Questions Without Answers For CySec Exam 1

Advanced Certificate Exam 1 (2018 Update)
1
Bank ABC monitors the potential for money laundering by its clients; however the degree to
which they monitor varies. To be compliant with regulations, the primary factor which
influences this variation should be?
1. The amount of investment involved

2. The type of financial instrument required
3. The nationality of the customer
4. The level of risk posed
2
A list of all persons employed who have access to inside information, is known as the insiders
list and must be available to the competent authority upon request and kept up to date. What is
the fine for not creating or updating this list to a natural person?
1. 1,000,000 EUR
2. 250,000 EUR
3. 500,000 EUR
4. 100,000 EUR
3
Law 87(I)/2017 only applies to third country firms if they:
1. Deal on their own account

2. Have a branch within the republic
3. Engage in high frequency trading
4. Undertake insurance activities
4
The outcome of the SREP will signify which of the following?
1. The new level of capital that a CIF should hold

2. a report that will define the risk profile of the CIF
3. how compliant is a company with the 144/2007 law
4. total turnover of the firm (CIF)
5
An AIFM that is responsible for multiple AIFs is required to maintain, with regards to liquidity
management which of the following?
1. A global liquidity management system and procedures for the leveraged AIFs but
separate systems for each unleveraged AIF
2. Separate liquidity management systems and procedures for each leveraged AIF but a
global system covering all unleveraged AIFs
3. Separate liquidity management systems and procedures for each AIF to ensure each has a
compliant liquidity profile
4. A global liquidity management system and procedures sufficient to monitor the total
liquidity risk of all AIFs
6
In the process of establishing a relationship with a client, the CIF should collect all necessary
information to what extent?
1. Depends size of client deposit

2. Might vary according to the CIF size and complexity of operations
3. Depends on the services offered by the CIF
4. Depends on the client’s requirements
7
In the case of a person failing to comply with the part of the law related to AML, such
as not reporting suspicious transactions, or not providing training to employees, etc.. the person
may be subject to a fine:
1. up to 350.000 euros and 1000 per day until the failure is rectified
8
The annual report submitted to CySEC by an AIF management company must be sent within
what time frame?
1. 6 months
2. 4 months
3. 3 months
4. 1 months
9
The risk of financial loss resulting from inadequate or failed internal processes, people and
systems or from external events falls under which type of risk?
1. Credit Risk
2. Settlement Risk
3. Operational Risk
4. Market Risk
10
When using scenario stress testing models to perform stress testing in regulated firms, there are
advantages and disadvantages. What could be the main disadvantage of using this method?
1. It is appropriate in all situations

2. It cannot reflect the real-life relationship between different real factors
3. It can be used anytime
4. It can appropriate to different factors of risk
11
Which of the below conditions should be met before a CIF can enter into an outsource
agreement?
1. CIF should first get CYSEC approval

2. The CIF needs to agree with the outsource who bears the responsibility
3. The should be a clause to be able to terminate the agreement at any time without or with
notice
4. The company should keep its obligation and agreements with clients unchanged
12
The ICAAP should prepared at least?
1. every 3 months
2. every 12 months
3. every 6 months
4. every 18 months
13
In relation to a VCIC, if the difference between the exchange price of the shares and the net
value of the shares is more than 5%, then:
1. that threshold is significant, however, the VCIC cannot step in and rectify the price
2. that threshold is not significant, only when it goes to above 10% it can step in
3. That threshold is considered significant and the VCIC should step in to rectify this
4. the share of the VCIC will automatically be suspended from trading on the exchange
14
The prospectus law applies to
1. non-equity securities issued in a continuous or repeated manner by credit institutions,

where the total consideration for the offer in the EU does not exceed the amount of
€75.000.000 over a period of twelve (12) months
2. ‘bostadsobligationer’ issued repeatedly by credit institutions in Sweden
3. equity securities issued by another member state
4. securities included in an offer where the total consideration of the offer in the EU is less
than €5.000.000 over a period of twelve (12) months
15
Which of the below statements is true: When investing, a UCITS cannot:
1. acquire precious metals or certificates representing them

2. deposit money in deposit in demand accounts witih maturity less than 12 months
3. invest in other UCITS
4. invest in transferable securities
16
In relation to publicizing personal transactions of managers and related persons, one of the below
is not obliged to publish his personal transactions:
1. Managers and senior managers

