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Question 1 of 30
1. Question
Which of the following best illustrates short selling?
Correct
When a seller offers for sale capital markets products without possessing the ownership of such at the time of sale, a seller is deemed engaged in short selling. Short selling may be classified as either “covered” or “uncovered” depending on whether or not borrowing arrangements have been made prior to the short sale.
Incorrect
When a seller offers for sale capital markets products without possessing the ownership of such at the time of sale, a seller is deemed engaged in short selling. Short selling may be classified as either “covered” or “uncovered” depending on whether or not borrowing arrangements have been made prior to the short sale.
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Question 2 of 30
2. Question
When does a short sell order take place?
Correct
A short sell order is considered to have been made when the seller does not have interest in the product at the time of order. Short sell orders for specified capital markets products are required to be disclosed to an approved exchange.
Incorrect
A short sell order is considered to have been made when the seller does not have interest in the product at the time of order. Short sell orders for specified capital markets products are required to be disclosed to an approved exchange.
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Question 3 of 30
3. Question
Which of the following reflects the short position threshold?
Correct
Under Section 137ZK of the SFA, a person is obliged to report its short positions in any specified capital markets products to MAS, with regards to whether the short position is equivalent to or surpasses the short position threshold on position day.
Incorrect
Under Section 137ZK of the SFA, a person is obliged to report its short positions in any specified capital markets products to MAS, with regards to whether the short position is equivalent to or surpasses the short position threshold on position day.
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Question 4 of 30
4. Question
Which of the following must a reporting person include in a Short Position Reporting form?
I. The position day on which the short position is determined
II. The stock code of the specified capital markets product
III. The number of shares in which the reporting person has a short position.
IV. The fact that the short position is equivalent to the short position threshold on position dayCorrect
Short Position Reporting forms are expected to embody the position day on which the short position is identified, the stock code of the specified capital markets product and the number of shares in which the reporting person holds a short position. A reporting person, and if applicable, his reporting agent must both possess a unique SPRS identifier. This SPRS identifier enables them to enter the said short position reporting form.
Incorrect
Short Position Reporting forms are expected to embody the position day on which the short position is identified, the stock code of the specified capital markets product and the number of shares in which the reporting person holds a short position. A reporting person, and if applicable, his reporting agent must both possess a unique SPRS identifier. This SPRS identifier enables them to enter the said short position reporting form.
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Question 5 of 30
5. Question
What purpose does a discretionary mandate serve?
Correct
Identical to the arrangement of institutional participants with multiple trading desks, multiple fund managers may manage an investor’s portfolio under separate discretionary mandates. In accordance to this, the MAS bestows flexibility on investors with regards to disclosing short sell orders and short position at a fund manager level.
Incorrect
Identical to the arrangement of institutional participants with multiple trading desks, multiple fund managers may manage an investor’s portfolio under separate discretionary mandates. In accordance to this, the MAS bestows flexibility on investors with regards to disclosing short sell orders and short position at a fund manager level.
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Question 6 of 30
6. Question
Which of the following is an example of a situation wherein short selling is used as a tool for market abuse?
Correct
The presence of risks with regards to short selling may not be ruled out as it is sometimes utilized as an opportunity to commit fraud; such is the case when false rumors are created to encourage others to sell.
Incorrect
The presence of risks with regards to short selling may not be ruled out as it is sometimes utilized as an opportunity to commit fraud; such is the case when false rumors are created to encourage others to sell.
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Question 7 of 30
7. Question
What does a person’s interest in a product represent?
Correct
A person’s interest in a product signifies his/her long position. A person is considered to have interest in a product when he/she possesses legal or beneficial ownership over the it (except if a person engages in a securities lending arrangement as a borrower) and will receive the product before he/she is expected to deliver it.
Incorrect
A person’s interest in a product signifies his/her long position. A person is considered to have interest in a product when he/she possesses legal or beneficial ownership over the it (except if a person engages in a securities lending arrangement as a borrower) and will receive the product before he/she is expected to deliver it.
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Question 8 of 30
8. Question
Which of the following is a key element of the short selling rules?
Correct
Short selling rules are set out to ensure the reporting of covered shorts. A person who borrows securities under a securities lending arrangement and subsequently sells them are expected to report the sale as a short sell order. This person is considered to have a short position between the time the securities are borrowed and the time they are returned to the lender.
