Chapter 1 Flashcards
(39 cards)
What are the 4 functions of the financial services?
- Savings - Protect and Channel into capital
- Match savers and borrowers
- Risk
- Diversification
What is Reinsurance?
When risks are too big for one company, a Reinsurance company will insure a proportion in exchange for a proportion of the premium
What is a derivative?
Similar to a contract - Used to offset the losses - protection for financial transactions, such as currency.
What are the 2 key objectives of capital markets
- Investors - able to invest in assets that provide growth above inflation
- Companies - able to raise money without help from banks
What financial instruments were created as a result of the key objectives of the capital markets?
- Shares - allows investors to buy a % or ownership from a company, therefore benefitting from company increase in value and receive dividends
- Bonds - allows investors to lend companies money in exchange for pre defined interest payment
Who are the EU Regulatory bodies?
European Supervisory Authorities ESAs
- EBA European Banking Authority
- ESMA European Securities & Markets Authority
- EIOPA European Insurance & Occupational Pensions Authority
What is the role of the European Central Bank (ECB)
Coordinate and control the monetary policy and the interest rates in countries using the Euro
What does the Financial Action Task Force (FATF) primarily deal with
Anti money laundering
What are the 4 key components of the UK Financial Services structure
- Financial infrastructure
- Financial markets
- Financial firms
- Financial authorities
Who oversees, monitors and facilitates the payment systems?
The Bank of England
What are the 3 objectives of the PSR (payment systems regulator)
- Consider and promote the interests of all
- Promotes effective competition
- Promotes development- particularly the infrastructure used to operate the system
What is the purpose of the PSR
To work well for those who use them
Who established the PSR
The FCA
What are on exchange markets
- FCA regulate the key changes in the UK
- used to trade investments such as equities and derivatives
- specifically designed locations such as London Stock Exchange
What are OTC Markets
- no physical exchanges
* users formed a committee that examine how markets function
What are the ‘core’ services offered by banks and building societies
- current accounts
- savings accounts
- wills
- mortgages/loans
What are the ‘extra’ services offered by banks and building societies
- Portfolio management
- Stockbroking
- Insurance, Investment & Pensions
When was the 3x ESAs created?
Jan 2011
When was the FSAP adopted by the European Commission?
Financial Services Action Plan adopted May 1999
What were the 3 objectives of the FSAP
- Create a single EU market
- Open and secure retail markets
- Prudential rules and structures of supervision
What was the FSAP designed to do?
- promote Europe’s wider economy by removing barriers and increasing competition amongst firms, thereby:
- increasing efficiency
- reduction of cost raising capital
Which Gvt department is responsible for the regulation of the market?
HM Treasury
Under direct supervision of the Chancellor of the Exchequer
Who is responsible for the regulation and conduct of business in the UK Markets
The Chancellor of the Exchequer
Which key legal instruments govern the regulation and conduct of business?
- FSMA 2000
2. FSA 2012
