REGULATION OF FINANCIAL MARKETS APRIL 2023 PAST PAPER

TUESDAY: 25 April 2023. Morning Paper. Time Allowed: 3 hours.
Answer any FIVE questions. ALL questions carry equal marks. Do NOT write anything on this paper.

QUESTION ONE

1. Outline FOUR crimes associated with money laundering. (4 marks)

2. Explain TWO objectives of the Corporate Governance Regulations issued by Capital Markets Authority
(CMA) or an equivalent body in your country, as part of its roles. (4 marks)

3. The principal of ratification of agency was applied in the case of Bolton Partners v. Lambert.
With reference to the above case, describe SIX conditions that are necessary for agency by ratification to arise. (6 marks)

4. Highlight SIX reasons of financial markets’ regulation in your country. (6 marks)

(Total: 20 marks)

 

QUESTION TWO

1. With respect to clearing agencies in your country:

Highlight THREE ways in which clearing agencies are regulated by the Government. (3 marks)

List FOUR roles played by clearing agencies. (4 marks)

2. Explain FIVE functions of the Banking Fraud Investigations Unit (BFIU) in enhancing capital markets function of fraud investigation in your country. (5 marks)

3. With recent advancements in the financial sector, there is a need for significant changes in regulation of financial markets.
With reference to the above statement, discuss FOUR such developments. (8 marks)

(Total: 20 marks)

 

QUESTION THREE

1. Egmont Group is a global organisation that facilitates and prompts the exchange of information, knowledge and cooperation amongst financial intelligence units (FIUs). This is in regards to enhancing efforts to counter money laundering and terrorist financing.
With reference to the above statement, highlight FIVE ways in which Egmont Group provides support to
members of financial intelligence units (FIUs). (5 marks)

2. Enumerate FIVE requirements for establishment of a central depository in your country. (5 marks)

3. With reference to licensing requirements, every investment adviser and fund manager are expected to maintain and preserve certain records for a period of seven years.

Required:

Highlight FIVE records that are to be maintained by an investment adviser and fund manager. (5 marks)

Outline FIVE reports that are to be submitted to the Authority periodically by an investment adviser or
fund manager as and when required. (5 marks)

(Total: 20 marks)

QUESTION FOUR

1. With specific reference to corporate governance and conduct of business of market intermediaries:

Summarise FOUR measures that a member of the Board should consider while exercising their
fiduciary duties. (4 marks)

Identify THREE committees of the Board specifically mentioned for establishment in the code of
corporate governance of issuers of securities to the public. (3 marks)

2. In relation to unfair trade practices in your country:

State THREE circumstances in which market abuse might arise. (3 marks)

Describe TWO ways in which the offence of insider dealing can be committed. (2 marks)

3. Discuss FOUR equitable remedies for breach of contract under the law of contract. (8 marks)

(Total: 20 marks)

 

QUESTION FIVE

1. List TWO contents in the information memorandum of a collective investment scheme (CIS) under the
following classification:

Scheme details. (2 marks)

Investment objective. (2 marks)

Scheme participants. (2 marks)

2. Highlight FOUR disadvantages of Initial Public Offering (IPO). (4 marks)

3. Define the term “independent non-executive director” as defined in the regulations relating to corporate governance of market intermediaries. (4 marks)

4. Summarise SIX requirements that must be fulfilled by a firm before being listed in the securities exchange. (6 marks)

(Total: 20 marks)

 

QUESTION SIX

1. With reference to client confidentiality rules:

Outline FIVE policy provisions that should be included in the policies and procedures adopted by the
market intermediaries to ensure client confidentiality. (5 marks)

State TWO institutions that a market intermediary might disclose information relating to a client.
(2 marks)

2. Summarise FIVE types of monies that compose the investor compensation fund or an equivalent body in your jurisdiction. (5 marks)

3. Explain TWO benefits of the depository system to each of the following financial markets participants:

Investors. (4 marks)

The Company. (4 marks)

(Total: 20 marks)

 

QUESTION SEVEN

1. Summarise FOUR functions of a Deposit Insurance Corporation or its equivalent in your country. (4 marks)

2. A reporting institution shall report suspicious or unusual transaction or activity to the financial reporting centre in the prescribed form immediately or within seven days of the date the transaction or activity that is considered to have suspiciously occurred.

With reference to the above statement, highlight TWO ways through which the form can be obtained. (4 marks)

3. Outline SIX functions of the Financial Reporting Centre or an equivalent organisation in your Country. (6 marks)

4. With reference to the Law of agency, discuss THREE characteristics of an agency relationship. (6 marks)

(Total: 20 marks)

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