Incorrect
Short selling rules are set out to ensure the reporting of covered shorts. A person who borrows securities under a securities lending arrangement and subsequently sells them are expected to report the sale as a short sell order. This person is considered to have a short position between the time the securities are borrowed and the time they are returned to the lender.
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Question 9 of 30
9. Question
As listed on the approved exchange, which of the following specified capital market products are subject to short sell order disclosures and are expected to comply with short position reporting requirements?
I. Any share of a corporation
II. Any unit in a government trust
III. Any unit in a real estate investment trust
IV. Any unit in individual trustCorrect
Any share of a corporation, unit in a business trust and unit in a real estate investment trust are defined as the approved exchange as securities subject to short sell order disclosures and short position reporting requirements. Derivatives are merely required to be reported as a short sell order once they are exercised and once obligations are created.
Incorrect
Any share of a corporation, unit in a business trust and unit in a real estate investment trust are defined as the approved exchange as securities subject to short sell order disclosures and short position reporting requirements. Derivatives are merely required to be reported as a short sell order once they are exercised and once obligations are created.
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Question 10 of 30
10. Question
With whom does the statutory duty to report short positions lie?
Correct
The persons that have the legal obligation to deliver specified capital markets products which have the possibility to result in short positions have an associated responsibility to report those short positions. In case of a trust, or unit trust, the duty to report rests with the trustee, and not the manager or the unit holders.
Incorrect
The persons that have the legal obligation to deliver specified capital markets products which have the possibility to result in short positions have an associated responsibility to report those short positions. In case of a trust, or unit trust, the duty to report rests with the trustee, and not the manager or the unit holders.
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Question 11 of 30
11. Question
How are institutional participants enabled to cater to different decision making and operational models?
Correct
Institutional participants are given the ability to cater to different decision making and operational models through the flexibility extended to them with regards to determining the level at which their orders and positions should be consolidated. They may report short position regardless of whether or not it approximates or exceeds the threshold on position day. This makes it easier administratively as the necessity to monitor the aggregated position at the legal entity level is eliminated.
Incorrect
Institutional participants are given the ability to cater to different decision making and operational models through the flexibility extended to them with regards to determining the level at which their orders and positions should be consolidated. They may report short position regardless of whether or not it approximates or exceeds the threshold on position day. This makes it easier administratively as the necessity to monitor the aggregated position at the legal entity level is eliminated.
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Question 12 of 30
12. Question
What is the role of the portfolio manager?
Correct
A portfolio manager is given the primary responsibility of making the firm’s investment decisions. At a legal entity level, a single portfolio manager oversees three trading desks.
Incorrect
A portfolio manager is given the primary responsibility of making the firm’s investment decisions. At a legal entity level, a single portfolio manager oversees three trading desks.
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Question 13 of 30
13. Question
How are short positions reported at trading desk level?
Correct
Institutional participants are required to access the SPRS in order to enter and establish separate reporting identities for the entity and each trading desk. The reporting may be delegated to any of the trading desks by designating a SPRS ID to each one and including the ID to the SPRS delegation list.
Incorrect
Institutional participants are required to access the SPRS in order to enter and establish separate reporting identities for the entity and each trading desk. The reporting may be delegated to any of the trading desks by designating a SPRS ID to each one and including the ID to the SPRS delegation list.
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Question 14 of 30
14. Question
Within how many days from position day must a Short Position Report Form be accomplished?
Correct
The MAS expects a person to report his short position by means of completing a Short Position Report Form within two business days from the position day. This is done by entering the form into the SPRS that may be accessed through MAS website.
Incorrect
The MAS expects a person to report his short position by means of completing a Short Position Report Form within two business days from the position day. This is done by entering the form into the SPRS that may be accessed through MAS website.
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Question 15 of 30
15. Question
What obligation does a trustee have in relation to the specified capital markets held in a trust?
Correct
A trustee is expected to report and make disclosures regarding short sell orders and short positions contained in the trust for which it acts as a trustee. The MAS gives trustees the privilege of flexibility with regards to the level at which orders and positions may be consolidated.
Incorrect
A trustee is expected to report and make disclosures regarding short sell orders and short positions contained in the trust for which it acts as a trustee. The MAS gives trustees the privilege of flexibility with regards to the level at which orders and positions may be consolidated.
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Question 16 of 30
16. Question
On what basis is the value threshold calculated?
Correct
The approved exchange publishes the closing prices of specified capital markets on position day in order to provide a basis upon which the value threshold of SGD2,000,000 is computed. In case the specified capital markets are quoted or traded in a foreign currency, the reporting entity may consult with the exchange rates published by the MAS in order to determine if the threshold is met.
