Regulation & Compliance

Examinable from November 2023

Reviewed November 2022

AIM
The aim of the examination is to test candidates’ knowledge and understanding of the
legal, regulatory and ethical framework of the UK financial services sector and their
ability to apply such knowledge and understanding in a practical manner. Candidates will
also be required to display an awareness of current topics of interest in the field and be
able to debate the major principles of such topics.

The regulatory environment is subject to significant change and students should

ensure that their knowledge is up to date. They should read the financial press and
material published by the Regulators and other agencies whose actions affect the
UK and European financial services sector.

KNOWLEDGE LEVEL EXPLANATIONS

In this syllabus knowledge levels give an indication of the depth to which each topic
should receive emphasis, as follows:

Overview knowledge:
An awareness of principles or rules, sufficient for the student to know when he or she
should refer to an outside source and why. Students with such knowledge should be able
to articulate issues which would require further study and to discuss briefly the likely
result of that enquiry. (O)

General knowledge:
Knowledge and understanding sufficient for intelligent comment and the solution of
straightforward problems. (G)

Detailed knowledge:
A thorough knowledge and substantial understanding, permitting detailed comment and
the solution of complex problems (D)

EXAMINATION STRUCTURE
A three hour and fifteen minutes examination, in which the paper is divided into three
sections:

SECTION A: Up to ten compulsory short answer questions. This section will carry 30%
of the marks.

SECTION B: A choice of four practical, problem solving questions from which students are
required to answer two. ONE QUESTION WILL BE COMPULSORY. This section will carry
40% of the marks and these will be awarded to reflect not only technical knowledge but the
ability to apply that knowledge to the problem and to deal practically and effectively with the
situation presented, INCLUDING AN ETHICAL AND PROFESSIONAL RESPONSE TO
THE SITUATION, BASED UPON THE CISI CODE OF CONDUCT, WHERE
APPROPRIATE.

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 Regulation & Compliance
Examinable from November 2023
Reviewed November 2022

SECTION C: A choice of four essay questions from which students are required to answer two.
This section will carry 30% of the marks and these will be awarded to reflect both knowledge and
understanding together with clarity of arguments presented. Candidates are required to keep their
knowledge up-to-date with regards to changes in the regulatory environment.

SYLLABUS
PART 1 - REGULATORY FRAMEWORK
Objectives
To demonstrate a knowledge and understanding of the regulatory framework of
the financial services sector, including the roles of the regulators in relation to the
major London markets, both as currently organised and incorporating planned
future changes.

Content Knowledge
Level
A. UK Statutory Structure

Financial Services and Markets Act 2000

Part I (the regulators) D
Part II (regulated and prohibited activities) D
PART III (AUTHORISATION AND EXEMPTION) D
Part IV (permission to carry on regulated activities) D
Part VIII (penalties for market abuse) D
Part X, chapter 1 (rule making powers) D
Part XIV (disciplinary measures) D
Part XXV (injunctions and restitution) D
Part XXVII (offences) D
Carrying on Regulated Activities by way of business order G
Regulated Activities Order D
Regulated Activities Order (PRA) D
Financial Promotions Order D
Collective Investment Schemes: Section 235/8 & 240/241 G
Prescribed markets & qualifying Investments order (2001) G

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 Regulation & Compliance
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Reviewed November 2022
Bank of England Act 1988 O
Banking Act 2009 O
Financial Services Act 2010 O
Financial Services Act 2012 O
Financial Services (Banking Reform) Act 2013 O
Bank of England and Financial Services Act 2016 O
European Union (Withdrawal) Act 2018 & European Union (Withdrawal
Agreement) Act 2020 O

