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Glossary of Terms Flashcards

Learn all key terms relating to CISI Regulation (111 cards)

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1
Q

What is Allocation?

A

The division of a single aggregated order between two or more investors’ accounts.

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2
Q

What does an American Depositary Receipt (ADR) represent?

A

A negotiable instrument representing rights to a block of shares in a non-US company, traded on a US exchange.

It is an acknowledgement from a bank or trust
company that the block of shares is held by it
for the account of its client.

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3
Q

Who is an Appointed Representative?

A

An individual or organisation that carries out certain regulated activities on behalf of an authorised firm under contract.

The individual must have accepted responsibility for these regulated tasks in writing.

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4
Q

What are Approved Persons (APER)?

A

Individuals approved by the FCA to undertake controlled functions.

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5
Q

What is Authorisation in the context of the FSMA?

A

The requirement for firms to obtain authorisation prior to conducting investment business.

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6
Q

What is the role of the Bank of England (BoE)?

A

Acts as the UK’s central bank and determines interest rates via its Monetary Policy Committee (MPC).

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7
Q

What is Best Execution?

A

The requirement for firms to consider price, costs, speed, likelihood of execution, and settlement when executing client deals.

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8
Q

What does the Bribery Act 2010 make an offence?

A

Offering or taking bribes or negligently preventing bribery.

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9
Q

What are Chinese Walls (Information Barriers)?

A

Organisational barriers to prevent the flow of confidential information between departments.

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10
Q

What is Churning?

A

Excessive trading by a firm to generate commission, regardless of the customer’s interests.

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11
Q

Define Client.

A

Individuals or firms conducting business through an authorised person.

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12
Q

What does COCON (SM&CR) contain?

A

The SM&CR Individual and Senior Manager Code of Conduct Rules.

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13
Q

What is the purpose of the Code of Practice for Approved Persons?

A

To provide guidelines for the behaviour of approved persons not subject to the SM&CR.

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14
Q

What is a Common-Platform Firm?

A

A firm subject to MiFID or the CRD, thus subject to the common platform of organisational systems and controls.

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15
Q

What is the role of the Competition and Markets Authority (CMA)?

A

To investigate mergers and acquisitions for adverse effects on competition.

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16
Q

What are the Conduct of Business Sourcebook (COBS) Rules?

A

Rules made by the FCA dealing mainly with the relationship between an authorised firm and its clients.

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17
Q

What is the Consumer Duty?

A

An initiative introducing a principle, cross-cutting rules, and outcomes for the treatment of retail customers.

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18
Q

What are Contracts of Insurance?

A

Financial products specified by Part III of the Regulated Activities Order (RAO) 2001.

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19
Q

What are Controlled Functions (CFs)?

A

Roles within authorised firms requiring FCA approval.

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20
Q

What does the Criminal Justice Act 1993 (CJA) relate to?

A

Provisions relating to insider dealing.

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21
Q

What is Customer Due Diligence (CDD)?

A

Steps firms must take to verify the identity of clients before engagement.

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22
Q

What are Debt Securities?

A

Securities acknowledging a loan made to the issuer, including bonds and commercial paper.

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23
Q

What does ‘Dematerialised’ mean?

A

Stock held in electronic form rather than paper certificates.

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24
Q

What are Depositary Receipts?

A

Negotiable instruments evidencing rights over a block of shares held with a depositary.

