Compliance and Regulatory Environment in Trading

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Questions and Answers

Why is compliance crucial in trading?

  • To limit market access and restrict participation in trading
  • To ensure fair play, protect investors, and maintain market integrity (correct)
  • To increase transaction costs and make trading more expensive
  • To discourage trading activity and reduce market engagement

Which regulatory body oversees financial markets in the UK?

  • Securities and Exchange Commission (SEC)
  • Commodity Futures Trading Commission (CFTC)
  • European Securities and Markets Authority (ESMA)
  • Financial Conduct Authority (FCA) (correct)

What is the primary goal of the Market Abuse Regulation (MAR)?

  • To increase trading volume and boost market activity significantly
  • To fight market manipulation and insider trading (correct)
  • To reduce transaction fees and make trading more cost-effective
  • To encourage high-frequency trading and rapid transactions

What significant impact did the Dodd-Frank Act have on the financial markets?

<p>Imposed stricter oversight on financial institutions and increased transparency in derivatives markets (A)</p> Signup and view all the answers

How does the General Data Protection Regulation (GDPR) affect trading firms?

<p>By limiting the types of financial instruments traded and restricting market participation (C)</p> Signup and view all the answers

What is a key best practice for staying compliant in trading?

<p>Developing a strong compliance program with clear policies and regular training (B)</p> Signup and view all the answers

What role do surveillance systems play in compliance?

<p>To monitor trading activities for signs of market abuse and suspicious behaviour (D)</p> Signup and view all the answers

Why are regular audits important for compliance?

<p>To identify compliance gaps (B)</p> Signup and view all the answers

How can ongoing training help in maintaining compliance?

<p>By reinforcing the importance of following regulations (A)</p> Signup and view all the answers

What is the benefit of fostering a culture of compliance within an organization?

<p>To promote ethical behavior and regulatory adherence (B)</p> Signup and view all the answers

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