Financial Services Act 2021 O

Financial Services and Markets Bill O

B. EUROPEAN FINANCIAL SERVICES REGULATION

Historical background G

Home and Host state regulation including passporting G

Revised institutional structure G

Directive and regulation implementation G

Future regulatory developments G

C. INTERNATIONAL BUSINESS STRUCTURE AND REGULATORY MANAGEMENT

PART 2 – FCA HANDBOOK AND PRA RULEBOOK OF RULES AND GUIDANCE

To demonstrate a knowledge and understanding of the FCA’s Handbook and PRA’s

rules and guidance as applicable to investment business conducted in the UK.
Knowledge level
A. High level standards
PRIN Principles for Businesses D
SYSC Senior Management Arrangements, Systems and Controls
SYSC 1 Application & purpose O
SYSC 2 Senior management arrangements D
SYSC 3 Systems and controls D
SYSC 4 General organisational requirements G
SYSC 5 Employees, agents and other relevant persons G

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SYSC 6 Compliance, internal audit and financial crime G
SYSC 7 Risk control G
SYSC 8 Outsourcing G
SYSC 9 Record keeping G
SYSC 10 Conflicts of interest G
SYSC 12 Group risk systems and controls requirements O
SYSC 18 Whistleblowing G
SYSC 19 Remuneration Codes and Performance Management O
SYSC 20 Reverse stress testing O
SYSC 21 Risk control: additional guidance O
SYSC 22 Regulatory References O
SYSC 23 Introduction and classification D
SYSC 24 Allocation of prescribed responsibilities D
SYSC 25 Management responsibilities maps and handover procedures
and material D
SYSC 26 Overall and local responsibility D
SYSC 27 Certification regime D

COND Threshold Conditions D

FIT The Fit and Proper Test for Approved Persons D
GEN General provisions O
COCON Code of Conduct D
PROD Product Intervention and Product Governance sourcebook D

B. Business standards
COBS Conduct of Business Sourcebook
In particular
COBS 1 Application O
COBS 2 Conduct of business obligations O
COBS 3 Client categorisation D
COBS 4 Communicating with clients, including financial promotions D
COBS 5 Distance communications O
COBS 6 Information about the firm, its services and remuneration D
COBS 8 Client agreements (Non-MiFID provisions) D
COBS 8A client agreements (MiFID provisions) D
COBS 9 Suitability (including basic advice) (Non-MiFID provisions) D
COBS 9A Suitability (including basic advice (MiFID provisions) D
COBS 10 Appropriateness (for non-advised services) (Non-MiFID provisions) D
COBS 10A Appropriateness (for non-advised services) (MiFID provisions) D
COBS 11 Dealing and managing D
COBS 11A Underwriting and Placing O
COBS 12 Investment research D

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COBS 16 Reporting information to clients (Non-MiFID provisions) D
COBS 16A Reporting information to clients (MiFID provisions) D
COBS 18 Specialist Regimes O
COBS 22 Restrictions on the distribution of certain complex investment
products D

CASS Client Assets Sourcebook G

Market Conduct G
Market Conduct 5 Multilateral trading facilities (MTFs) G
Market Conduct 5A Organised trading facilities (OTFs) G
Market Conduct 5AA Multilateral systems G
Market Conduct 6 Systematic internalisers G
Market Conduct 7A Algorithmic Trading G

FINMAR Short Selling G

TC Training and competence G

C. Regulatory processes

SUP Supervision
In particular:
SUP 6 Applications to vary and cancel Part 4A permissions and to impose, vary
or cancel requirements O
SUP 8 Waiver and modification of rules O
SUP 10A FCA Approved Persons D
SUP 10B PRA Approved Persons D
SUP 10C FCA senior managers regime for approved persons in SMCR firms
D
SUP 15 Notifications to the FCA G
SUP 17A Transaction reporting and supply of reference data G

DEPP Decision Procedure and Penalties Manual. O

D. Redress

Dispute resolution & complaints, in particular:

DISP
DISP 1 & 2 Complaint handling procedures for firms & eligible complainants D
COMP
Compensation G

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 Regulation & Compliance
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E. Regulatory Guides

The Perimeter Guidance Manual

PERG 2 Authorisation and regulated activities D
PERG 8 Financial promotions and related activities O

PART 3 - OTHER REGULATORY PROVISIONS

Objective

To demonstrate knowledge and understanding of a selection of regulatory provisions

relevant to UK firms and individuals.

