TUESDAY: 6 December 2022. Morning Paper. Time Allowed: 3 hours.

Answer any FIVE questions. ALL questions carry equal marks. Do NOT write anything on this paper.


1. Highlight SIX functions of a securities exchange in your country. (6 marks)

2. Analyse THREE vitiating factors that may undermine in a financial contract. (6 marks)

3. Explain how a financial contract may be discharged through the following ways:

Performance. (2 marks)

Agreement. (2 marks)

Breach. (2 marks)

Operation of law. (2 marks)

(Total: 20 marks)


1.  Summarise FIVE instances where an agent may become personally liable to third parties on a contract on behalf of his principal. (5 marks)

2.  In determination of a commercial disputes in your country, Commercial Courts (or their equivalent) have power to make any order and grant any relief as they deem fit and just.

Outline FIVE orders a court can make in exercise of its jurisdiction over commercial contracts. (5 marks)

3. With reference to the International Organisation of Securities Commissions (IOSCO):

State the rationale for the existence of IOSCO. (2 marks)

Give THREE objectives that IOSCO members have resolved to. (3 marks)

4. With reference to the capital market intermediaries that require authorisation from the Capital Markets Authority (CMA), or an equivalent in your country:

Distinguish between a “dealing online foreign exchange broker” and a “non-dealing online foreign exchange broker”. (4 marks)

State the minimum number of unimpaired shareholders’ funds (paid up share capital and reserves) and the minimum amount of liquid capital for a dealing online foreign exchange broker. (1 mark)

(Total: 20 marks)


1. The Central Securities Depository operates as a self-regulator body as per the rules approved by the Capital Market

In light of the above statement, highlight FOUR areas covered by the rules of the Central Securities Depository. (4 marks)

2. State FOUR conditions that must be fulfilled before admission to listing of real estate investment trust (REIT). (4 marks)

3. A fund manager manages discretionary funds and has appointed a custodian for the assets of the fund.

Explain THREE duties of a custodian. (6 marks)

4. Discuss THREE obligations of licensed financial market intermediaries. (6 marks)

(Total: 20 marks)


1.  In relation to regulation of financial market intermediaries and operation of collective investment schemes in your country, explain the role of:

Real Estate Investment Trusts (REIT) manager. (2 marks)

REIT trustee. (2 marks)

2. In relation to investment of funds:

Explain the term “Exchange Traded Fund” (ETF). (2 marks)

Examine THREE requirements that an ETF must meet before being listed in the securities exchange as applicable in your jurisdiction. (6 marks)

3. Steve Johnson is a European investor who has recently expressed desire to invest in the Kenyan financial services space. He has analysed recent market discussions and identified Credit Information Sharing as a critical emerging issue that may impact his investments. He has tasked you to keep him abreast on these discussions around Credit Rating Agencies.

In your presentation to Steve Johnson:

Explain the term “Credit Information Sharing” (CIS) in respect to Credit Rating Agencies. (2 marks)

Highlight TWO benefits of CIS with respect to each of the following headings:
• Customer. (2 marks)
• Lender. (2 marks)
• Economy. (2 marks)

(Total: 20 marks)


1. As part of the investment advice process, the client’s risk profile must be undertaken by a market intermediary.

Explain THREE components of client’s risk profile. (6 marks)

2. Analyse THREE ways in which an intermediary can eliminate conflict of interest or minimise its effect on decision making with reference to corporate governance and conduct of business of market intermediaries in your jurisdiction. (6 marks)

3. With respect to the law of agency:

Highlight FOUR ways in which an agency can be terminated by agreement between the agent and the principal in the absence of express provisions in the agency agreement. (4 marks)

Describe TWO ways in which an agency relationship can be created. (4 marks)

(Total: 20 marks)


1. A venture capital company can apply to the Capital Markets Authority (CMA), or an equivalent in your country,
for authorsation provided it meets certain eligibility requirements.


Highlight FOUR details that a venture capital company must include in the application for authorisation in order to meet CMA eligibility requirements in your country. (4 marks)

Outline TWO prohibitions placed upon a venture capital company once authorised and registered. (2 marks)

2. Explain THREE powers of the Financial Reporting Centre to take administrative action for non-compliance. (6 marks)

3. With reference to licensing requirements on the obligations of licensed intermediaries in record keeping and reporting obligations, discuss FOUR records that are to be maintained by an investment adviser and fund manager. (8 marks)

(Total: 20 marks)


1. Adopting a structured and disciplined approach to investment advice is essential in these days of increasing professionalism and regulatory scrutiny.

List FIVE distinct stages that a structured and disciplined approach investment advice process can be divided into. (5 marks)

2. With respect to customer due diligence (CDD) requirements for natural persons, legal persons, partnerships and trusts.

Name THREE activities that are involved in CDD. (3 marks)

Enumerate SIX factors that customers might possess which present a higher risk of money laundering. (6 marks)

3. Discuss THREE responsibilities of senior management in discharging the obligations placed on them in developing Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) processes and procedures. (6 marks)

(Total: 20 marks)

(Visited 88 times, 1 visits today)
Share this:

Written by