CySEC Basic Examination Mock Exam 2
1. When an EU IF wishes to establish a branch in Cyprus, it must notify the following information:
Address, Directors, shareholders, program of operations
Address, directors and program of operations
Address structure, shareholders and program of operations
Address, people directing the business, organizational structure and program of operations
2. A Systematic Internaliser
Must always apply its public quotes on a sale
Must always apply its public quotes to retail clients
Can offer an improved price to its clients
Can apply its quotes on a discretionary basis
3. What is the penalty for not publishing an inside information without the prior agreement of CySEC:
€300.000
€175.000
€200.000
341.720
4. A CIF must implement procedures to identify:
When the CIF is making a profit from the client
When the CIF is charging a commission to the client
When the client is in the same business with another client
When the CIF has an interest to advance the benefits of one client over another
5. For shares for which the market is illiquid, Systematic Internalisers must
Always disclose quotes on the request of the clients
Always disclose quotes to the clients
Always disclose quotes on the request of the clients when dealing in transaction sizes up to standard market size
Never disclose quotes to retail clients
6. The extent of verification obtained regarding the clients suitability varies:
According to the CIFs judgment
But the standard of service remains the same
And the standard of service will vary
And the standard of service will vary according to the client’s category
7. The obligation to update client’s information should be fulfilled:
Every day
Every 10 years
Whenever an event which has changed the client’s particulars has occurred
There is no requirement to update the information, the client is obliged to inform the CIF whenever necessary
8. International AML provisions are aimed at requiring firms to:
Identify customers & suspicious transactions at the placement and layering stages,
Keep adequate records which should prevent the integration stage being reached, but also provide an audit trail for investigators
Report suspicious activity or behaviour to the relevant regulatory/legislative authority
All of the above
9. A client of an investment firm ABC wishes to deal in instruments that ABC does not offer. Therefore ABC introduces the clientvto another investment firm XYZ. The client becomes a customer of investment XYZ firm. XYZ provides investment services to the client and charges him transaction fees. XYZ then pays a share of those fees to the introducing investment firm ABC.
No issue in the transaction. The transaction is a common practice
ABC is not allowed under MiFiD to act as introducing broker
The fees are not regarded as inducement if the payment to the introducing broker is disclosed
The transaction is void because it is illegal
10. Which of the following may not be generally categorized as a professional client:
An individual working in an Investment Firm as an investment advisor
A US Investment Firm
A Russian bank
A close-end listed investment organization
11. What is a qualifying holding in an investment firm?
10% or more of the share capital or the voting rights
20% or more of the share capital or the voting rights
33% or more of the share capital or the voting rights
50% or more of the share capital or the voting rights
12. What is the minimum initial capital requirements for a market operator of a regulated market?
5.000.000
10.000.000
15.000.000
20.000.000
13. Which of the following information is not necessary to be provided by investment firms to clients in relation to financial instruments?
Explanation of specific type of financial instruments
Volatility of each type of financial instrument
Expected return of the financial instrument in the following 12 months
Number of staff employed by the IF
14. What is not a condition for granting authorization by CySEC?
The CIF must have a separate compliance unit
To have at least 2 managerial staff with good reputation and sufficient experience
CYSEC must approve of the shareholders and beneficiaries of the investment firm
the CIF must have its registered office in Cyprus
15. When does CYSEC withdraw a CIF’s authorization?
When the CIF has renounced its license
when there are suspicions that a violation may endanger the client’s interests
When the CIF systematically violates the provisions of the law
If the CIF has not used its license for the last 6 months
16. What is not true about financial reports of UCITS
The accounting information given in the annual report shall be audited by one auditor according to international audit standards
The annual and half-yearly reports are available to the investors in all selling points of the units
The annual and half-yearly reports must compulsorily be given to the investors before any investment is made in a UCITS
The delivery of the reports in paper copy is compulsory in case that the investor requests it.