Incorrect
The approved exchange publishes the closing prices of specified capital markets on position day in order to provide a basis upon which the value threshold of SGD2,000,000 is computed. In case the specified capital markets are quoted or traded in a foreign currency, the reporting entity may consult with the exchange rates published by the MAS in order to determine if the threshold is met.
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Question 17 of 30
17. Question
Which of the following agreements must be entered into in order to receive a product before a person is due to deliver it ?
I. Loan the product
II. Convert or exchange other products into the product
III. Exercise an option or a warrant to subscribe for the product
IV. Recall the product that was loaned out under a securities lending arrangement.Correct
A person must either obtain ownership over the product through purchasing it, convert or exchange other products into the product, subscribe for the product by means of exercising an option or warrant, or recall the product loaned through a security lending arrangement in order to receive a product before he/she is expected to deliver it. This constitutes one of the factors that deems a person as having interest in a product.
Incorrect
A person must either obtain ownership over the product through purchasing it, convert or exchange other products into the product, subscribe for the product by means of exercising an option or warrant, or recall the product loaned through a security lending arrangement in order to receive a product before he/she is expected to deliver it. This constitutes one of the factors that deems a person as having interest in a product.
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Question 18 of 30
18. Question
Why are exemptions from the requirement to mark short sell orders granted?
Correct
The obligation to disclose short sell orders in respect of market-making activities are not imposed on market makers. They are exempt from this requirement in order to prevent their efficient submission of continuous bids and offers from being subject to hindrance.
Incorrect
The obligation to disclose short sell orders in respect of market-making activities are not imposed on market makers. They are exempt from this requirement in order to prevent their efficient submission of continuous bids and offers from being subject to hindrance.
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Question 19 of 30
19. Question
What role does the Central Depository (Pte) Limited (“CDP”) play with regards to the regulation of short selling?
Correct
The Central Depository (Pte) Limited (CDP) minimizes the risk of subjecting the settlement system under the disruptive effects that may result from short selling. Through the buying – in process, where the CDP purchases securities on behalf of sellers for delivery on settlement day, the seller who fails to deliver is made to shoulder costs of purchase and becomes subject to additional penalty.
Incorrect
The Central Depository (Pte) Limited (CDP) minimizes the risk of subjecting the settlement system under the disruptive effects that may result from short selling. Through the buying – in process, where the CDP purchases securities on behalf of sellers for delivery on settlement day, the seller who fails to deliver is made to shoulder costs of purchase and becomes subject to additional penalty.
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Question 20 of 30
20. Question
What does short selling pave way for?
I. More efficient price discovery
II. Increased market liquidity
III. Facilitation of risk management
IV. Development of speculating activitiesCorrect
Short selling is defined as the sale of capital markets products that the seller does not own at the time of sale. It encourages efficient price discovery, increased market liquidity, the effective management of risks and the development of hedging activities.
Incorrect
Short selling is defined as the sale of capital markets products that the seller does not own at the time of sale. It encourages efficient price discovery, increased market liquidity, the effective management of risks and the development of hedging activities.
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Question 21 of 30
21. Question
Which of the following describes the arrangement at a fund manager level?
I. An investor has two non-discretionary investment portfolios and one discretionary investment portfolio. Despite delegating management of discretionary portfolios to separate fund managers, the investor may still consolidate orders and positions of the three portfolios at his level.
II. An investor has two discretionary investment portfolios, under the management of different fund managers. Lacking sight of the investment decisions made by the fund managers, the investor may choose not to consolidate the orders and positions at his level.
III. Arrangements are made for the disclosure of each fund manager on behalf of the investor regarding the short orders or short positions arising from the discretionary portfolios they manage
IV. Care should be taken to ensure that orders and positions are not double counted
Correct
The MAS provides an investor with the liberty to disclose short orders and positions at a fund manager level when dealing with discretionary investments portfolios. Delegating decisions with regards to investment portfolios to fund managers may accordingly enable an investor to establish arrangements for the disclosure of short orders or positions on their behalf. Diligence and care must be ascertained so as to prevent double counting.
Incorrect
The MAS provides an investor with the liberty to disclose short orders and positions at a fund manager level when dealing with discretionary investments portfolios. Delegating decisions with regards to investment portfolios to fund managers may accordingly enable an investor to establish arrangements for the disclosure of short orders or positions on their behalf. Diligence and care must be ascertained so as to prevent double counting.
