Chapter 3 CMSL and CMSRL

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Questions and Answers

What must a CMSL holder do if they receive client funds not intended for contract payments?

Deposit the funds in a trust account (correct)

Reinvest the funds in securities on behalf of the client

Invest the funds in their own account

Immediately withdraw the funds for operational expenses

Which of the following is NOT a function that must operate independently within a CMSL holder's organization?

Internal Audit

Risk Management

Compliance

Marketing (correct)

What is required from a CMSL holder when issuing an offer or recommendation?

Provide a summary of personal investment experience

Outline the commission structure for affiliated parties

Disclose any potential conflict of interest

Confirm they hold the shares being recommended (correct)

Which of the following is a requirement for the CMSL/CMSRL holder regarding client funds?

Segregate client funds from their own funds Signup and view all the answers

What is the role of the appointed compliance officer under the SMR?

To assess and ensure compliance with regulations Signup and view all the answers

What should be done with assets received from clients for agreed purposes?

Put them in a custody account Signup and view all the answers

Which statement about the independence of the Compliance, Risk Management, and Internal Audit functions is true?

They must operate separately and independently from other functions Signup and view all the answers

In the context of risk management, what must a CMSL holder establish?

Operational policies and measures to manage risks Signup and view all the answers

What is a requirement for an applicant to obtain a CMSRL?

Must be at least twenty-one (21) years old Signup and view all the answers

Which of the following conditions would exempt a CMSRL applicant from examination requirements?

Gaining twenty (20) years of diverse industry experience Signup and view all the answers

What is one of the continuous obligations for CMSL holders regarding financial records?

Keep auditable books for a minimum of seven years Signup and view all the answers

What is the consequence for a CMSRL applicant who passes the required licensing examination but does not engage in regulated activities within three years?

They will be required to retake the examination Signup and view all the answers

What additional criteria must be met if a CMSRL applicant seeks an exemption based on distinguished service?

Must have at least ten years in capital markets or financial services Signup and view all the answers

Which of the following processes must be included in the complaint handling procedures?

Assessment of eligibility and severity of complaints Signup and view all the answers

What is one of the responsibilities of the compliance function regarding the adequacy and effectiveness of measures?

To monitor and assess policies to ensure compliance Signup and view all the answers

What is the maximum period a CMSL holder has to retain information regarding each complaint received?

Not less than seven years Signup and view all the answers

Which of the following is NOT a requirement for the compliance function under the SMR?

The compliance officer must be involved in running services monitored Signup and view all the answers

What action should a CMSL holder take if a complaint is not resolved within ninety business days?

Notify the complainant and inform them of the delay Signup and view all the answers

How long does a CMSL/CMSRL holder have to notify the Authority of significant changes?

Within fourteen days Signup and view all the answers

What is required of the compliance officer in terms of reporting?

Prepare and file an annual report to management regarding compliance Signup and view all the answers

What could be a reason for a CMSL holder to apply for a variation of their licence?

To remove a regulated activity from their licence Signup and view all the answers

Which of the following statements best describes the CMSL holder’s responsibilities regarding risk management?

Establish and maintain effective risk management policies and procedures Signup and view all the answers

Which of the following statements about representation by a CMSRL holder is correct?

A CMSRL holder must possess the corresponding licence for each regulated activity Signup and view all the answers

Which of the following is NOT considered a relevant person under these compliance responsibilities?

Clients who use services from the CMSL holder Signup and view all the answers

Which of the following is NOT a documented obligation of CMSL holders regarding complaints?

To handle all complaints without exceptions Signup and view all the answers

What aspect of risk management must the CMSL holder regularly monitor?

Adequacy and effectiveness of risk management policies Signup and view all the answers

Which of the following is a necessary characteristic of the compliance function as per SMR?

Independence from operational activities being monitored Signup and view all the answers

What is a requirement imposed on CMSL holders regarding complaints handling?

They must track and manage the status of complaint resolutions Signup and view all the answers

What is the specific timeframe a CMSL holder must respond to a complaint?

Within thirty business days Signup and view all the answers

What should the risk management policies set in relation to identified risks?

Risk tolerance levels and management strategies Signup and view all the answers

According to the compliance framework, how are the relevant persons’ objective assessments protected?

By ensuring their remuneration is not influenced by operations they monitor Signup and view all the answers

What is a requirement for securities listed on a P2P platform?

They must be rated by the P2P platform operator Signup and view all the answers

Which of the following securities can be listed on a P2P platform?

Debentures that comply with Hukum Syara’ Signup and view all the answers

What is a crucial function of the compliance role within a CMSL holder?

To monitor and assess policy effectiveness Signup and view all the answers

What must be provided to a licence holder before revocation of their CMSL or CMSRL?

A written notice with reasons for revocation Signup and view all the answers

When does a CMSL holder need to inform the Authority about material changes?