17. The Annual Report of a UCITS is available to the investor within:
2 months from the end of the financial year
4 months from the end of the financial year
6 months from the end of the financial year
8 months from the end of the financial year
18. Which of the following in not a requirement for the risk management fun
Functionally and hierarchically separate the functions of risk management from the operating units of the AIFM
outsource at least part of the risk management function to ensure independence from all internal operating units of the AIFM
Establish and implement adequate risk management systems in order to identify, measure, manage and monitor appropriately all risks relevant to each AIF investment strategy
review the risk management systems with appropriate frequency at least once a year and adapt them whenever necessary
19. The minimum capital for a CIF licensed to provide Portfolio Management and does not hold clients’ money is:
€1 million
€730,000
€50,000
None of the above
20. When executing a client’s order:
Similar orders by different clients may be aggregated and executed together
Clients’ orders may be aggregated only with prior consent by client
Clients orders can never be aggregated
Retail clients’ orders must be executed first and in priority from professional clients’ orders
21. Information shall be deemed as having been “made public” when there occurs one, or more of the following situations:
It is discussed at a board meeting
It is discussed at a board meeting in the presence of the Company’s legal advisors
It is referred to in an article published in a newspaper
All of the above
22. When a tied agent holds clients monies:
This constitutes a criminal offence, punishable with imprisonment maximum 5 years and an administrative find of maximum €350.000
This constitutes an administrative offence punishable with a fine of maximum €350.000
This constitutes an administrative offence punishable with a fine of maximum €175.000
This constitutes a criminal offence, punishable with imprisonment maximum 5 years and/or a fine of maximum €350.000 and an administrative fine of maximum €350.000
23. Which of the following may operate an MTF:
Pension Funds
Insurance Companies
Market Operators
Listed Companies
24. Which is not an objective of MiFID I:
Internal procedures and controls of Investment Firms
Code of Conduct of persons employed in Investment Firms
Best Execution of orders
Good corporate governance in listed companies
25. Which of the following would not fall under the scope of MiFID I regulation?
Banks
Investment Firms
Insurance Firms
Cooperative Societies
26. The Risk Management’s responsibility is not:
To ensure compliance with the risk management procedures
to identify risk of non-compliance with the law
Consult persons providing investment services in complying with the law
To ensure conformance with suggestions for improvement of internal control procedures
27. AIFMs regulated in the Republic must regularly report to CySEC
The principal markets and instruments in which they trade on behalf of the AIFs they manage
The Net Asset Value of all the AIFs they manage
The redemption dates
The percentage of the increase or decrease of the net asset value of all the AIFs they manage
28. A Bank has noticed that there was a large transfer from a third country and these funds were used in order to purchase stocks in the stock market. The bank has decided to investigate these transactions in order to identify:
Market manipulation act
Terrorist Financing
Money Laundering
All of the above
29. Which of the following information is not necessary to be provided by investment firms to clients in relation to financial instruments?
Explanation of specific type of financial instruments
Volatility of each type of financial instrument
Expected return of the financial instrument in the following 12 months
Number of staff employed by the IF
30. In order to perform suitability and appropriateness test, the CIF needs to gather information regarding the investment objectives of the client. This information will not include:
The length of time for which the client wishes to hold the investment
Risk-taking preferences
Risk profile and the purpose of the investment
Information regarding the economic indicators of the world
31. Which one of the following statements is not true for regulated markets?
Regulated markets establish and maintain effective arrangements to verify that issuers of transferable securities that are admitted to trading comply with their obligations in respect of initial, ongoing or ad-hoc disclosure obligations.
Regulated markets may be operated by investment firms or market operators
Regulated markets have clear and transparent rules regarding the admission of financial instruments to trading
Regulated markets establish arrangements which facilitate their members in obtaining access to information which has been made public regarding listed financial instruments
32. Which is the supervisory of Cypriot banks which offer their services to another EU country by the establishment of a branch?
