Click on the Detail Button to view the Formula Sheet. You hear from a client of good standing that a major market participant has taken major losses on its proprietary trading book and is desperate for liquidity. You are not convinced that the story is true, but have a friend at another bank who you know has very large exposures to this firm and would be seriously damaged by a default. What advice does the Model Code give?
A. Unsubstantiated information which you suspect to be inaccurate and which could be damaging to a third party should not be passed on in any circumstances.
B. Unsubstantiated information which you suspect to be inaccurate and which could be damaging to a third party should be discussed only with great care.
C. Unsubstantiated information which you suspect to be inaccurate and which could be damaging to a third party should be reported to the regulator in order to provide warning of possible systemic problems.
D. You have a duty to warn counterparties but should make clear that the information is unsubstantiated.
Click on the Detail Button to view the Formula Sheet. Gambling or betting amongst market participants has obvious dangers and:
A. Should be forbidden.
B. Should be strongly discouraged.
C. Should be monitored by management.
D. All of the above.
Click on the Detail Button to view the Formula Sheet. Brokers should confirm all transactions:
A. Initially by fax or other acceptable electronic means, then in writing.
B. Only if the deal is between overseas counterparties and for value today.
C. Only if the transaction is not for a marketable amount .
D. To both counterparties immediately by fax or other acceptable electronic means.
Click on the Detail Button to view the Formula Sheet. Where repos or securities lending transactions are entered into, the Model Code recommends:
A. Documentation should be in place beforehand.
B. Management should approve all transactions.
C. Copies of the underlying documentation should be lodged with regulators.
D. All of the above.
Click on the Detail Button to view the Formula Sheet. Making interest rate swap transactions subject to agreement on documentation:
A. Is recommended where the complications of the transaction warrant the practice.
B. Is strictly forbidden.
C. Is considered bad practice.
D. Must have senior management approval.
Click on the Detail Button to view the Formula Sheet. Where dealing through an intermediary with an unidentified principal, the Model Code recommends:
A. It is good practice for compliance, legal or credit functions to identify counterparties before the execution of a deal.
B. Management should have in place a clear written policy and procedures governing such transactions.
C. Management needs to be aware of the risks involved, particularly with respect to credit exposure and money laundering.
D. All of the above.
Click on the Detail Button to view the Formula Sheet. Which of the following is not in the Model Code?
A. Banks and brokers should record, by tapes or other such means, conversations between dealing counterparties.
B. There is no need to inform new counterparties and clients that conversations will be recorded.
C. On completion of recordings, tapes should be kept for a period sufficient to enable the details of any transaction contained therein to be confirmed.
D. The storage of recorded tapes should be strictly managed to prevent their contents from being tampered with.
Click on the Detail Button to view the Formula Sheet. If the value date of forward USD/JPY transactions is declared a holiday in either New York or Tokyo, the correct value date will be:
A. The value date of the centre which is open.
B. The next business day of the centre which is closed.
C. The next business day when both New York and Tokyo are open.
D. None of the above.
Click on the Detail Button to view the Formula Sheet. Bank participants have a duty to make it clear that their prices are firm or merely indicative:
A. Only if they are dealing with brokers.
B. Only if they are dealing in a fast moving market.
C. Only if the amount is not marketable.
D. At all times.
Click on the Detail Button to view the Formula Sheet. The extension of forward FX contracts at their historic rates is only allowed when:
A. Prior management approval has been sought.
B. They are executed within six months.
C. They are extended for not more than one year.
D. All of the above.
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