Chapter 5 - IT CISI

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Exchanges and counterparties are types of trading parties - what is another type?
Clients
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What are credit policies and credit limits used for ?
To restrict the total amount of exposure for a particular trading book, parties, clients or countries.
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What controls which settlement agents settle trades in particular instruments?
SSIs (Standard Settlement Instruction)
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Why have some firms built separate reference data repositories (RDRs)?
To ensure data across different systems / apps in configuration is consistent
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How do reference data repositories work?
Take data from external sources eg Bloomberg and internal data , then feed this to all other systems in configuration.
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What is the default settlement date for most securities?
T+2
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What is the unique instrument identifier used for currencies?
ISO
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"GB123456789" is an example of which coding scheme to identify securities?
ISIN code
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What is the coding system used by LSE for all commonly traded securities?
SEDOL
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If a security is trades on exchanges in 6 different countries, how many SEDOL codes would it have?
6
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What is the coding system used by exchanges and clearing houses in NA markets only?
CUSIP
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What is the code for a "short security description" used in the stock exchange trading systems in US and Canada, and used by Bloomberg?
Ticker
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What is the most common code used to identify securities?
ISIN
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If an security is listed on more than one exchange, how many ISIN codes will it have?
1
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What date does interest cease to become payable and capital is returned?
Maturity date of the bond
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In the calculation where accrued interest = t/s x c/n - what does "t "and "s" stand for?
T = actual number of calendar days / S = actual number of calendar days in the current interest period.
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What is the most common method for calculating interest on currencies?
Actual/360
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What is the BIC code used for?
Professional trade parties
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What is the IBAN code used for?
identify counterparty's bank and depot accounts in EU
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Who handles the administration of BIC?
SWIFT
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What is the underlying principle behind BIC?
Used on messages between trading parties, exchanges and settlement agents, approved by ISO, identifies a particular bank.
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Who created the LEI standard?
Dodd-Frank
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Why was the LEI standard created?
To understand and monitor systematic risk
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What is a stock depot?
Settlement agent that will accept or make delivery of this type of asset on behalf of the trading party
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A firm is setting up internal reference data information to supply its business apps. So far it has included "base currency" and "comission rates and calc methods". What is the 3rd internal data ref it is missing?
Credit Limits
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What code are countries usually identified by?
2-character ISO code
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A high level of failed trades and unmatched instructions is an indication of what?
Problems in maintaining & using reference data correctly
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What Counterparty Agreement covers trading in swaps and OTC Derivitives?
ISDA
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What Counterparty Agreement covers trading in BONDS and adheres to the statues and by-laws?
ICMA
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A "durable medium" is defined by the UK regulator as what?
Paper / any instrument allowing to store information EXCEPT internet websites
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What is the confirmation process when the sell-side firm is dealing with a buy-side firm?
Confirmation, affirmation, allocation
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What is the confirmation process when the sell-side firm is dealing with a RETAIL INVESTOR?
trade confirmation (retail client responds if there's a problem)
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What is the confirmation process when the sell-side firm is dealing with a MARKET COUNTERPARTY?
Mutual exchange of confirmation or matching engine
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If a firm has executed an order on behalf of the client then it is obliged under MiFID II to provide the client with what?
Confirmation of the order on a durable medium, no later than the first business day following the execution
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What trade agreement method is used for matching confirmations for FX and money market trades?
Mutual Exchange of Confirmations
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How are Mutual Exchange of Confirmations sent?
SWIFT
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Where are off exchange transactions reported to?
APA (Authorised publication Arrangement)
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What is the difference between "TRADE REPORTS" VS "TRANSACTION REPORTS"?
Trade reports are public vs transaction reports are private data sent to regulators
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What are Transaction Reports used for by the FCA?
To identify market abuse
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An ISDA Master Agreement is being drawn up in relation to a swaps trade. What needs to be entered on the pre-printed section of the form, apart from the relevant signatures?
The names of the parties
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What do characters 1-4 of the LEI identifier identify?
Local operating unit (LOU)
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How do the FCA's rules for transaction reporting assist firms in fulfilling their regulatory obligations?
By setting out the minimum requirements for the content of transaction reporting
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What technical IT challenges does reference data repository pose?
Complexity of integrating systems including packaged apps
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Other cards in this set

Card 2

Front

What are credit policies and credit limits used for ?

Back

To restrict the total amount of exposure for a particular trading book, parties, clients or countries.

Card 3

Front

What controls which settlement agents settle trades in particular instruments?

Back

Preview of the front of card 3

Card 4

Front

Why have some firms built separate reference data repositories (RDRs)?

Back

Preview of the front of card 4

Card 5

Front

How do reference data repositories work?

Back

Preview of the front of card 5
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