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Question 22 of 30
22. Question
Which of the following describes the arrangement at a legal entity level?
I. The firm’s investment decisions are made across trading desks and the books constitute the records consolidated through these desks
II. A single portfolio manager is tasked to manage the trading desks
III. The firm must report the aggregated short orders and short positions arising from the portfolios managed by the trading desks that is equivalent or exceeds the threshold
IV. Each trading desk works under a different investment mandate and under a different portfolio manager
Correct
The MAS imposes an obligation of reporting when the short position at the legal entity level is equivalent or if it exceeds the threshold. On the entity level, a portfolio manager is appointed to manage trading desks through which the investment decisions, and as well as records are consolidated. The disclosure of the aggregated short orders and short positions of the trading desks are then reported if they are equivalent or if they exceed the threshold.
Incorrect
The MAS imposes an obligation of reporting when the short position at the legal entity level is equivalent or if it exceeds the threshold. On the entity level, a portfolio manager is appointed to manage trading desks through which the investment decisions, and as well as records are consolidated. The disclosure of the aggregated short orders and short positions of the trading desks are then reported if they are equivalent or if they exceed the threshold.
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Question 23 of 30
23. Question
Which of the following describes the arrangement at trading desk level?
I. Trading desks trade independently from each other
II. Additional resources are required to consolidate orders and positions
III. The firm must report the short orders and short positions that are equivalent or exceeds the threshold at an aggregated level
Iv. A single task manager is tasked to manage multiple trading desksCorrect
Each trading desk operates under a different portfolio manager and under a different investment mandate. Trading among these trading desks occurs independently from each other, would thus necessitate additional resources in order to consolidate orders and positions. To eliminate the burden imposed by this requirement, the firm is given the option to disclose short sell orders or positions at trading desk level.
Incorrect
Each trading desk operates under a different portfolio manager and under a different investment mandate. Trading among these trading desks occurs independently from each other, would thus necessitate additional resources in order to consolidate orders and positions. To eliminate the burden imposed by this requirement, the firm is given the option to disclose short sell orders or positions at trading desk level.
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Question 24 of 30
24. Question
Which of the following describes the arrangement at trustee level?
I. The trustee must make the necessary arrangements to monitor or assign a third party to consolidate short sell orders and short positions across the three trusts
II. A trustee is responsible for three trusts that are managed by the same manager
III. Trusts are managed independently of each other
IV. Each trust works under a different investment mandate and under a different portfolio managerCorrect
A trustee has responsibility over trusts managed by a single manager. Trustees are given liberty to consolidate short sell orders and short positions of the trusts they manage. Arrangements must be made for the appointment of a third party that will bear the responsibility of consolidation.
Incorrect
A trustee has responsibility over trusts managed by a single manager. Trustees are given liberty to consolidate short sell orders and short positions of the trusts they manage. Arrangements must be made for the appointment of a third party that will bear the responsibility of consolidation.
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Question 25 of 30
25. Question
Which of the following describes the arrangement at trust level?
I. It may be challenging for the trustee to consolidate the orders and positions across the two trusts.
II. Trusts are managed as one
III. The trustee is provided with the liberty in choosing to disclose short sell orders and report short positions at individual trust level, or to appoint a third party to do so
IV. In appointing a manager to disclose on the behalf of the trustee, care must be exercised in order to prevent double countingCorrect
Under trust level, a trustee is managed independently of each other. Trustees are given the option to choose to disclose short sell orders and short positions at an individual level, or to appoint a third party, such as a manager, to do so. It must be noted, however, that due care is exercised in order to prevent the double counting of disclosures.
Incorrect
Under trust level, a trustee is managed independently of each other. Trustees are given the option to choose to disclose short sell orders and short positions at an individual level, or to appoint a third party, such as a manager, to do so. It must be noted, however, that due care is exercised in order to prevent the double counting of disclosures.
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Question 26 of 30
26. Question
Which of the following best defines a position day?
Correct
The last day of the calendar week on which the approved exchange has opened for trading in a relevant class of specified capital markets product marks the position day. This typically falls on a Friday and also serves as the day on which the short position is calculated.
Incorrect
The last day of the calendar week on which the approved exchange has opened for trading in a relevant class of specified capital markets product marks the position day. This typically falls on a Friday and also serves as the day on which the short position is calculated.
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Question 27 of 30
27. Question
Which of the following deems true if trading in specified capital markets products is suspended?
