need to register with state or SEC
AUM of $25 million to $100 million and has a permanent establishment in a state that requires registration: registration with state
AUM of $25 million to $100 million and has a permanent establishment in a state that does not require registration: registration with SEC
AUM of $25 million to $100 million and has a permanent establishment in state that does not require examination by the state securities commissioner: registration with SEC
AUM greater than $100 million and has managed accounts: registration with SEC
AUM greater than $150 million and no managed accounts: registration with SEC

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19
Q

Who are provided a $10 million discretion to avoid constant changes in state and SEC registration due to AUM changes?

A

Private fund managers with AUM in the range of $25 million to $100 million

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20
Q

Private fund managers with AUM in the range of $25 million to $100 million are provided a _______

A

They are provided a $10 million discretion to avoid constant changes in state and SEC registration due to AUM changes.

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21
Q

When would a non-U.S. hedge fund need to register with the SEC?

A

If they have more than 15 U.S. clients and investors with AUM exceeding $25 million

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22
Q

What are antifraud prohibitions?

A

State security laws which make it illegal to obtain funds from investors by making material misstatements or not disclosing key information

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23
Q

What are state security laws which make it illegal to obtain funds from investors by making material misstatements or not disclosing key information called?

A

Antifraud prohibitions

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24
Q

What are the two common registration exemptions? What does this mean for the adviser?

A

The adviser advises on venture capital funds.
The adviser advises on private funds with under $150 million in AUM.

Means not having to comply with the reporting and recordkeeping requirements of the Advisers Act and not being subject to SEC examination. Instead, some of the information on Form ADV needs to be provided to the SEC.

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25
Q

What are the 12 matters regulated under the Advisers Act?
1 AAT
2 PF
3. CS
4 PC
5 TP
6 A
7 R
8 PSR
9 C
10 PV
11 CP
12 G+E

A

1 Adviser agreement terms
2 Performance fees
3 Client solicitation
4 Political contributions
5 Trading practices
6 Advertising
7 Recordkeeping
8 Personal securities reporting
9 Custody
10 Proxy voting
11Compliance program
12 Gifts and entertainment

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26
Q

What is covered by Part 1 and Part 2 of Form ADV?

A

Part 1 of Form ADV covers administrative details of the fund and its staff. Part 2 is the disclosure portion to clients and provides a substantial amount of information, including range of services provided, fees, and conflicts of interest.

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27
Q

It is an adviser’s legal obligation to deliver Form ADV P2 to clients when? and if this relates to an adviser managing funds, who is the client?

A

At the beginning, annually, and whenever specific disclosure items change.

If an adviser is managing funds, the fund (not the fund investors) is technically the client. However, it is recommended to provide Form ADV Part 2 to both the fund’s general or managing partner and the fund investors

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28
Q

What is Form CRS?

A

Form CRS explains fees, conflicts of interest, and a firm’s disciplinary history and must be provided to investors before they invest.

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29
Q

Why is the level of SEC regulation for alternative investments is markedly different than for other investments, and what is it primarily focused on?

A

It is presumed that alternatives are for experienced and wealthy investors who do not require protection. As a result, regulation is focused on oversight activities pertaining to the systemic risks to the economy

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30
Q

Because SEC registration can be an onerous process, private funds often do what?

A

They take advantage of an exemption in the Securities Act and sell investments through private placements.

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31
Q

Private placements are governed by (1), which allows the sale to any number of (2) and up to (3), subject to (4) and the nonaccredited investors having enough skills to assess their suitability for the investment. General advertising is allowed if (5).

A
  1. Rule 506 of the Securities Act
  2. accredited investors
  3. 35 nonaccredited investors
  4. no general advertising
  5. all investors are accredited.
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32
Q

An accredited investor is defined as an individual who has

A
  1. net worth exceeding $1 million (excluding the value of the primary residence)
    or
  2. annual income of $200,000 ($300,000 together with spouse) in the current year and each of the two preceding years
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33
Q

Although many hedge funds are considered investment companies according to (1), other private funds are able to seek exemptions under two sections of Act.
What are these? What does it mean if they meet one of the exemptions?

A
  1. the 1940 Act

Section 3(c)(1): the private investment fund exemption
Section 3(c)(7): the qualified purchaser fund exemption

Meeting either exemption means the fund is not an investment company and is exempt from almost all of the 1940 Act.