A. Takeover Code
General principles D
Role and function of the Takeover Panel O

B. FCA Listing rules O

C. Market Abuse D

Insider Lists D
Stabilisation D
Insider dealing D
Legitimate behavior D
Market Soundings D
Market Manipulation D
Investment recommendations D
Accepted market practices D

D. Insider Dealing
Part V and Schedule 1 of the Criminal Justice Act 1993 and regulations made thereunder
D
The offences D
The defences D
– “Dealing” D
– “Inside information” D
– “insiders” D
– “made public” D
– “professional intermediary” D
Penalties, prosecution and territorial scope D
Misleading Statements and impressions
(Part 7, s.89-95 of Financial Services Act 2012) D

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 Regulation & Compliance
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E. Money Laundering

The regulatory framework in respect of money laundering

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on
the Payer) Regulations 2017 (MLR 2017) O
Offences under the Terrorism Act (2000) Sec 21A D
Proceeds of Crime Act (2002) Sections 327-334 D
Serious Organized Crime & Police Act 2005 O
Joint Money Laundering Steering Group Guidance for the UK
Financial Sector (chapters1-4) O
Firms systems & controls (including relevant provisions of SYSC) D
Implementation of international money laundering standards O

F. UK Bribery Act 2010 D

G. Whistleblowing D

H. Benchmarks O

I. Data Protection Act 2018 & the Information Commissioners’ Office G

(General Data Protection Regulation)

J. The Climate Financial Risk Forum (CFRF) G

PART 4 –THE REGULATION OF MARKETS AND EXCHANGES

Objectives
To demonstrate a knowledge and understanding of the main dealing and reporting rules
of the major securities and financial derivative exchanges and some of the major
characteristics of and differences between a variety of regulated markets, including other
developments in the area of payment and market infrastructure.

Regulation of:
Recognised Investment Exchanges (RIE) O
Designated Investment Exchanges (DIE) O
Recognised Overseas Investment Exchanges (ROIE) O
Multilateral Trading Facilities (MTFs) O
Organised Trading Facilities (OTFs) O
Systematic Internalisers (SIs) O

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 Regulation & Compliance
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PART 5 –CURRENT REGULATORY DEVELOPMENTS

Candidates are required to keep up to date with UK and international regulatory

developments.

Candidates should specifically be aware of any significant directly applicable European

measures in the financial services area.

READING LIST

Strategies for Compliance. Tools, Techniques and Challenges in Financial Services

by Alan Brener
Published December 21, 2020 by Routledge
ISBN – 9780367337575

Conduct and Accountability in Financial Services: A Practical Guide by Stacey

English and Susannah Hammond
Published by Bloomsbury Professional
ISBN – 10: 1526505207
ISBN – 13: 978-1526505200

Essential Strategies for Financial Services Compliance by Annie Mills

Published by Wiley
ISBN 978-0-470-51904-2

Most parts of the Regulation and Compliance syllabus cover ground where there has
been major change in the recent past. As a result, there is comparatively little in the way
of up–to–date secondary literature to which reference can usefully be made. Students
must therefore be prepared to have recourse, where appropriate, to the primary materials
to which the syllabus refers.

Candidates are encouraged to make reference to the Financial Services and Markets Act
and the FCA handbook and PRA handbooks.
www.fca.org.uk &
www.bankofengland.co.uk/pra

Candidates are advised to familiarise themselves with the FCA, PRA and relevant
European websites (European Commission, ESMA, EBA and EIOPA), including:

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 Regulation & Compliance
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Dear CEO letters
Market watch/market abuse
Regulatory decisions
Executive speeches and press releases
Consultation papers, discussion papers, feedback statements, policy statements and
supervisory statements.

Candidates are also encouraged to read:

CISI Review Magazine

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