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Investment Environment & UK Markets Flashcards

6 cards from real IMC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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

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

    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.

  2. What is the FSCS in the UK investment context?

    Answer: Financial Services Compensation Scheme

    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.

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

    Answer: The twin-peaks model with FCA and PRA

    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.

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

    Answer: It is a lightly regulated growth market for smaller companies

    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.

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

    Answer: Settlement of a trade two business days after the trade date

    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.

  6. What is the primary purpose of the Financial Policy Committee (FPC)?

    Answer: Identifying and managing systemic risks to UK financial stability

    The FPC, a committee of the Bank of England, is responsible for macroprudential regulation — identifying, monitoring, and taking action to remove or reduce systemic risks to UK financial stability.