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Questions and Answers
What is the primary function of a securities exchange?
What is the primary function of a securities exchange?
Which regulatory regime allows a locally incorporated market operator to operate in Brunei Darussalam?
Which regulatory regime allows a locally incorporated market operator to operate in Brunei Darussalam?
What role does a clearing house play in the securities market?
What role does a clearing house play in the securities market?
Which type of market operator is specifically responsible for issuing credit ratings?
Which type of market operator is specifically responsible for issuing credit ratings?
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What differentiates the 'designation' regulatory regime from others?
What differentiates the 'designation' regulatory regime from others?
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Which of the following is NOT a type of market operator regulated under the Authority?
Which of the following is NOT a type of market operator regulated under the Authority?
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What is a common characteristic shared by all types of market operators?
What is a common characteristic shared by all types of market operators?
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Which general requirement is specific to foreign market operators seeking recognition?
Which general requirement is specific to foreign market operators seeking recognition?
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What is a key requirement for a licensed securities exchange?
What is a key requirement for a licensed securities exchange?
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Which of the following is NOT a type of market operator regulated by the Authority?
Which of the following is NOT a type of market operator regulated by the Authority?
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What is one of the key roles of a central securities depository (CSD)?
What is one of the key roles of a central securities depository (CSD)?
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What is a characteristic of self-regulating organisations (SROs)?
What is a characteristic of self-regulating organisations (SROs)?
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Which regulatory regime governs the licensing of securities exchanges?
Which regulatory regime governs the licensing of securities exchanges?
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What are the three regulatory regimes for regulating market operators as stated in the content?
What are the three regulatory regimes for regulating market operators as stated in the content?
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Which is NOT a type of market operator or infrastructure regulated by the Authority?
Which is NOT a type of market operator or infrastructure regulated by the Authority?
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Which of the following best describes the role of a licensed securities exchange?
Which of the following best describes the role of a licensed securities exchange?
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What is a key requirement for a clearing house as per the general requirements?
What is a key requirement for a clearing house as per the general requirements?
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Under which condition will the Authority most likely apply for a Court Order regarding an SRO?
Under which condition will the Authority most likely apply for a Court Order regarding an SRO?
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Which type of market operator is responsible for evaluating credit risks?
Which type of market operator is responsible for evaluating credit risks?
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Which option represents a consequence of non-compliance for licensed market operators?
Which option represents a consequence of non-compliance for licensed market operators?
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Which of the following statements correctly describes a self-regulating organization (SRO)?
Which of the following statements correctly describes a self-regulating organization (SRO)?
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What action can the Authority take concerning an SRO in case of non-compliance?
What action can the Authority take concerning an SRO in case of non-compliance?
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What is the primary purpose of a regulated market in the capital market context?
What is the primary purpose of a regulated market in the capital market context?
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Which of the following groups is NOT classified as a market operator according to the regulations?
Which of the following groups is NOT classified as a market operator according to the regulations?
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What are the three regulatory regimes that apply to market operators under the SMO?
What are the three regulatory regimes that apply to market operators under the SMO?
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Which type of entity is responsible for maintaining the infrastructure of the market?
Which type of entity is responsible for maintaining the infrastructure of the market?
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What situation may lead to the revocation of a market operator's license?
What situation may lead to the revocation of a market operator's license?
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What is a key requirement for a market operator to maintain its designation status?
What is a key requirement for a market operator to maintain its designation status?
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What role does a clearing house play within the market infrastructure?
What role does a clearing house play within the market infrastructure?
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What authority does the regulatory body possess in relation to market operators?
What authority does the regulatory body possess in relation to market operators?
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Which of the following describes a self-regulating organization?
Which of the following describes a self-regulating organization?
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What is the main function of market operators within a regulated market?
What is the main function of market operators within a regulated market?
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What is a primary requirement for a person directing a licensed securities exchange or clearing house?
What is a primary requirement for a person directing a licensed securities exchange or clearing house?
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Which aspect of management is NOT a requirement for licensed securities exchanges and clearing houses?
Which aspect of management is NOT a requirement for licensed securities exchanges and clearing houses?
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Which of the following best describes the Authority's role in relation to licensed market operators?