I. The short positions in the product are no longer required to be reported on a given position day
II. The opening price of the last trading day before the suspension must be used as basis in determining whether the short position is equivalent or exceeds the short position threshold on position day
III. The short positions in the product are required to be reported on settlement day
IV. The closing price of the last trading day before the suspension must be used as basis in determining whether the short position is equivalent or exceeds the short position threshold on position dayCorrect
In the case that trading in specified capital markets products is suspended, the requirement of reporting short positions in the products on position day still applies. Before the day of suspension, the closing price provided on the last trading day shall serve as an indicator as to whether or not the short position equals or exceeds the short position threshold on position day.
Incorrect
In the case that trading in specified capital markets products is suspended, the requirement of reporting short positions in the products on position day still applies. Before the day of suspension, the closing price provided on the last trading day shall serve as an indicator as to whether or not the short position equals or exceeds the short position threshold on position day.
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Question 28 of 30
28. Question
Which of the following are true with regards to delegation?
I. Delegation of reporting obligations to third parties is not permitted by the MAS
II. A person who has an obligation to report short positions may appoint a third party reporting agent to report short positions on its behalf.
III. Reporting agents can be any individual or corporation.
IV. The legal responsibility for compliance still rests with persons mentioned in paragraph 4.20Correct
A person who has an obligation to report short positions has the liberty to delegate the duty to a third party reporting agent, who will be tasked to act on the obligation on his behalf. These reporting agents may be in the form of another individual or a corporation. However, despite the delegation, it must be noted that the legal responsibility for compliance still remains with the persons mentioned in paragraph 4.20.
Incorrect
A person who has an obligation to report short positions has the liberty to delegate the duty to a third party reporting agent, who will be tasked to act on the obligation on his behalf. These reporting agents may be in the form of another individual or a corporation. However, despite the delegation, it must be noted that the legal responsibility for compliance still remains with the persons mentioned in paragraph 4.20.
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Question 29 of 30
29. Question
Which of the following are true with regards to the reporting of short positions?
I. The reporting of short positions in any specified capital market products is required under Section 137ZK of the SFA if the short position is equivalent or exceeds the short position threshold on position day
II. The short position threshold is the lower of: (a) 0.2% of total issued shares in the relevant class of shares or units in the relevant class of units of a business trust or real estate investment trust; or (b) SGD2,000,000 in aggregate value.
III. A person is prohibited to report short positions if it does not meet the short position threshold
IV. In cases of doubt, a person may opt to report its short position in any specified capital markets products despite falling short of the short position threshold.Correct
The SFA guidance on the reporting of short positions states that all short positions in specified capital markets if the short position is equivalent or exceeds the short position threshold on position day. In determining this fact, a threshold is indicated as the lower value between 0.2% of total issued shares in the relevant class of shares or units in the relevant class of units of a business trust or real estate investment trust or SGD2,000,000 in aggregate value. To effciently deal with uncertainties that may arise, a person is freely given the option to report the short positions despite not meeting the required threshold.
Incorrect
The SFA guidance on the reporting of short positions states that all short positions in specified capital markets if the short position is equivalent or exceeds the short position threshold on position day. In determining this fact, a threshold is indicated as the lower value between 0.2% of total issued shares in the relevant class of shares or units in the relevant class of units of a business trust or real estate investment trust or SGD2,000,000 in aggregate value. To effciently deal with uncertainties that may arise, a person is freely given the option to report the short positions despite not meeting the required threshold.
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Question 30 of 30
30. Question
Which of the following are true with regards to the flexibility given for reporting?
I. The approach taken must consistently be utilized over time in order to avoid distorting the informational value of short sell order and short position trend data.
II. Exceptions may be made if the change in approach is caused by a material change in how investment decisions are made within the firm that accordingly warrants a change in the level of reporting.
III. The approaches taken must vary over time in order to reflect the informational value of short sell order and short position trend data.
IV. An substantial period of time must be provided before any changes in approach can take effectCorrect
In order to preserve the informational value of short sell order and short position trend data, the approach must be applied in a consistent manner over time. There may be exceptions with regard to this in case the mode by which investment decisions are conducted materially changes, and changes in reporting must also be adjusted. This must take effect promptly following the changes in investment decision-making.
Incorrect
In order to preserve the informational value of short sell order and short position trend data, the approach must be applied in a consistent manner over time. There may be exceptions with regard to this in case the mode by which investment decisions are conducted materially changes, and changes in reporting must also be adjusted. This must take effect promptly following the changes in investment decision-making.