REGULATION OF FINANCIAL MARKETS AUGUST 2023 PAST PAPER

TUESDAY: 22 August 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. No person is permitted to acquire shares or enter into arrangements that would allow them to take effective control of a listed company without complying with the takeover procedures.
In relation to the above statement:

Explain THREE ways that a company can be considered to have taken over the effective control of a
listed company. (6 marks)

List FOUR takeover procedures that must be executed as per the regulations of the Capital Markets
Authority of your country. (4 marks)

2. Securities Exchange may impose trading halts for the market as a whole or individual securities.

Required:

Explain TWO types of trading halts that may be imposed by the Securities Exchange. (4 marks)

Highlight any SIX circumstances under which trading halts may be imposed by the Securities
Exchange. (6 marks)

(Total: 20 marks)

 

QUESTION TWO

1. The main participants in a unit trust must be licensed by the Capital Markets Authority.

Explain the term “unit trust”. (2 marks)

List THREE participants in a unit trust. (3 marks)

Enumerate TWO roles of each of the market participants listed in (a)(ii) above. (6 marks)

2. In relation to client communication:

Explain the term “cold calling”. (2 marks)

Explain ONE risk posed by cold calling. (2 marks)

Highlight FIVE rules of cold calling. (5 marks)

(Total: 20 marks)

 

QUESTION THREE

1. In relation to Investment Funds:

Explain the term “venture capital firm”. (2 marks)

List SIX eligibility requirements for a venture capital to be authorised by Capital Markets Authority.
(6 marks)

Highlight ONE investment and ONE financing activities respectively, that a venture capital is prohibited
from engaging in. (2 marks)

2. List FOUR powers that Capital Markets Authority (CMA) could use to enforce compliance as per the provisions of the Capital Markets Act and associated regulations. (4 marks)

3. Enumerate SIX Internal Control Standards requirement for information management as issued by the Capital Markets Authority (CMA). (6 marks)

(Total: 20 marks)

 

QUESTION FOUR

1. List FIVE provisions of the Code of Corporate Governance on Board operations and control. (5 marks)

2. In relation to money laundering checks, explain THREE rules of prevention of money laundering. (6 marks)

3. In relation to Investment Funds:

Explain the term “Special Interest Collective Investment Scheme”. (2 marks)

Highlight SEVEN requirements of Special Interest Collective Investment Scheme. (7 marks)

(Total: 20 marks)

 

QUESTION FIVE

1. Although a Central Securities Depository can make and enforce its own rules, the Capital Markets Authority (CMA) has the power to make directions to Central Securities Depository or intervene in its operations where appropriate.

Explain SIX powers of Capital Markets Authority (CMA) in relation to Central Securities Depository. (6 marks)

2. Summarise SIX roles played by the Unclaimed Financial Assets Authority (UFAA) or its equivalent in your country. (6 marks)

3. Highlight EIGHT sources of law in your country. (8 marks)

(Total: 20 marks)

 

QUESTION SIX

1. With reference to law of contract:

Explain the term “limitations of actions”. (2 marks)

Describe with an example, the term “illegal contract”. (3 marks)

2. The term “law” refers to a system of rules that a country or community applies in regulating the actions of its members. The rules are recognised by all its members.

Highlight FOUR purposes of law. (4 marks)

List TWO main categories of law. (2 marks)

3. List FOUR functions of The Institute of Certified Investment and Financial Analysts (ICIFA). (4 marks)

4. Enumerate FIVE responsibilities of international financial market regulatory bodies. (5 marks)

(Total: 20 marks)

 

QUESTION SEVEN

1. List TWO sources of funds for the Central Depository Guarantee Fund or its equivalent in your country. (2 marks)

2. Describe how the settlement of trades are done by the Central Depository System or its equivalent in your country. (6 marks)

3. The Capital Markets Act provides for the establishment of the Capital Markets Tribunal.

Required:

Describe THREE powers of the Capital Markets Tribunal. (3 marks)

List THREE actions that a Capital Markets Tribunal may take upon an appeal. (3 marks)

4. List SIX factors that could make some customers present a higher risk of money laundering. (6 marks)

(Total: 20 marks)

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