2. relatives of managers who lived for at least 6 months in the same household with the
manager
3. Spouses of manager
4. legal persons (companies) managed by the spouse of the manager of the issuer firm
17
When dealing with clients, any transaction which is larger than , the company should
apply additional due diligence.
1. 15 000 euros
2. 100 000 euros
3. 10.000 euros
4. 19 999 euros
18
Firm A receives an instruction to provide investment services on behalf of a client from Firm B.
Firm A then:
1. may rely on client information provided by Firm B

2. must provide the client with a report outlining the suitability of its recommendations
3. must make its own suitability assessment
4. assumes responsibility of the suitability of the services it provides
19
In an AIF, the responsible body/person for setting and reviewing staff remuneration is?
1. Board of directors
2. Remuneration committee whose members are part of the management but with non-
executive functions
3. Executive directors
4. Remuneration committee whose members are not part of the management
20
When preparing the ICAAP:
1. The compliance function is the main responsible department

2. The Internal Auditor is the main responsible person
3. Board of directors are the main responsible body
4. All the above departments should cooperate together
21
In relation to an externally managed AIF with portfolio of less than 250 million euros, the
minimum required capital is?
1. 150 000 euros

2. 125 000 euros
3. 200 000 euros
4. 300.000 euros
22
An AIFM must have the ability to reconstruct any transactions involving an AIF according to its:
1. Origin, parties, nature, place and time

2. Origin and time only
3. Nature, place and time only
4. Parties, nature and time only
23
Cysec is responsible for ensuring which of the following, with regards to the provision of
investment services by authorized firms?
1. The sound and prudent management of all CIFs

2. The compliant arrangements of all ACIs
3. That the strategies and processes implemented by CIFs are reviewed every 2 years
4. That all CIF authorisations, rejection and revocations are communicated to European
Central Bank
24
Issuers of share are obliged to treat all shareholders who are in the same position equally. They
must also ensure that:
1. The exercise of shareholders right by proxy is prevented

2. Information is available online to enable overseas shareholders to exercise their rights in
the Republic
3. The integrity and safety of data is preserved
4. Basic facilities are available on demand to enable shareholders to exercise their rights
25
Securitization risk is defined as:
1. being represented by the effect of a security arrangement failing, or of the values and
risks transferred not emerging as expected on the financial position of a CIF
2. foreign exchange risk
3. a risk concentration in any single exposure or group of similar exposures
4. occurring for example, as a result of the low performance or failure of credit risk
mitigation techniques such as ineffective documentation
26
Quote stuffing is defined as:
1. submitting multiple orders often away from the touch on one side of the order book, with
the intention of executing a trade on the other side of the order book. Once that trade has
taken place, the manipulative orders will be removed.
2. entering small orders to ascertain the level of hidden orders, particularly used to assess
what is resting on a dark platform.
3. entering large numbers of orders and/or cancellations/updates to orders so as to create

uncertainty for other participants, slowing down their process and to camouflage their
own strategy.
4. entry of orders, or a series of orders, intended to start or exacerbate a trend, and to

encourage other participants to accelerate or extend the trend in order to create an
opportunity to unwind/open a position at a favourable price.
27
A risk register is:
1.
2. the registration of all risks with MOKAS
3. risk that results from not registering all transactions on books
4. used by a CIF to document and categorise all risks that it is, or could be, exposed to in
the future.
5. the registration of all risks with CySEC
28
In order for a master UCITS to have the ability to raise capital from other investors, it must have
at LEAST how may feeder UCITS?
1. 3
2. 4
3. 2
4. 1
29
One of the below is not a part of the five stages in the SREP process:
1. Identifications of risks
2. Planning
3. Review of additional information

4. Review and assessment of ICAAP submission
30
Margo wants to increase the % number of shares he holds in a company which gives him voting
rights from 2.25 % to 4.5% in the 1st quarter. He then decides to double it again in the 2nd
quarter to 9%, this pattern of also continued with 18% in the 3rd Quarter and again to 36% in
the 4th Quarter. Which of the following applies?
1. No notification is required
2. A notification is required in Q2 and Q4 only
3. A notification is required in all quarters
4. A notification is required in Q2, Q3 and Q4 only
31
An AIFM licensed in the republic must inform CySEC of changes to its voting rights when it
acquires a non-listed company, within 10 working days; given the voting rights crossed which of
the following levels?
1. 10,20,30,50,70%
2. 10,20,30,50,75%
3. 10,20,30,40,,50 %
4. 10,20,30,40,50,75%
32
The SREP is conducted?
1. every 6 months
2. Annually, but with reviews
3. One time, but periodic reviews should follow
4. Annually
33
CTPs will need to make trading information available free of charge including whether a
computer algorithm was responsible for the investment decision and whether the transaction was
subject to any waivers, within (or at)
1. 24 hours after publication
2. beginning of the next trading day
3. 15 minutes after publication
4. the end of the next trading day

