X-gen Certification April 2014

The correct answer is Pre-Arrival, Arrival, Business Relationship and Satisfaction. This sequence represents the stages in a stockbroking circle. Pre-Arrival refers to the initial preparation and research done before engaging with a stockbroker. Arrival is the point at which the client meets with the stockbroker to discuss their investment goals and needs. Business Relationship involves the establishment of a professional relationship between the client and the stockbroker. Finally, Satisfaction refers to the client's level of contentment with the services provided by the stockbroker.

The back office department is responsible for the internal operations and financial management of a company. This includes tasks such as processing transactions, managing inventory, handling payroll, and maintaining financial records. Therefore, the correct answer is Operations & Finance, as these two functions are typically the main components of the back office department.

The trade comparison, clearing & settlement function is handled by the back office. This is because the back office is responsible for the administrative and support functions of a financial institution, including trade processing, reconciliation, and settlement. The front office is typically involved in client-facing activities such as sales and trading, while the settlement office may be a part of the back office or a separate department specifically focused on settlement processes. The service support office may provide assistance and support to various departments, but it is not directly responsible for trade comparison, clearing, and settlement functions.

The correct answer is "Back office." The back office is responsible for handling the accounts maintenance function. This department typically deals with administrative tasks, such as processing transactions, managing records, and ensuring compliance with regulations. They work behind the scenes to support the front office and customer service teams by handling the financial and operational aspects of maintaining accounts.

The financial market plays a crucial role in allocating scarce resources from savers to investors. It allows savers to invest their money in various financial instruments such as stocks, bonds, and mutual funds, which in turn provides capital to businesses and entrepreneurs for investment and growth. By facilitating the transfer of funds from those who have surplus savings to those who need capital, the financial market helps to efficiently allocate resources and promote economic growth.

The correct answer is "Initial Public Offer, Public Offer, Private Placement". Primary market transactions refer to the issuance of new securities by a company to raise capital. An Initial Public Offer (IPO) is the first sale of a company's shares to the public. A Public Offer is a sale of securities to the general public. Private Placement involves the sale of securities to a select group of investors, such as institutional investors or high net worth individuals. These three options cover the various types of primary market transactions. The other options either miss out on one or more of these types or include additional types not mentioned in the question.

The correct answer is Issuing house, stockbroker, reporting accountant, solicitor, registrar. In a primary market transaction, the issuing house is responsible for issuing new securities, the stockbroker facilitates the buying and selling of these securities, the reporting accountant ensures the accuracy of financial information, the solicitor handles legal aspects of the transaction, and the registrar maintains records of shareholders and their holdings.

The correct answer is Marketing, Liaising with NSE, Pricing, Allocation, Research & Listing. In a primary market transaction, a stockbroker plays a crucial role in marketing the securities to potential investors. They also liaise with the National Stock Exchange (NSE) to ensure compliance with regulations and facilitate the listing of the securities. Additionally, stockbrokers are responsible for determining the pricing of the securities, allocating them to investors, conducting research on the securities, and assisting with the listing process.

The correct answer is I, II and III only. This is because the Rules and Regulations Governing Dealing Members prohibit disclosing customers' information or acting in a way that would harm the customer or any other party (I). They also prohibit establishing fictitious accounts to execute transactions (II) and unauthorized use of customers' funds or commingling the firm's cash account with that of customers (III). Opening clients' accounts after observing the required Know-Your-Client procedure (IV) is not a prohibited practice.

If an investor experiences unfair treatment by a Dealing Member, the most appropriate avenue for seeking redress would be to report the case to the Nigerian Stock Exchange. The Nigerian Stock Exchange is the regulatory body responsible for overseeing and regulating activities in the Nigerian stock market. They have the authority to investigate and take action against any unfair practices or misconduct by Dealing Members. By reporting the case to the Nigerian Stock Exchange, the investor can ensure that their complaint is properly addressed and that appropriate action is taken against the Dealing Member.

The Investor Protection Fund (IPF) is designed to compensate investors for losses caused by the bankruptcy of a dealing member firm, negligence of a dealing member firm, and defalcation committed by employees of a dealing member firm. However, it is not intended to compensate investors for losses resulting from unanticipated adverse market conditions and sentiment. These types of losses are considered inherent risks of investing and are not within the scope of the IPF's coverage.