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34
Q

What is the definition of a qualified purchaser?

A

A qualified purchaser is defined as either an individual with $5 million or more in investments, an institution with $25 million or more in investments, or an entity where each beneficial owner is a qualified purchaser.

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35
Q

What are the two tests for the private investment fund exemption? (40 Act)

A

(1) 100 or less beneficial owners, and (2) no public offerings, with offerings only to qualified purchasers.

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36
Q

Who are included in a firm’s ‘access persons’?

A

Firm’s directors, officers, partners, and other persons who would be privy to material nonpublic information on securities

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37
Q

What is the definition of an advertisement?

A

An advertisement is any form of written communication on securities directed to multiple individuals through any media outlet.

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38
Q

Who performs SEC exams?

A

the Office of Compliance, Inspections and Examinations (OCIE)

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39
Q

What are three types of SEC exams? (NPI, CE, SE)

A
  1. Normal periodic inspections - focus on the marketing materials and the Form ADV to check for any false or misleading statements.
  2. Cause exams - arise from specific tips and complaints.
  3. Sweep exams - arise because of a compliance problem that the SEC has noted in numerous firms.
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40
Q

Institutional investors have fiduciary duties to their own investors, and therefore, often require more information from hedge funds. As a result, hedge funds often provide the following items:
- inspection of ___
- QL
- AFS

A
  • Inspection of fund books and records
  • Quarterly letters
  • Annual financial statements
41
Q

Private fund advisers must meet certain annual reporting requirements - including:

  1. SA+OP (5%)
  2. D over 100$
  3. FPF
  4. Form CPO-PQR
  5. RD and BSRF
  6. P2P and LR
  7. SSR
A
  1. Significant acquisition and ownership positions (Section 13(d) of the Exchange Act). - owning more than 5% of a class of public equity securities with voting rights need to disclose (source and amount of funds, purpose)
  2. Discretion over $100M in public equity - holdings and voting power
  3. Form PF - such as fund size, leverage, investor types, liquidity, and performance (more details for hedge funds on strategy). Required for AUM over $150M in private funds.
  4. Filed with the CFTC by commodity pool operators or commodity trading advisers
  5. Regulation D and blue sky renewal filings - for private funds with private offerings greater than one year
  6. Pay to play and lobbyist registration - for private fund advisers who lobby U.S. state or local govts
  7. Short selling reporting - Required in some countries for short positions in specific investments
42
Q

The ESFS (which stands for?) is made up of the following:

  1. A series of NCAs (a CA has power to…)
  2. A joint committee of…
  3. Additional authorities including (4)
A

The European System of Financial Supervisors (ESFS) is made up of the following:

  1. A series of national competent authorities; a competent authority has the power to regulate or exert control
  2. A joint committee of European supervisory authorities
  3. Additional authorities including (4):
    - European Securities and Markets Authority (ESMA): focused on maintaining the stability of the financial system
    - European Banking Authority (EBA)
    - European Insurance and Occupational Pensions Authority (EIOPA)
    - European Systemic Risk Board (ESRB): focused on macroeconomic aspects of the financial system
43
Q

What is ESMA focused on?

A

European Securities and Markets Authority (ESMA): focused on maintaining the stability of the financial system

44
Q

What is a competent authority?

A

A competent authority has the power to regulate or exert control

45
Q

What framework outlines the legislative process in the EU for financial services?

A

The Lamfalussy Framework

46
Q

What does the Lamfalussy Framework outline? What are the levels? (LA, IM, SC, S+E)

A

Outlines the legislative process in the EU for financial services.
Level 1 Legislative Act.
Level 2 Implementing Measures (Written and adopted by the EU Commission based on specialist committees, including the ESMA)
Level 3 Supervisory Convergence. Strive for consistent application in each country.
Level 4 Supervision and Enforcement. Done mainly by regulators in each country

47
Q

Why is the regulatory framework complicated? (Europe vs EU).

A

The EU does not consist of all the countries in Europe and because EU members have different status levels within the EU. European countries who are not EU members (e.g., Switzerland) may have their own regulations for alternative investments

48
Q

What rules exist when selling non-EU funds in the EU? What might a country have on top?

A

National private placement rules. Each country within the EU could have additional rules on top of these.