34
A financial transaction was carried out by a CIF for one of its clients. What is the minimum
period that records of this transaction must be normally held?
1. 3 years
2. 7 years
3. 5 years
4. 1 year
35
In relation to disaster recovery, which of the following is true?
1. Disaster Recovery Plan is part of the Business Continuity Planning
2. Business Continuity Program is part of the Disaster Recovery Plan
3. Disaster Recovery Plan is part of the Business Continuity Program
4. Business Continuity Planning is part of the Disaster Recovery Plan

36
Legal requirements with regards to “Recovery Planning” clearly state that CIFs MUST maintain
a recovery plan that should be reviewed at least:
1.
2. Every 7 years
3. Every year
4. Every 5 years
5. Every 2 years
37
In the case a management company managing an AIF, the annual report should include all of the
following except?
1. Balance sheet
2. Immaterial changes to the fund
3. Total amounts of variable and fix remuneration paid to staff
4. Income and expenditure report

38
If a company managing a UCITS stops its activities for months, it license will be revoked.
1. 18 months
2. 12 months
3. 3 months
4. 6 months
39
An investment firm must maintain a capital ratio of CET1 not less than at least
1. 6.5%
2. 8%
3. 4.5%
4. 2.5%
40
In relation to UCITS, one of the below is not true:
1. Uses capital raised from the public
2. Operates on the principle of risk spreading
3. Sole object is the collective investment in transferable securities and/or other liquid
securities
4. Uses privately or publicly raised capital
41
During the SREP process, communication between the CIF and CySEC is?
1. continuous
2. only takes place at the begining of the process and at the end of the process
3. there is no communication at all
4. there is no communication until CySEC finalizes the process
42
In the case where an AIFM delegates one of its functions to a 3rd party and that 3rd part sub-
delegates it to a 4th party, given the competent authorities were notified, then who is the
responsible for the AIF and the investors?
1. The AIFM
2. The 3rd party which did the sub delegation

3. The 4th party which accepted the delegation
4. All parties
43
Financial instruments can be admitted for trading on numerous regulated markets if the issuer of
the instrument:
1. Has given its consent
2. Has a head office in the republic
3. Has appropriate risk management procedures in place
4. Has been informed
44
Layering and Spoofing can be defined as:
1. submitting multiple orders often away from the touch on one side of the order book, with
the intention of executing a trade on the other side of the order book. Once that trade has
taken place, the manipulative orders will be removed.
2. entering small orders to ascertain the level of hidden orders, particularly used to assess
what is resting on a dark platform.
3. entry of orders, or a series of orders, intended to start or exacerbate a trend, and to

encourage other participants to accelerate or extend the trend in order to create an
opportunity to unwind/open a position at a favourable price.
4. entering large numbers of orders and/or cancellations/updates to orders so as to create
uncertainty for other participants, slowing down their process and to camouflage their
own strategy.
45
Of the following combinations of directorships, which would be acceptable for the board of
directors of a CIF?
1. 1 executive and 3 non-executive directorships
2. 4 executive directorships
3. 3 executive and 1 non-executive directorships
4. 4 non-executive directorships
46
The ICAAP is created by?
1. ESMA
2. CySEC
3. the CIF
4. CBC
47
In the process of obtaining a license for a UCITS, CySEC needs to reply:
1. within 2 months for a common fund, or 6 months for a VCIC
2. within 6 months for a common fund, and 2 months for a VCIC
3. within 6 months for a VCIC and 12 months for a common fund
4. within 3 months regardless if it is a VCIC or common fund
48
A central counterparty (CCP) MUST publicly disclose which of the following?
1. Costs and revenues for each of their services
2. Any breaches that might seriously jeopardise the financial markets
3. Any breaches that constitute a threat to market confidence
4. Prices and fees for each of their services
49
New EU regulations regarding credit institutions, will finally aim for said institutions to reach a
certain liquidity coverage percentage. Institutions will be asked to hold extra capital that will
cover net liquidity outflows of what %?
1. 100%
2. 40%
3. 60%
4. 75%
50
With regards to conducting a suitability test, a company cannot decide on which individual to
apply the suitability test because the account is a joint account, in this case the suitability test can
be done on?
1. any one of the owners of the joint account
2. the person with the least knowledge in the related service / product
3. Both owners of the account
4. the person with the most knowledge in the related service / product
51
The minimum capital required by a management company managing a UCITS is?
1. 125 000 euros
2. 150 000 euros
3. 100 000 euros
4. 200 000 euros
52
Is the compliance officer responsible for writing new procedures and policies?
1.
2. Yes along with outsourced professional help.
3. No, he is responsible in the participation of establishing them.
4. No his assistant is responsible.