A Dealing Member Firm of the Nigerian Stock Exchange is required to submit various reports to The Exchange to ensure transparency and compliance. These reports include Quarterly Financial Statements, Monthly Transaction Reports, and Audited Financial Statements. However, a Due Diligence Statement is not required to be submitted to The Exchange. This statement is typically prepared by a potential investor or buyer to assess the financial and legal status of a company before entering into a transaction.

The correct answer is "Best Execution." This is because the other options mentioned, such as market manipulation and insider trading, fraud, and money laundering and terrorist financing, are all considered major violations of the Rules and Regulations Governing Dealing Members. However, "Best Execution" refers to the obligation of brokers to execute client orders in a manner that provides the best possible result for the client, and it is not a violation but rather a requirement in the financial industry.

Professional ethics encompasses both the personal and corporate standards of behavior expected of a professional. This means that professionals are expected to adhere to certain ethical guidelines not only in their personal conduct but also in their professional roles within a corporate setting. These standards include principles such as honesty, integrity, respect, and responsibility. By considering both personal and corporate standards, professionals are able to maintain ethical behavior in all aspects of their professional lives.

Business ethics refers to a written set of guidelines that an organization provides to its employees, management, and directors. These guidelines are meant to help them conduct their actions in line with the organization's primary values and ethical standards. This means that all individuals within the organization, including employees, management, and directors, are expected to adhere to these guidelines and act ethically in their professional roles.

The basic principles underlying ethical conduct of individuals and professionals are generally considered to be five in number. These principles include honesty, integrity, fairness, respect for others, and responsibility. These principles serve as a foundation for ethical decision-making and guide individuals and professionals in their behavior and interactions with others. By adhering to these principles, individuals and professionals can maintain a high standard of ethical conduct in their personal and professional lives.

Customer Due Diligence procedures require continuous update, monitoring, assessment, and reports on the one-off customer identification procedure at the account opening stage and the periodic assessment of customers' transaction history to both management and regulatory authorities. This is necessary to ensure that the customer's information is up to date, their transactions are monitored for any suspicious activity, and reports are provided to the relevant parties for compliance and regulatory purposes.

A well-structured firm typically has a robust ethical framework in place, which helps minimize ethical threats. These threats can include conflicts of interest, breaches of confidentiality, unfair treatment of employees, unethical decision-making, and non-compliance with laws and regulations. The higher the number of identifiable ethical threats, the more challenging it becomes for professionals to navigate their work environment ethically. Therefore, the least number of identifiable ethical threats that a professional has to face in a well-structured firm is 5.

CAMCAN stands for Capital Market Correspondents Association of Nigeria. This organization is likely a professional association or group that consists of correspondents or journalists who cover the capital market in Nigeria. They may provide news, analysis, and reports on the activities and developments in the Nigerian capital market. This association aims to promote transparency, information dissemination, and professionalism in reporting on the capital market.

CSR stands for Corporate Social Responsibility. This term refers to a company's commitment to operating in an ethical and sustainable manner, taking into account its impact on society and the environment. It involves initiatives and actions taken by businesses to contribute to the well-being of society, such as philanthropy, environmental conservation, and ethical labor practices. By practicing CSR, companies aim to go beyond profit-making and actively contribute to the betterment of society.

The Corporate communications department coordinates various types of events including trade fairs, bell ringing ceremonies, conferences, and events related to the facts behind the figures and the listing. These events help in promoting the company's image, communicating important information to stakeholders, and building relationships with clients and investors.

The correct answer is 4. This suggests that there are four pillars that drive the NSE strategy. However, without further context or information about the NSE strategy, it is difficult to provide a specific explanation for why there are four pillars. It could be that these pillars represent key areas or components of the strategy, each contributing to its overall success. Each pillar may have its own specific goals, objectives, or actions that align with the overall strategy.

The National Essay competition has been in existence for 10 years.

