Background information Flashcards
What is a consent order?
A formal agreement between a regulator and a company to resolve compliance issues, requiring corrective actions to fix deficiencies
What is Granular data?
Highly detailed and specific data, broken down into smaller components to improve accuracy in analysis, such as risk factors for individual trades
What does Remediation mean?
To fix or correct a problem, such as addressing regulatory issues or deficiencies to meet compliance standards.
What are fixed income securities?
Are investments, such as bonds, that provide regular interest payments and return the principal at maturity, offering predictable income with lower risk compared to equities.
What is Front office banking?
Front office banking refers to the parts of a bank that deal directly with clients and generate revenue. This includes:
- Investment Banking: Helping clients with mergers, acquisitions, and raising capital.
- Trading: Buying and selling financial instruments like stocks, bonds, or derivatives.
- Private Banking: Providing personalized services to wealthy individuals.
What does a judristiction mean?
In banking, jurisdictions refer to the geographic regions or countries where the bank operates. Each jurisdiction may have its own rules, regulations, and risks associated with trading or financial services.
What does Quality assurance mean?
Quality assurance involves checking and validating that processes, tools, and data meet required standards. For this project, QA ensures that:
What is PwC’s role in this project?
A: To develop a granular risk assessment framework and tools to address regulatory feedback, ensuring DB meets compliance and sustainably manages risks.
Q: What is the Trader Finder Tool, and what is its purpose?
A tool to track trading activities, consolidating data to assess risks related to trades, desks, or products more effectively.
What does a desk mean in banking?
refers to a specific team or unit within a trading floor or finanical instution that specialises in a particular type of financial product or market activity e.g. equities desk ( specialises in buying and selling stocks and equity), Deriartives desk ( trades financial instruments like options, swaps or futures.
What is a fixed income?
Fixed income is an investment that offers consistent returns and is often used for portfolio stability, income generation and risk reduction e.g. Bonds, certificates of deposits, treasury bills and mortage backed securities.
What is Certificate of Deposit?
is a fixed-term financial product offered by banks and credit unions that allows you to deposit money for a specific period in exchange for a guaranteed interest rate. ( you cannot withdraw funds before CD maturity early or it will incur a penalty)
What is FX trading?
Involves the buying and selling of currencies in the foreign exchange market.
Give me some key exampels of FX trading activities?
Spot trading
Forward contracts
Options
Fx Swaps
Non-deliverable forwards ( NDFs ( Non-deliverable forwards)
What is spot trading?
The most basic form of Fx Trading, involving the immediate exchange of currencies at the current market rate ( e.e.g a company buys euros using US dollars for payment in Europe.
What is Forward contract?
Agreements to exchange currencies at a set rate in the future.
What is an option?
Contracts giving the right but not the obligation to exchange currencies.
What is FX swaps
Exchange of currencies with a future reversal e.g. A multinational banks swaps euros for USD today and agrees to reverse the trade after 90 days.
What is a non-deliverable forward?
What are 2 main reasons for trading?
Hedging risk
Arbitrage
What are key risks associated with FX trading activities?
Market risk
Counterparty risk
Liquditiy risk
Operational risk
Reputational risk
What is areMarket risk
Counterparty risk
Liquditiy risk
Operational risk
Reputational risk
Market risk: Lossess from adverse exchange rate movements
Counterparty risk: The risk that the other party in an FX transaction fails to fulfil its contractual obligations
Liquditiy risk: Difficulty in executing trades due to low market activity
Operational risk: Errors or system failures in trading
Reputational risk: Damage from unethical pratcites or regulatory violations.