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25
What is Designated Investment Business (DIB)?
Regulated activities giving rise to additional obligations under COBS.
26
What is a Designated Investment Exchange (DIE)?
An overseas exchange designated by the FCA meeting investor protection standards.
27
What is a Designated Professional Body (DPB)?
Professional bodies allowing limited financial services without FCA authorisation.
28
What do the Disclosure Guidance and Transparency Rules (DTRs) implement?
Requirements of the Market Abuse (UK MAR) and Transparency Directives.
29
What is the European Securities and Markets Authority (ESMA)?
The European body responsible for the regulation of investment firms and markets.
30
Who are Exempt Persons?
Firms or persons exempt from the requirement to be authorised for regulated activities.
31
What is the FCA Handbook?
The document containing FCA rules that authorised firms must comply with.
32
What is the Financial Conduct Authority (FCA)?
The regulatory body responsible for regulating conduct of business and markets.
33
What does the Financial Policy Committee (FPC) do?
Responsible for macroprudential regulation within the Bank of England.
34
What was created by the Financial Services Act 2012?
The FCA, PRA, and FPC as new regulators.
35
What did the Financial Services Act 2021 implement?
The Investment Firms Prudential Regime.
36
What is the Financial Services and Markets Act 2000 (FSMA)?
Legislation that established the financial regulator and empowered it to regulate the sector.
37
What was the role of the Financial Services Authority (FSA)?
The single financial regulator in the UK before being replaced by the FCA in 2013.
38
What does 'Fit and Proper' mean under the FSMA?
A requirement for every firm conducting investment business to be fit and proper.
39
What is a Fixed Portfolio Firm?
Firms with a named supervisor, subject to a firm-specific continuous assessment approach.
40
What characterizes a Flexible Portfolio Firm?
Majority of firms under market-based thematic work and communication programmes.
41
What is a Futures contract?
A legally binding arrangement to buy/sell a standard quantity of an asset at a specified future date.
42
What is the role of His Majesty’s Revenue & Customs (HMRC)?
Responsible for tax administration and collection in the UK.
43
What is the responsibility of His Majesty’s Treasury (HM Treasury)?
Formulating and implementing the government’s financial and economic policies.
44
What is ICE Futures Europe known for?
Trading futures for energy products and other derivatives.
45
What is Inside Information?
Non-public information that could affect the price of a security if disclosed.
46
What constitutes Insider Dealing?
Dealing in securities while in possession of unpublished price-sensitive information.
47
What is Integration in money laundering?
The stage where laundered funds appear to be of legitimate provenance.
48
What is the Joint Money Laundering Steering Group (JMLSG)?
A group providing guidance on interpreting and implementing money laundering regulations.
49
What is Layering in money laundering?
The stage where money is passed through transactions to obscure its origin.
50
What is LCH Ltd?
An independent clearing house acting as the central counterparty for certain trades.
51
What do the Listing Rules (LRs) provide?
Rules for the London Stock Exchange main market and other listed companies.
52
What does the London Metal Exchange (LME) trade?
Contracts in base metals and some plastics.
53
What is the primary function of the London Stock Exchange (LSE)?
Trading in securities, especially shares and bonds.
54
What is Market Abuse classified as?
A civil offence under UK MAR related to failing to observe required market standards.
55
What is a Market Maker?
A firm that quotes bid and offer prices for a named list of securities.
56
What is the Markets in Financial Instruments Directive (MiFID)?
An EU directive allowing firms authorised in one member state to offer financial services in another.
57
What is the Markets in Financial Instruments Regulation (MiFIR)?
The UK version of EU regulation on markets in financial instruments.
58
What is a Misleading Statement?
False or incomplete information about an investment affecting its value.
59
What is Money Laundering (ML)?
The process of concealing the true origins of criminal proceeds.
60
What do the Money Laundering Regulations 2017 require?
Firms to comply with administrative obligations to prevent money laundering.
61
What is the role of the Money Laundering Reporting Officer (MLRO)?
Responsible for assessing and reporting internal money laundering suspicion reports.
62
What are Multilateral Trading Facilities (MTFs)?
Systems bringing together multiple buyers and sellers of securities, not classified as exchanges.
63
What does the National Crime Agency (NCA) deal with?
The agency responsible for tackling serious and organized crime.
64
What is the role of a Money Laundering Reporting Officer (MLRO)?
Responsible for assessing internal money laundering suspicion reports and reporting justified suspicions to NCA.
65
Define Multilateral Trading Facilities (MTFs).
A system operated by authorised firms that brings together multiple buyers and sellers of securities, not an exchange.
66
Who must suspicions of money laundering be reported to?
National Crime Agency (NCA).
67
What is a Nominated Adviser (nomad)?
A firm approved by the LSE to advise AIM companies on admission and compliance with rules.
68
What is the function of a Nominated Officer (NO)?
Receives a firm’s internal suspicion reports under POCA, the Terrorism Act, and Money Laundering Regulations.
69
What is a Nominee in legal terms?
A party that holds assets in its own name on behalf of the true beneficial owner.
70
