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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?

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

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

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

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

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

What role do surveillance systems play in compliance?

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

Why are regular audits important for compliance?

To identify compliance gaps (B) Signup and view all the answers

How can ongoing training help in maintaining compliance?

By reinforcing the importance of following regulations (A) Signup and view all the answers

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

To promote ethical behavior and regulatory adherence (B) Signup and view all the answers

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