5. Yes
53
Issuers without listed equity will be deemed an SME if, according to their last annual or
consolidated accounts, they meet which of the following criteria
1. The average number of employees during the financial year is less than 250 and The total
balance sheet does not exceed 47 million EUR
2. The total balance sheet exceeds 43 million EUR and The annual net turnover does not
exceed 50 million EUR
3. The average number of employees during the financial year is less than 250 and The total
balance sheet does not exceed 43 million EUR
4. The total balance sheet does not exceed 43 million EUR or the annual net turnover does
not exceed 50 million EUR
54
AlphaCap UCIT a regulated UCIT in Cyprus wants to market and sell its units in Belgium, what
information regarding the units should be translated into French, given that the offical language
spoken in Belgium is French?
1. The product information
2. All marketing material including digital and printed
3. Only the Key investor information

4. Any information that might be required by the regulator in Belgium
55
Training and maintenance of staff competence fall on the shoulders of the?
1. Compliance officers
2. Heads of departments
3. Human Resources
4. Board of Directors
56
Risks that may arise from providing investment advice fall under:
1. Compliance and legal risk
2. Strategic risk
3. Reputational risk
4. Group risk
57
People who produce or disseminate investment recmmendations must disclose which of the
following:
1. Any potential conflicts of interest
2. The complaints policy of the firm
3. How they are remunerated

4. How they are qualified to give such recommendations
58
When providing investment advice to clients, records should be kept showing which of the
following?
1. Any de-investment and investment advice provided
2. Any investment advice provided
3. Any de-investment advice provided
4. no records are needed, especially if client did not follow the advice
59
Regulations of the EU state that counter clearingparties (CCPs) MUST hold capital that is:
1. In excess of 10 million Euros
2. Sufficient to meet short term obligations
3. Sufficient to ensure an orderly wind-down or restructuring of activities
4. In excess of 15 million Euros
60
The SREP is part of the risk based approach that:
1. licensed firms follow
2. CySEC follows
3. ESMA follows
4. the CBC follows

61
A Consolidated Tape Provider (CTP) MUST make published transactional information available
within what MAXIMUM amount of time?
1. 10 minutes
2. 5 minutes
3. 15 minutes
4. 20 minutes
62
After implemeting management decisions and actions, a CIF should carry out the same stress test
in order to?
1. No need to run again.
2. Help in re-evaluating the ICAAP.
3. Observe changes on the impact.
4. No need until the end of the year.
63
Sensitivity analysis is:
1. based on less complex methodologies, the sensitivity analysis illustrates how a CIFs
position changes in the event a single relevant risk factor is modified, while all other
factors remain equal.
2. primarily designed to be a risk management tool for the identification of vulnerabilities

and defects in the business model, reverse stress testing requires a CIF to assess scenarios
and circumstances that would render its business models nonviable
3. analyzing sensitivity of a CIF to market volatility
4. assumes the simultaneous change of several risk factors and quantifies their combined
impact on the position of a CIF
64
If a customer opening an account with a firm lives far away from the bank involved, then:
1. References should be obtained
2. This transaction should be treated as suspicious
3. This transaction should be registered with the CBC
4. Simplified due diligence should apply
65
Potential clients of a firm MUST be provided with what comprehensive information?
1. Investment performance
2. Regulatory status
3. Costs and Charges
4. Use of third parties
66
In the case of a violation of obligations of a depository that led to the loss of investors funds
which owned units of a UCITS, then the liability of this violation falls on which of the
following?
1. The management company which chose the depository
2. The depository itself
3. The shareholders of the UCITS

