Description

Financial Markets and Specialized Institutions

Financial Markets and Specialized Institutions is intended to equip the candidate with the knowledge, skills and attitudes that will enable him/her to apply governance and regulatory requirements in relation to financial market transactions.

LEARNING OUTCOMES

A candidate who passes this paper should be able to:

• Identify financial institutions and markets
• Advise on financial market regulations
• Trade in financial securities
• Explain the roles and functions of the financial sector in the economy
• Describe the emerging issues and trends in the financial markets
• Explain governance systems in specialised institutions

CONTENT

1. Market organisation and structure
   • Functions of financial markets
   • Classifications of financial assets and markets
   • Structure of financial markets
   • Players within the financial services industry: central banks, retail banks, corporate banks; investment banks; retirement schemes; insurance companies; Saccos, fund managers; securities exchanges, stockbrokers; online foreign exchange brokers, insurance brokers, investment advisors, custodians; REIT managers and trustees, pension administrators; industry associations; professional bodies; crowdfunding; collective investment schemes (CIS); credit rating agencies
   • Major types and characteristics of securities traded in organised markets: Equities, government bonds and bills, corporate bonds, currencies, derivative contracts and commodities.
   • Flow of funds and financial systems
   • Characteristics of a well-functioning financial system
   • Automation of security exchanges: Automated trading systems (ATS)

2.                   Raising capital in the securities market

• Types of shares
• Private offers
• Public offers; listing by introduction, offer by tender and rights issue
• Prospectus/information memorandum
• The International Organisation of Securities Commissions (IOSCO) principles for issuers

3.                   Central Depository System

• The Central Depository Settlement Corporation
• Establishment of the central depository
• Duties of a central depository
• Central depository agents
• Rules and regulations of the central depository
• Remedies for breach of duties
• Security measures in the system
• Central Depository Guarantee Fund
• Immobilisation and dematerialisation of securities

4.               Securities Exchange

• Establishment, membership and roles of the security exchange
• Listing and post listing requirements
• Restriction of trade in eligible securities exchange
• Self-listing of the exchange
• Cross border listing

5.                 Securities transactions

• Book entry of transactions and prohibition
• Records of depositors
• Suspended securities
• Suspension and delisting of securities
• Charging or mortgaging of securities
• Bonus and rights issues
• Prohibition of dealings in book entry securities
• Insider trading
• The International Organisation of Securities Commissions(IOSCO) principles for enforcement of securities regulation

6                     Financial markets regulation

• Historical development of the law and regulations governing financial markets
• The need for regulation and authorisation of firms
• Asymmetric information and financial regulation: government safety net, restrictions on asset holdings, capital and governance
• Role of government in the financial system; Capital Markets Authority (CMA), Central Bank of Kenya, Retirement Benefits Authority, Insurance Regulatory Authority, The Sacco Societies Regulatory Authority (SASRA), the Unclaimed Financial Assets Authority, Kenya Deposit Insurance Corporation (KDIC) and the Financial Reporting Centre
• Regulation of financial market intermediaries: Stockbrokers, Stock dealers, Investment banks, Investment advisers, Fund managers, Credit rating agencies,Collective investments schemes, Custodians, The International Organisation of Securities Commissions (IOSCO) principles for credit rating agencies, collective investment schemes and market intermediaries, Central Depository and Settlement Corporation (CDSC)
• Main aims and activities of financial services regulators
• Anti-money laundering and prevention of terrorism financing
• Functions and powers
• Due diligence requirements
• Corporate governance and conduct of business requirements
• Financial supervision: chartering and examination, assessment of risk
• Regulations in the international financial markets
• The International Organisation of Securities Commissions(IOSCO) principles for self-regulation
• Management, disclosure requirements, restrictions on competition
• Financial liberalisation, stratification and rationalisation
• Financial inclusion and deepening
• Bank runs and panics
• The liquidity crisis

7.                 Legal, Regulatory and Governance systems in Specialised Institutions

• Pension Schemes
• Trusts and Foundations
• Clubs
• Religious organisations
• Educational institutions
• Co-operative societies
• Non governmental Organisations