49
Q

What is the main framework for collective investments in EU?

A

Undertakings for Collective Investments in Transferable Securities (UCITS).

50
Q

What does UCITS stand for?

A

Undertakings for Collective Investments in Transferable Securities (UCITS)

51
Q

UCITS funds are OE, L, and generally invest in SI that are PT. They are suitable for SI, and leverage amounts are C.

A

UCITS funds are open-ended, liquid, and generally invest in safe investments that are publicly traded. They are suitable for smaller investors, and leverage amounts are capped.

52
Q

What does AIFMD stand for? What does this cover?

A

Alternative Investment Fund Managers Directive (AIFMD). The AIFMD covers anything that is not a UCITS fund, such as private equity, venture capital, and hedge funds

53
Q

What directive covers PE and HFs?

A

The AIFMD covers anything that is not a UCITS fund, such as private equity, venture capital, and hedge funds

54
Q

UCITS and alternative investment funds are both considered to be?

A

Collective investment schemes (CIS)

55
Q

What is a CIS?

A

Collective investment schemes (CIS) - includes both UCITS and alternative investment funds

56
Q

AIFs are suitable for LI who do not want to be restricted to S and L investments, and leverage amounts are typically higher than those of ____

A

AIFs are suitable for larger investors who do not want to be restricted to safe and liquid investments, and leverage amounts are typically higher than those of UCITS funds

57
Q

Four key features of the AIFMD?
1. auth
2. comp
3. lev
4. oversight

A
  1. AIFMs are required to be authorized, subject to any applicable exemption(s).
  2. There are caps on compensation for senior management and those in a position to gain.
  3. For each AIF, the AIFM must establish a maximum threshold for leverage.
  4. AIFMs have oversight duties for liquidity risks and stress tests.
58
Q

What is the point of being compliant with the AIFMD?
1. provides investors…
2. allows AIFMS…

A
  1. provides investors assurance that the investments have a sound basis.
  2. allows AIFMS the ability to conduct business in a uniform manner in all EU countries, and that results in much lower compliance costs
59
Q

What entities are exempt from the AIFMD?
1. type
2. investors
3. AUM

A

Entities exempt from the AIFMD include holding companies, family offices, pension funds, national central banks, and governments that manage Social Security and pension funds

AIFMs are also exempt from the AIFMD if they manage AIFs where investors consist of only the AIFM or the parent/subsidiaries. Those investors may not be AIFs.

Full AIFMD authorization is not required for AIFMs with AUM below 100 million, or below 500 million on an unlevered basis and no redemption rights for investors for five years. The key requirement is still to register with the local authority

60
Q

What AUM exempts AIFM from full AIFMD registration?

What is the key requirement?

But what is the result of not registering?

A

Full AIFMD authorization is not required for AIFMs with AUM below 100 million, or below 500 million on an unlevered basis and no redemption rights for investors for five years. The key requirement is still to register with the local authority.

Not having full AIFMD registration results in the denial of a marketing passport, which results in more stringent monitoring by each member state where the AIFM operates.

61
Q

Not having full AIFMD registration results in the denial of ______, which results in ______

A

Not having full AIFMD registration results in the denial of a marketing passport, which results in more stringent monitoring by each member state where the AIFM operates.

62
Q

EU AIFMs must do the following to receive and maintain authorization from the competent authority:
1. capital
2. compensation
3. RM
4. disc
5. reg req
6. annual

A
  1. Meet initial and subsequent capital requirements
  2. Establish compensation guidelines for top management and staff where compensation may significantly affect the AIMF’s risk profile
  3. Create an independent risk management group
  4. Provide disclosures to investors of specific information initially and on a continuing basis
  5. Satisfy the regulatory requirements of the competent authority of the home member country
  6. Produce an annual report of the AIF
63
Q
A
64
Q
A

The disclosures include investment fund strategy and objective, valuation methods, liquidity, and fees.

65
Q

What kind of disclosures are usually provided in a fund’s offering memorandum?