Within fourteen days of the change Signup and view all the answers

What differentiates a CMSL from a CMSRL regarding their roles?

CMSRL is primarily for representative functions Signup and view all the answers

Which of the following best describes the licensing application process?

Typically involves application for CMSL and/or CMSRL Signup and view all the answers

What must entities apply for to conduct regulated activities?

CMSL and CMSRL licenses Signup and view all the answers

What is the significance of the risk scoring in P2P platforms?

It must be available to investors at the time of offer Signup and view all the answers

Which of the following roles is NOT typically part of the compliance function?

Providing investment advice Signup and view all the answers

Study Notes

CMSL and CMSRL Licensing and Requirements

A CMSL holder must disclose all securities held and their purpose while selling them.
Funds from clients must be segregated from the CMSL holder's funds.
Client assets must be held in dedicated trust and custody accounts, kept separately from the CMSL holder's accounts.
Money in trust accounts can only be withdrawn to pay the client or for their brokerage charges.

Compliance, Risk Management and Internal Audit

All CMSL holders must establish compliance, risk management, and internal audit functions.
These roles must be independent and separate.
The SMR only mandates the appointment of a compliance officer, who must be authorized by the Authority.

Key Licensing Requirements

Applicants for a CMSL or CMSRL must meet initial licensing requirements and ongoing obligations.
CMSL holders must have effective policies, procedures, and measures to ensure compliance with obligations.
Compliance functions advise and help relevant personnel comply with CMSL holder obligations.

Revocation, Cessation and License Variation

The Authority may revoke a CMSL or CMSRL following a notification process.
License holders must notify the Authority of any cessation of business or changes to their details.
License holders can apply to vary their license, adding or removing regulated activities or changing their principal's name.

CMSRL Specific Requirements

A CMSRL is required for anyone representing a CMSL holder.
Additional specific requirements for a CMSRL applicant:
- Minimum age of 21
- Provision of relevant information to the CMSL holder for due diligence purposes.
- Demonstration of competence.
CMSRL applicants must pass relevant licensing examinations except for the regulated activity of assets safekeeping and administration.

Exemption from Examination Requirements

CMSRL applicants may apply for an exemption from examination requirements in the following circumstances:
- At least 20 years of working experience, including at least 10 years in the capital markets or financial services industry or a regulatory body.
- Hold a senior management position in capital markets, financial services, or a regulatory body.

Continuous Obligations

CMSL holders must maintain proper auditable books, accounting records, and data for a minimum of 7 years.
CMSL holders must take reasonable measures to prevent and detect falsification of financial records.
CMSL holders must appoint an independent auditor and submit an audited report within 3 months of the financial year-end.

CMSL Compliance Function Responsibilities

Monitor and assess the effectiveness of policies, procedures, and measures, and take action to rectify any deficiencies.
Advise and assist relevant personnel to ensure compliance with the CMSL holder's obligations.

CMSL Compliance Function Requirements

Have the appropriate authority, resources, expertise, and access to relevant information.
Appoint a compliance officer responsible for reporting on compliance, including an annual report to management on compliance, risk control, and corrective actions taken.
The compliance function must be independent of the services and activities they monitor.
The remuneration of those working in compliance must not compromise their objectivity.

CMSL Risk Management Requirements

Establish and maintain effective risk management policies and procedures.
Adopt arrangements, processes, and mechanisms to manage risks, taking into account risk tolerance levels.
Monitor the effectiveness of risk management policies and procedures and address any weaknesses.

CMSL Complaint Handling Procedures

Processes to assess the eligibility, validity, merits, and severity of complaints.
Processes and organizational structures to handle investigations.
Complaints resolution procedures and remedies.
Processes to monitor, track, and manage the status of complaints.

CMSL Complaint Record-keeping Requirements

CMSL holders must retain complaint records for a minimum of 7 years.
Half-yearly reports to BDCB on complaints received.
Response to complainants within 30 business days, with updates provided if the resolution process exceeds this timeframe.

CMSL Notification Requirements

CMSL/CMSRL holders must notify the Authority within 14 days of the occurrence of the following events:
- Cessation of regulated activities by a CMSL holder.
- Cessation of representation by a CMSRL holder.
- Changes to the CMSL/CMSRL holder's information required for the public register.

CMSL License Variation

CMSL holders can apply to modify their licenses with supporting documentation.
Reasons for variation include adding or removing regulated activities, or varying the name of the license holder's principal.

CMSL License Variation Outcome

The Authority may approve a license variation application and specify conditions or restrictions.
The Authority may refuse a license variation application on the basis of grounds outlined in Section 165(2).

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Description

Test your knowledge on the licensing and compliance requirements for CMSL and CMSRL holders. This quiz covers important aspects such as client fund segregation, compliance functions, and key licensing regulations. Ensure you understand the roles and responsibilities associated with these licenses.