Commercial banks as Authorised Deposit-Taking Institutions (ADIs) are

Permitted to take deposits from the general public

Information barriers are designed to prevent insider trading in investment banks so that

Private side does not communicate inside information to the public side

Which of the following statement(s) is accurate

Gambling contracts are generally illegal in Australia

Twin Peaks model of regulation in Australia

Gives ASIC and APRA different aims & functions

Which of the following statements is accurate?

APRA and the Reserve Bank have joint responsiblity for financial stability

Unauthorised trading which may be a criminal offence

What is/are the lesson(s) to be learned from the collapse of Baring Brothers?

Management must understand the risks faced by their trading teams

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Topic 2 Non-Financial Risk, Banking and Regulation

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Introduction to non- financial risk, banking and regulation

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Questions 13

Answers

1
Risk(s) faced by commercial banks
Operational risk
All available answers
Reputational risk
Market risk
2
Commercial banks as Authorised Deposit-Taking Institutions (ADIs) are
Permitted to take deposits only from wealthy investors
Prohibited from lending monies to government institutions
Permitted to take deposits from the general public
Prohibited from lending monies to Australian companies
3
Information barriers are designed to prevent insider trading in investment banks so that
No one in the public side enages in trading
Private side does not communicate inside information to the public side
No one in the private side receives inside information
Public side does not communicate inside information to the private side
4
An example of a non-financial risk is
Market Risk
Credit Risk
Liquidity Risk
Legal Risk
5
Rogue traders usually takes advantage of gaps and weaknessses in control systems
True
False
6
Which of the following statement(s) is accurate
There is no difference between the concepts of illegality and criminality
A gambling contract with Crown Casino in Melbourne is unenforceable
Gambling is a crime in Australia
Gambling contracts are generally illegal in Australia
7
Which risk were government regulators most worried about in the Global Financial Crisis?
Reputational risk
Market risk
Credit risk
Legal risk
Operational risk
Systemic risk
8
Proprietary trading
Trading on behalf of private companies
Trading on behalf of customers
Trading on own account
Trading on behalf of listed public companies
Trading between different parts of an invesment bank
Trading outside authorised limits
9
Twin Peaks model of regulation in Australia
Gives ASIC and APRA different aims & functions
Backed up by lender of last resort facility
Promotes competition and financial stability
Prohibits Australia’s largest 4 banks from merging with each other
10
Which of the following statements is accurate?
ASIC is solely responsible for prosecuting bank fraud
The Commonwealth Director of Public Prosecution regulates superannuation
Reserve Bank of Australia licenses Authorised Deposit Institutions
APRA and the Reserve Bank have joint responsiblity for financial stability
11
What type of risk(s) does the Barings Bank case illustrate?
Internal Fraud by an employee
External Fraud by a third party
Clients, Products and Business Practices
Execution, Delivery and Process Management
12
Rogue trading is
Unauthorised trading which may be a criminal offence
Unauthorised trading which must be a criminal offence
Unauthorised trading which only occurs with traders in investment banks
Unauthorised trading which always results in financial losses
13
What is/are the lesson(s) to be learned from the collapse of Baring Brothers?
Management must understand the risks faced by their trading teams
Regue trading can never be prevented
Management must understand money laundering risk
Rogue trading can only occur with the knowledge and consent of management

Topic 2 Non-Financial Risk, Banking and Regulation Flashcards | StudBud