IMC Investment Environment & UK Markets 2

Question 1

What is the role of the Prudential Regulation Authority (PRA) in the UK?

Accepted Answer

Supervising the prudential soundness of banks, insurers, and major investment firms

Answer

The PRA, part of the Bank of England, is responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers, and major investment firms to promote their safety and soundness.

Question 2

What is the FSCS in the UK investment context?

Accepted Answer

Financial Services Compensation Scheme

Answer

The FSCS is the UK's statutory compensation scheme for customers of authorised financial services firms that have failed. It protects eligible deposits, investments, and insurance policies up to specified limits.

Question 3

Which regulatory framework replaced the FSA's twin-peaks model in 2013?

Accepted Answer

The twin-peaks model with FCA and PRA

Answer

In 2013 the Financial Services Authority (FSA) was replaced by a twin-peaks regulatory model: the FCA for conduct regulation and the PRA (part of the Bank of England) for prudential regulation.

Question 4

What is the key characteristic of the Alternative Investment Market (AIM)?

Accepted Answer

It is a lightly regulated growth market for smaller companies

Answer

AIM is the LSE's international market for smaller growing companies. It has a more flexible regulatory framework compared to the Main Market, making it accessible for smaller companies seeking capital.

Question 5

In UK market structure, what is 'T+2' settlement?

Accepted Answer

Settlement of a trade two business days after the trade date

Answer

T+2 is the standard settlement cycle for UK equities, meaning the transfer of securities and payment of cash occurs two business days after the trade is executed.

IMC Practice Test

IMC Practice Test

IMC Investment Environment & UK Markets 2