A

Investment fund strategy and objective, valuation methods, liquidity, and fees

66
Q

Marketing of AIFs by AIFMs in the EU occurs in two ways:
1. MP - has benefit of ?
2. PP

A
  1. with a marketing passport - allows marketing of AIFs to professional investors throughout the EU, subject to only one set of rules
  2. marketing in certain EU member countries under the country’s private placement rules
67
Q

Requirements in risk management include:
1. independent
2. continuous - including (3)
3. lev
4. consideration of (4)

A
  1. Risk management must be independent from portfolio management
  2. All risks to be properly measured and evaluated continuously. Continuous oversight activities include stress testing, backtesting, and scenario analysis.
  3. No “hard” amounts of permissible leverage, a reasonable amount is permissible
  4. Consideration of key risks such as market, liquidity, counterparty, and operational
68
Q

What are three continuous oversight activities for risk management?

A

Continuous oversight activities include stress testing, backtesting, and scenario analysis.

69
Q

What are three types of reports required under AIFMD?
1. AR (includes…)
2. PR (depends on, and includes…)
3. ROMC

A
  1. annual report - includes a balance sheet and income statement plus material changes over the past year and compensation details for key staff
  2. periodic reports (depending on the size of the AIF/AIFM) - include information such as the key market and instruments in which the AIFM operates, key exposures and concentrations for individual AIFs, risk profile and risk management tools, stress test results
  3. reports of material changes
70
Q

When do asset stripping rules apply? What do they mean?

A

Asset stripping rules apply when AIFs invest in unlisted companies. The rules would not allow an AIF to take a controlling stake in a private equity investment that takes on debt in order to pay the AIF a dividend because it increases leverage and risk. Asset stripping rules remain for two years after purchasing the nonlisted company.

71
Q

Why would asset stripping rules not allow an AIF to take a controlling stake in a private equity investment that takes on debt in order to pay the AIF a dividend?

A

because it increases leverage and risk

72
Q

How long do asset stripping rules remain in place?

A

Asset stripping rules remain for two years after purchasing the nonlisted company.

73
Q

Two countries where AIFs are frequently domiciled?

A

Luxembourg and Ireland.

74
Q

The following legal structures exist in the EU:
1. IC/VCC
2. ICAV
3. UT
4. CC
5. RAIF
6. SICAV
7. SIF

A
  1. Investment company/variable capital company (used by UCITS and AIFs to pool funds).
  2. Irish Collective Asset Management Vehicle - used by UCITS and AIFs in Ireland to reduce administration costs
  3. Unit trust - Trustee acts on behalf of investors as the legal owner of fund assets; trustee engages management company to invest assets.
  4. Common contractual - investors are co-owners of the fund’s assets as in a direct proportionate share of the assets; used by UCITS and AIFs in Ireland
  5. Reserved Alterative Investment Fund (RAIF). Used by AIFs in Luxembourg and does not require regulatory approval prior to being established
  6. Société d’Investissement à Capital Variable (SICAV). Public limited company with variable share capital in Luxembourg.
  7. Specialized investment funds (SIF). For qualified investors in Luxembourg.
75
Q

In EU, each member state designates a national regulator to ESMA’s board. If two member states are unable to come to an agreement on enforcement steps…

A

The ESMA could step in to impose binding mediation

76
Q

What is one key exception to ESMA’s influence through mediation? (S, S, PO)

A

The AIFMD sovereignty exemption - the member state can choose not to cooperate if by doing so, it negatively impacts its sovereignty, security, or public order

77
Q

Home member state vs host state?

A

The home member state is the country in which the AIFM is authorized, while the host state is the country where the AIF is marketed.

78
Q

When can host competent authorities audit AIFs?

A

Host competent authorities are able to audit AIFs on an unannounced basis. Should it be alleged that an AIF committed an illegal act in a host state, then the AIFMD has guidelines regarding subsequent procedures and enforcement actions. If an illegal act occurs in a host state, and it is beyond the host state’s jurisdiction, then it is possible to contact authorities in the AIFM’s home state for further action.

79
Q

What is the Act/law and the main reg body in HK?

A

SFO - Securities and Futures Ordinance (contains the main laws regarding asset management regulation).

SFC - Securities and Futures Commission is the regulating authority to enforce the SFO

80
Q

In Hong Kong, how may AIFMs by-pass registration procedures involving the SFO and SFC?

A

They can avoid registration by selling investments on an unsolicited basis via private placement. The fund’s offer and marketing activities must not be reasonably perceived as a public offering or else registration is required.