What does an Option provide to its holder?
The right to buy or sell a fixed quantity of an underlying asset on or before a specified date.
71
What is an Organised Trading Facility (OTF)?
A multilateral system that allows multiple third-party buying and selling interests to interact, not permitting equities.
72
What does the Panel on Takeovers and Mergers (PTM) oversee?
Administration of the City Code on Takeovers and Mergers to ensure fair treatment of shareholders.
73
What is Part 4A Permission?
The specific activity an authorised firm is permitted to carry on, granted under FSMA 2000.
74
Define Passporting in financial services.
Method allowing firms authorized in one EU member state to provide services in another without full authorization.
75
What is Placement in the context of money laundering?
The first stage where money is introduced into the financial system.
76
What are Pre-emption Rights?
Rights for existing shareholders to be offered new shares before new shareholders, protecting their interests.
77
What is a Premium Listing?
One of the two listing options on the LSE main market with higher regulatory criteria than standard listing.
78
What is a Prescribed Market?
An MTF operated by a UK Recognised Investment Exchange (RIE), including AIM.
79
What are the Principles for Businesses (PRIN)?
12 key principles established by the FCA that must be observed by authorised firms.
80
What does the Proceeds of Crime Act 2002 (POCA) include?
Anti-money laundering provisions, including offences of assisting money laundering and failing to report suspicions.
81
What is a Prohibition Order?
An order by the FCA prohibiting an individual from carrying out particular controlled functions due to lack of fitness.
82
What do the Prospectus Regulation Rules (PRRs) govern?
When a prospectus is required, its contents, format, and approval process by the FCA.
83
What is the role of the Prudential Regulation Authority (PRA)?
Responsible for prudential regulation of systemically important firms like banks and insurance companies.
84
What does the Prudential Regulation Committee (PRC) do?
Undertakes prudential regulation decisions for banks, building societies, and other financial firms.
85
Who qualifies as a Qualified Investor (QI)?
Investors classified as professional clients or eligible counterparties under UK MiFID.
86
Define a Reasonable Investor.
A hypothetical person likely to use information as the basis for investment decisions under UK MAR.
87
What is a Recognised Clearing House (RCH)?
Clearing houses recognized by the BoE for providing appropriate standards of protection in clearing and settlement.
88
What is a Recognised Investment Exchange (RIE)?
UK exchanges that operate markets in investments and meet FCA standards.
89
What is a Recognised Overseas Investment Exchange (ROIE)?
An overseas exchange recognized by the FCA for providing investor protection within the UK.
90
What are Regulated Activities?
Activities requiring authorisation from the FCA unless exempt.
91
What defines a Regulated Market?
A market meeting regulatory standards and operated by a Recognised Investment Exchange (RIE).
92
What is the Regulatory Decisions Committee (RDC)?
A committee of the FCA responsible for disciplinary decisions.
93
What is the purpose of a Regulatory Information Service (RIS)?
To make announcements required by companies subject to DTRs, LRs, City Code, and AIM Rules.
94
What is a Scheme of Arrangement?
A Companies Act procedure for a company to seek shareholder and court approval for reorganisation.
95
What is a Sell-Out under the Companies Act 2006?
Minority shareholders can insist a successful bidder buys them out within three months of the bid.
96
Define Senior Manager.
An individual with management responsibility reporting to the board or a significant business unit head.
97
What is the Senior Managers & Certification Regime (SM&CR)?
A regime ensuring accountability for individuals in firms authorized under FSMA.
98
What is an SME Growth Market?
An MTF registered as an SME growth market with at least 50% issuers being SMEs.
99
What is a Squeeze-Out?
Compulsory acquisition of remaining shares by a purchaser after acquiring 90% of shares in a takeover.
100
What is Stabilisation in the context of securities?
Supporting the price of a new issue to minimize volatility.
101
Define Standard Listing.
One of two listing options on the LSE main market with EU-minimum regulation.
102
What are Statements of Principle for Approved Persons (APER)?
Principles established by the FCA for approved persons in Appointed Representatives.
103
What are Threshold Conditions?
Conditions a firm must meet before the FCA will authorize it.
104
What is Tipping-Off?
An offence of disclosing an investigation that may imperil it.
105
What does the Training and Competence Sourcebook require?
Sets out FCA’s requirements for training and competence, especially for controlled functions.
106
What is the role of a Trustee?
Legal owner of assets held in trust for the beneficial owner, responsible for safeguarding assets.
107
What is the UK Corporate Governance Code (2018)?
Principles of good corporate governance aimed at companies with a premium listing on the LSE.
108
Define the UK Stewardship Code 2020.
Standards for responsible allocation and management of capital to create long-term value.
109
What does the Upper Tribunal (Tax and Chancery Chamber) do?
Hears appeals against decisions of the FCA.
110
What is a Warrant?
A transferable security giving the holder the right to buy underlying equities at a predetermined price.
111
What does Whistleblowing refer to?
Raising concerns over potential wrongdoing, protected by the Public Interest Disclosure Act (PIDA) 1998.

CISI Regulation (2 decks)

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