Asset co-mingling refers to the practice of combining both proprietary and clients' assets together. It involves mixing up the assets owned by a company or organization with the assets owned by their clients or customers. This can occur in various financial or investment scenarios, such as when a financial institution combines their own funds with those of their clients in a single account or investment vehicle. By doing so, it becomes more difficult to distinguish between the assets owned by the company and those owned by the clients, potentially leading to issues related to transparency, accountability, and potential conflicts of interest.

Reconstruction refers to the process of increasing or decreasing both the value and volume of shares. It involves making changes to the company's structure, operations, or financials in order to improve its share value and increase the number of shares traded. This can be done through various strategies such as mergers, acquisitions, divestitures, or implementing new business plans. The aim of reconstruction is to enhance the overall performance and attractiveness of the company's shares in the market.

Simultaneous delivery versus payment (DVP) is a concept in financial transactions where the delivery of securities or assets occurs at the same time as the payment for those securities or assets. This ensures that both parties involved in the transaction fulfill their obligations simultaneously, reducing the risk of one party not delivering the securities or assets after receiving payment. DVP is commonly used in securities trading to ensure a secure and efficient settlement process.

The mode of this transaction is called "Nominal transfer". This refers to the transfer of shares from one person to another without involving any monetary exchange. In this case, Mr. A intends to transfer his shares to his two children, B and C, without going through the floor of the Exchange, meaning the shares will not be traded publicly. Instead, the transfer will be done directly between Mr. A and his children, without any financial transaction taking place.

The statement suggests that Clearing House Numbers and investors' numbers are the same for investors. However, the correct answer is False. Clearing House Numbers and investors' numbers are not the same. Clearing House Numbers are unique identification numbers assigned to clearing houses, which facilitate the clearing and settlement of trades. On the other hand, investors' numbers are unique identification numbers assigned to individual investors. These numbers serve different purposes and are not interchangeable.

The Index is useful for all of the above options. It can be used for performance benchmarking to compare the performance of different entities or sectors. It can also be used to measure economic performance by tracking the changes in the index value over time. Additionally, the index can be used to forecast future trends based on the historical data and patterns observed in the index. Therefore, all the given options are correct.

The NSE Index includes equities in its computation. Equities refer to shares of stock or ownership in a company. The NSE Index is a stock market index that tracks the performance of a specific group of stocks listed on the National Stock Exchange (NSE) in India. By including equities in the computation, the NSE Index provides a measure of the overall performance of the stock market by tracking the movement of these selected stocks.

The given statement "Indices cannot be constructed for individual portfolios" is incorrect. Indices can be constructed for individual portfolios, such as a portfolio index that tracks the performance of a specific investment portfolio. This allows investors to compare the performance of their portfolio against a benchmark or other portfolios.

The correct answer is the NSE 30 Index is composed of all the highly capitalized and perhaps the most profitable companies spread across key sectors of the economy. This statement accurately describes the composition of the NSE 30 Index, which is an index that represents the performance of the top 30 companies listed on the Nigerian Stock Exchange. These companies are selected based on their market capitalization and profitability, and they span across various sectors of the economy.

The given answer, "None of the above," is correct because all of the statements listed are incorrect on a Bear Market. In a bear market, the broader market experiences a period of negative returns, not positive returns. Investment prices decline, and pessimism prevails instead of optimism. There is no requirement for a bear market to occur within six months of the year. Additionally, low unemployment and slowing inflation are characteristics of a healthy economy, not a bear market.

There are five IT Technical requirement baselines available in the Exchange under the Minimum IT Standard.

OMS brokers are expected to perform multiple functions for post-trade activities. These functions typically include trade confirmation, settlement instruction, trade matching, and trade allocation. Therefore, the correct answer is 4, indicating that OMS brokers are expected to perform four functions for post-trade activities.

OMS brokers are expected to perform multiple functions for ON Trade. These functions may include order routing, trade execution, order management, risk management, compliance monitoring, and reporting. Therefore, the correct answer is 6, as OMS brokers are expected to perform six functions for ON Trade.