81
Q

In HK, if an AIFM sells investments on an unsolicited basis via private placement, they can…

A

Avoid registration procedures involving the SFO and SFC

82
Q

To avoid registration with the SFO and SFC in HK, four requirements regarding offers must all be met:
1. #
2. HKD$ min per person
3. HKD total max
4. prof

A
  1. Maximum 50 persons
  2. Minimum amount per person of HKD 500,000
  3. Maximum amount of HKD 5 million
  4. Professional investor, which would be financial institutions and intermediaries but not individuals or holding companies controlled by individuals
83
Q

In Singapore, what is the legal term for an investment fund>

A

Collective investment scheme (CIS) is the legal term for an investment fund.

84
Q

What is the main regulatory body in Singapore, and the regulatory Act.

A

The Securities and Futures Act (SFA) contains the main laws regarding asset management regulation.

The Monetary Authority of Singapore (MAS) is the regulating authority.

85
Q

In Singapore, what is the name for the legal entity for investment funds that allows for economies of scale for fund managers through the creation of an umbrella fund structure? This is the umbrella containing what?

A

A Variable Capital Company (VCC). It contains a collective investment scheme (CIS) which is the fund itself.

86
Q

In Singapore, what is the benefit of a VCC? (2)

A

A Variable Capital Company (VCC) is an umbrella structure containing CISs - this will allow CIS to have more flexibility in redeeming shares of multiple investment vehicles and allows VCC to share board of directors and service providers across fund types

87
Q

In Singapore, fund managers must be licensed and subject to the provisions of the SFA. They must have (1) or do (2)

A

They must have a capital markets services (CMS) license
or
They must register with the MAS (Monetary Authority of Singapore) as a registered fund management company (RFMC).

88
Q

Why might a fund manager in Singapore have an exemption from CMS licensing?
1. #
2. AUM
3. RFMC

A
  1. there is a maximum 30 qualified investors (maximum of 15 of them being funds or limited partnerships)
  2. total AUM does not exceed $250M (per SFA)
  3. they are registered as an RFMC with the MAS
89
Q

In Singapore, what is the difference for venture capital funds with regard to registration etc.

A

They must have a CMS licence, but there is a fast-tracked application process and the absence of many onerous regulations

90
Q

What are two conditions which Offers of interests to Singapore residents are subject to?
1. auth/rec
2. prospectus

A
  1. The fund must be authorized (registered fund established locally) or recognized (registered fund established overseas) by the MAS.
  2. The offer includes a prospectus that meets the SFA’s requirements and is registered with the MAS.
91
Q

Offering a foreign CIS in Singapore requires ____ or the use of

A

Requires a license or the use of a local licensed intermediary such as a placement agent.

92
Q

Act and two bodies in South Korea?

A

The Financial Investment Services and Capital Markets Act (FSCMA) contains the main laws regarding asset management regulation.

The Financial Services Commission (FSC) is the regulating authority, and it manages the Financial Supervisory Service (FSS), the latter of which performs inspections and enforces the regulations.

93
Q

In Korea, advertising must be …

A

All advertising must be done locally by a Korean securities firm, bank, or insurance company that is authorized to distribute funds.

94
Q

All foreign funds offered to Korean investors must be registered with —–

A

The FSC (Financial Services Commission)

95
Q

In Japan, what are the two Acts and one regulatory body?

A

The Financial Instruments and Exchange Act (FIEA) and the Act on Investment Trust and Investment Corporation (ITIC) contain the main laws regarding asset management regulation.

The regulatory authority is the Kanto Local Finance Bureau of Ministry of Finance Japan (KLFB).

96
Q

In Japan, registration as an investment manager is generally required; however, foreign funds that are already represented in Japan could …

A

Qualify for a limited exemption under Article 63 of FIEA that still subjects the foreign funds to onerous regulations.

97
Q

All entities selling funds to Japanese investors must be (1). If foreign funds are not directly marketed to Japanese investors, then (2).

A
  1. registered with the Financial Services Agency of Japan
  2. registration is not necessary
98
Q

Developing a geopolitical framework of analysis leads to the determination of GB, which is applied to G and IE when computing ER.

A

Developing a geopolitical framework of analysis leads to the determination of geopolitical beta, which is applied to growth and inflation expectations when computing expected returns.

2 Universal Considerations (5 decks)

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