Which of the following best describes the Authority's role in relation to licensed market operators?
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What must licensed trading facilities demonstrate during the licensing assessment?
What must licensed trading facilities demonstrate during the licensing assessment?
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What is required regarding the outsourcing of operational functions for licensed securities exchanges?
What is required regarding the outsourcing of operational functions for licensed securities exchanges?
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Which requirement is common for both licensed securities exchanges and licensed trading facilities?
Which requirement is common for both licensed securities exchanges and licensed trading facilities?
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What must be notified to the Authority whenever changes occur?
What must be notified to the Authority whenever changes occur?
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What ensures transactions at licensed securities exchanges are conducted fairly?
What ensures transactions at licensed securities exchanges are conducted fairly?
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Which of these is NOT a requirement of the Authority for a licensed securities exchange's organizational arrangements?
Which of these is NOT a requirement of the Authority for a licensed securities exchange's organizational arrangements?
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What is a critical aspect of the Authority’s continuous supervision over licensed exchanges?
What is a critical aspect of the Authority’s continuous supervision over licensed exchanges?
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Study Notes
Market Operators and Infrastructure
- Three types of market operators exist: Securities Exchange, Clearing House, and Trading Facility
- Market operators are entities that facilitate the buying and selling of securities
- Securities exchange facilitates the buying and selling of listed or traded securities
- Clearing house provides facilities for clearing and settlement of transactions in exchange-traded securities
- Clearing house guarantees settlement of transactions
- Trading facility provides an electronic system connecting parties to facilitate the buying and selling of securities
Credit Rating Agency
- Credit rating agencies are independent bodies providing professional credit ratings
- Credit rating agencies issue or update credit ratings that reflect the creditworthiness of an entity, debt, financial obligation, or security
- Credit rating agencies also assess the issuer of debt, financial obligation, or security
Regulated Market, Market Operators, and Market Infrastructure
- A regulated market is an exchange or trading system for securities
- Market operators facilitate the exchange or trading of securities among market participants and investors
- Market infrastructure refers to entities that set up and maintain the platform and provide services for facilitating the exchange of funds and securities
Regulatory Regimes
- Three regulatory regimes exist for market operators: Licensing, Recognition, and Designation
- Licensing applies to locally incorporated market operators in Brunei Darussalam
- Recognition applies to foreign market operators incorporated outside of Brunei Darussalam
- Designation applies to foreign market operators incorporated outside Brunei Darussalam, designated by the Authority to operate in Brunei Darussalam without an application
General Requirements
- The Authority grants a license only if it is satisfied that the applicant complies with the Securities Market Order (SMO) requirements and regulations
- The Authority will continue to supervise licensed securities exchanges and clearing houses
- Licensed securities exchanges and clearing houses must comply with initial licensing and other continuing obligations as specified by the SMO
Requirements for Licensed Securities Exchanges and Clearing Houses
- Directors of securities exchanges and clearing houses must be reputable and experienced
- The Authority must be notified in advance of any proposed changes in directors
- Adequate organizational arrangements must be in place, including:
- Identifying and managing potential conflicts of interest
- Implementing risk management arrangements and systems
- Sound management of system technical operations
- Clear regulations and procedures for serving members fairly and orderly
- Arrangements for efficient and timely completion, clearance, and settlement of transactions
- Sufficient financial resources to ensure orderly functioning of services
- Clear regulations must govern the admission of securities to trading
- Securities must be traded fairly, orderly, efficiently, and freely negotiable
- Outsourcing of important operational functions must not materially affect the quality of internal control
- The Authority must be able to supervise compliance with the SMO
- The Authority must be notified of any changes to regulations or guidelines
Requirements for Licensed Trading Facilities
- Requirements for licensed trading facilities are broadly similar to those for licensed securities exchanges and clearing houses
- The Authority assesses the applicant’s compliance with the SMO requirements and regulations before granting a license
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Description
Explore the roles and functions of market operators such as securities exchanges, clearing houses, and trading facilities. This quiz also covers the significance of credit rating agencies in assessing creditworthiness and providing ratings for financial entities. Test your knowledge on the regulated market frameworks that govern these operations.