The TRIAD of Information Security refers to the three fundamental principles that are essential for ensuring the security of information. These principles are process, confidentiality, and integrity. Process refers to the procedures and protocols in place to manage and protect information. Confidentiality ensures that information is only accessible to authorized individuals. Integrity ensures that information is accurate, complete, and trustworthy. Together, these three principles form the foundation of a comprehensive information security framework.

The Information Security Officer is the correct answer because they are responsible for overseeing and managing an organization's information security program. In the event of a security breach or password hijacking, the Information Security Officer would be the first person to contact as they have the expertise and knowledge to handle such incidents. They would be able to assess the situation, investigate the breach, and implement necessary measures to mitigate the damage and prevent future incidents. The CEO, Compliance Office, and Line Manager may have some involvement in the process, but the Information Security Officer would be the primary point of contact.

The correct answer is the capital market. The registrar is a professional who operates in the capital market. This market refers to the financial market where long-term securities such as stocks and bonds are bought and sold. The registrar plays a crucial role in maintaining accurate records of ownership and transactions of these securities. They ensure that shareholders or bondholders receive their dividends or interest payments, and also handle the issuance of new securities.

A Probate Letter is a legal document that pertains to the estate of a deceased individual who had a Will. It is used to validate the Will and ensure that the deceased person's assets are distributed according to their wishes. This letter is an important part of the probate process, which involves the court overseeing the administration of the estate. It provides details regarding the deceased person's assets, debts, and beneficiaries, and is essential for the proper settlement of the estate.

Unclaimed dividends can be caused by any or all of the reasons mentioned. If the registrars fail to update their clients' registers, it can lead to dividends going unclaimed. Similarly, if shareholders are unaware or ignorant about their entitlements, they may not claim their dividends. Additionally, if there is a failure in the postal system, shareholders may not receive their dividend checks, resulting in unclaimed dividends. Therefore, all of the listed reasons can contribute to unclaimed dividends.

Registrars are responsible for maintaining the register of shareholders, managing share transfers, and ensuring the accuracy of shareholder records. They also handle dividend payments and keep track of unclaimed dividends. However, preparing annual reports for client companies is typically the responsibility of accountants or financial professionals, not registrars. Therefore, it is not a function of registrars.

Registrars are considered important in the capital market because they are responsible for verifying all transactions. This ensures that the buying and selling of securities are accurately recorded, preventing any fraudulent or incorrect activities. By verifying transactions, registrars help maintain the integrity and transparency of the capital market, providing confidence to shareholders and investors.

The objective of market regulation is not to make life easy. Market regulation aims to ensure fair and transparent practices in the market, prevent manipulation of prices, protect investors, and maintain market stability. Making life easy is not a primary goal of market regulation, but rather creating a level playing field for all participants and promoting a healthy and efficient market environment.

The correct answer is "Listings Sales and Retention" because it does not include units of the Listings Regulation Department. This department is responsible for analyzing, ensuring compliance, and enforcing listings regulations. However, Listings Sales and Retention focus on the sales and retention of listings, which is a separate function from the regulatory aspects of the department.

Listings Analysis is responsible for receiving applications for new issue. This unit is likely in charge of reviewing and analyzing the applications submitted for new issues, ensuring they meet the necessary requirements and criteria. They may assess the financial viability, compliance with regulations, and overall suitability of the proposed new issue before making a decision. Their role is crucial in the initial evaluation and processing of new issue applications.

The newly introduced Issuers Portal is important because it allows issuers to file their annual returns and corporate actions. This means that issuers can easily and efficiently submit the necessary paperwork and information regarding their annual financial reports and corporate actions such as dividends or stock splits. This portal streamlines the process for issuers and ensures that the necessary documentation is filed in a timely manner, increasing transparency and accountability in the securities market.

The correct answer is "Brokers Dealer engagement." The given stages are all part of the process of obtaining a quotation, except for the engagement of brokers and dealers. The other stages involve the application and packaging of the quotation, obtaining approval and registration from the NSE and SEC, and the completion board meeting stage. The engagement of brokers and dealers is not mentioned as a specific stage in this process.

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The LSR Department's main functions are to increase the number of listings on the various boards and to manage existing listed companies. This means that the department is responsible for attracting new companies to be listed on the boards and ensuring that the already listed companies are effectively managed.