ACI-Dealing Certificate (2) Set 3

1.

What does the Model Code say concerning repos and stock-lending?

Legal documentation must be put in place as soon as possible after transaction. All market participants should use the Modified Previous Business Day Convention. The exact maturity (end) dates for transactions must be agreed as soon as possible after a transaction. All market participants should use the Modified Following Business Day Convention.

2.

What should be done when a voice broker hits a dealer's price as "done" at the very instant the dealer calls "off"?

The deal should not be concluded and the broker should inform both counterparties accordingly. The transaction should be concluded and the broker should inform both counterparties accordingly. The broker should immediately inform both counterparties that the deal will have to be renegotiated. The broker should decide whether the transaction is concluded or not and inform both counterparties accordingly.

3.

Which of the following does the Model Code not recommend to prevent technical errors by etrading devices?

A manual "kill button" to disable the system's ability to trade and cancel all resting orders. An 'inbound message rate" feature that monitors the number of confirmation messages that are sent from trading venues within a specific time period. A "repeated automated execution throttle" monitoring the frequency of strategies that are filled and then re-entered into the market without human interventionthrough automated trading systems. A "fat-finger quantity" feature limiting the size of orders that can be sent from the trading systems and preventing order quantities above the fat-finger limit fromleaving the system.

4.

In trade confirmation, which one of the following statements about "matching" is correct?

matching should be performed by no later than the day after trading day matching processes are manual and may not be automated matching should be performed as soon as possible upon receipt of the confirmation confirmation matching should be a post-settlement workflow activity

5.

If several banks hit a broker simultaneously for an amount greater than the amount for which the price was shown:

no transaction is done the broker has to honor each and every amount hit the broker has to split the amount among the banks on a pro rata basis the broker may freely choose the bank(s) he will deal with

6.

According the Model Code, a principal, whose name has been rejected, feeling that the broker may have actually quoted a price or rate that it could not in fact substantiate, may:

deduct points from the broker or adjust the brokerage bill accordingly in some centres, ask either the central bank or some other neutral body to investigate and confidentially verify that there was support for the original price or rate in some centres, ask the local ACI to investigate and confidentially verify that there was support for the original price or rate insist that the broker discloses the name of the other counterparty

7.

What kind of information should dealers and brokers take care when relaying?

Information that could be damaging to a third party Unsubstantiated rumours Unsubstantiated information that they suspect may be inaccurate and damaging to a third party Price-sensitive information

8.

Which of the following is true regarding the consummation of a deal?

verbal agreements are considered binding written confirmations always override terms verbally agreed to deals agreed to verbally can be done subject to documentation verbal agreements are never to be considered legally binding

9.

Which of the following dealing strategies involves the placing of orders with very short quote lives into a market?

frequency trading high-incidence trading flash trading liquidity aggregators

10.

A 3-month (90-day) NZD deposit is 2.75% and 6-month (180-day) NZD deposit is 3.00%. What is the 3x6 NZD deposit rate?

0.00% 0.00% 0.00% 0.00%

ACI-Dealing Certificate (2) Set 3

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ACI-Dealing Certificate (2) Set 3

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