Both Central Bank of Cyprus and the Cyprus Securities and Exchange Commission
The Central Bank of Cyprus
The European Central Bank
The Central Bank of Cyprus and the European Central Bank together
33. No authorization is needed to:
A subsidiary of an Investment Firm that performs investment services to clients
A subsidiary of an insurance authorized by the Republic that provides investment advice to clients
A subsidiary of a credit institution authorized by the a 3rd country that provides portfolio management to clients
a subsidiary of a parent undertaking that provides investment advice only to the parent
34. Which investment services and activities can a Cyprus Investment Firm provide in another EU Country via its Single passport?
Any investment and ancillary services under Law 144/2007
Any investment services only but not ancillary services
Any of the investment and ancillary services covered under the Law 144
Any Investment services covered under the Cyprus Investment Firm’s license and all the ancillary services
35. Shareholders of CIFs must report to CySEC if their shareholding exceeds or falls below the following levels:
5%, 10%, 20%, 30%, 50%, 75%
20%, 30%, 50%
5%, 10%, 20%, 25%, 30%, 50%, 75%
5%, 10%, 15%, 20%, 25%, 30%, 50%, 75%
36. Which of the following payments may be prohibited to be received by investment firms when providing investment services to clients?
Brokerage commission charged to clients for the sale of a specific stock
Custody fees for the safekeeping of financial instruments
Commission from 3rd party investment firms for executing a specific transaction when this is disclosed to the client
Fees which aim at increasing the order flow from an investment firm to another
37. Which of the following services may not be provided by a tied agent?
Portfolio management
Reception and transmission of orders
Underwriting of financial instruments
Investment advice
38. Any violation of Law 144/2007, if not otherwise stated will be fined by:
175.000
350.000
300.000
200.000
39. The Annual Report of a UCITS is available to the investor within:
2 months from the end of the financial year
4 months from the end of the financial year
6 months from the end of the financial year
8 months from the end of the financial year20 days
40. Where the AIFM cooperates with a prime broker, it:
Must obtain prior approval by CySEC
Must obtain consent of client
Must inform the depositary
Must inform the competent authority of the depositary if in another member state
41. Any person who provides false/misleading information to CySEC may be liable for:
A criminal offence punishable with maximum 5 years imprisonment and/or a fine maximum €350.000
An administrative fine maximum €175.000
A criminal offence punishable with maximum 5 years imprisonment and a fine maximum €175.000
An administrative fine maximum €100.000
42. Inside information is:
An information included in a newspaper article which however has not yet been endorsed
An information included in the chairman’s statement in the financial statements
An information discussed only at Board meetings and has yet to be announced
An information that has leaked into the market but has not yet been confirmed
43. The fine imposed by CySEC for not making a suspicious report is :
€512.580
€341.720
€683.440
€300.000
44. The delay of the publication of inside information may be allowed if:
Its disclosure will not affect the public's interest
The issuer cannot safeguard its confidentiality
It has already leaked to the public
If only the employees of the company are aware of the information
45. A CIF authorization lapses automatically:
If it has not used within 12 months
If it has not used it in the last 9 months
If it has not used it in the first 6 months
When they have provided false or misleading information
46. In order for a CIF to assess suitability, the client needs to provide information:
In order to provide them the best service
In order to ascertain the reasons for using the CIF’s services
In order to decide if the CIF will accept them
To ensure that the client is not involved in money laundering
47. Updating client’s information must be done:
Annually
Every 5 years
Whenever an event which has changed the client’s particulars has occurred
There is no requirement to update the information the client is obliged to inform the CIF whenever necessary
48. On 31st of January every year what information needs to be reported:
List of Compliance Officers
List of people who may possess inside information
List of people with a qualifying holding
List of Directors
49. A bank needs to send retail clients concerning any orders related to units in a UCITS:
Every month
Every two months
Every year
Every six months
50. What is not true about nomination committees?
It should composed of members of the board of directors who do not perform any executive function in the CIF
The committee is not required when the CIF is not authorised for the investment service of "Dealing on Own Account"
One of the tasks is to periodically assess the structure, size, composition and performance of the board of directors
The committee's role is to identify and recommend, for the approval of the board of directors
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