4. The Directors of the UCITS
67
Disclosure of information for issuers should be done as soon as possible. The issuer can still
delay the disclosure if?
1. the board of directors decides at its own discretion no to
2. it is done in order to for the company to make profit, and thus investors will benefit
3. There are ongoing negotiations, where the outcome of it can be affected if the
information is disclosed
4. the information can harm the public
68
The main difference between a common fund and a VCIC which fall under UCITS law, is that:
1. a VCIC needs a management company while a common fund does not need
2. there are no differences
3. a common fund can be run from inside, while a VCIC needs a separate management
company
4. a VCIC capital and investments are based on shares, while a common fund is units
based
69
Which of the following functions of a CIF cannot be combined?
1. compliance and AML
2. Management and compliance
3. Compliance and Internal Audit
4. Management and AML
70
CySEC must ensure that any individual acting on behalf of a CIF is:
1. Under the age of 60
2. Reasonably solvent
3. Over the age of 21
4. Sufficiently knowledgable
Advanced Certificate Exam 2 (2018 update)
1
The obligation for the issuers of financial instruments to make inside information public as soon
as possible only applies to instruments which are:
1. Traded on a regulated market
2. In an ongoing negotiation
3. Listed within the republic
4. Derivatives
2
With regards to client order handling rules, a firm may be permitted to aggregate client orders
with own account transactions if:
1. The firm's order proceeds the the client order
2. CySEC is informed prior to the trade
3. The client is a professional
4. It is disclosed to all parties

3
A newly established UCITS in the republic is preparing its reports, procedures and policies. It is
also accountable for Synthetic risk and reward indicators, these are calculated in order to?
1. Enhance the risk management function of the UCITS
2. Provide a meaningful indication of overall risk and rewards
3. Smooth the profits paid out by the UCITS to clients
4. Provide a benchmark for actual performance
4
A newly established CIF has appointed its compliance officer, one of his first jobs is to allocate
the resources provided by the company, in order to allocate the resources efficiently he needs to?
1. Take a risk-based approach
2. Take an equality based approach
3. Keep evidence that the allocation is fair
4. Rely on information obtained from the Risk Management Committee

5
In order to be compliant with regulations, the risk management function of large banks MUST
normally:
1. Be led by a board director
2. Operate on an independent basis
3. report directly to the CBC
4. Update the procedure manual at least every six months
6
Shares of ABC are listed on a regulated market. In order to comply with regulations with regards
to these shares, which of the following details MUST be made public through the trading
systems?
1. Names of the issuers board of directors
2. Independent credit risk rating
3. Depth of trading interest
4. Price growth performance statistics

7
A CIF has various risk typologies covered in PIllar 1 and Pillar 2 of the CRD and Basel Accord.
which of the following risk typologies are not fully covered in Pillar 1?
1. Operational risk
2. Residual risk
3. Credit risk
4. Market risk
8
Bank XYZ has raised concerns regarding its operations; the CBC has requested they increase
their share capital by 12% within the next 10 days. However despite doing this the bank was in
breach of the regulations in relation to this because it failed to:
1. Convene an extraordinary general meeting of the shareholders
2. Notify customers of this change
3. Register a recovery plan with CySEC
4. Conduct a dividend audit

9
Golden Star FX is a CIF which has been operating for 5 years. It can be considered they suffer
from strategic risk if they:
1.
2. Take actions which lead to sanctions from CySEC
3. Needs to raise assets on short notice at high costs
4. Responds too slowly to changes in its market sector
5. Becomes associated with the act of money laundering activity by any means
10
All investment firms in the republic are obligated by law to produce an ICAAP report. It is an
vital process for the firm and should be?
1. For the preparation for supervisory visits only
2. An integral part of the risk management practices of the firm
3. For the monitoring of the compliance function
4. Part of the bonus assessment process
11
The obligation to make pre-trade information available can be waived under certain conditions,
however, is capped at
1. to 5% of total volume in the financial instrument to which the waiver applies on all
trading venues in the EU over the previous 12 months.
12
In order to properly detect any risk of failure by the investment firm to comply with its
obligations the compliance function should identify the level of compliance risk the investment
firm faces, taking into account, among others, which of the following?
1.
2. The performance of the portfolio management department
3. The experience of the members of the board of directors
4. The frequency of the board meetings
5. The types of financial instruments traded and distributed
13
A compliance officer working in a CIF needs to ensure that the focus and the scope of
compliance monitoring and advisory activities remain valid, in order to successfully accomplish
this what needs to be done?
1. The compliance risk assessment needs to be performed regularly

2. The compliance risk assessment needs to be performed at least on an annual basis
3. The compliance risk assessment needs to be performed at least on a monthly basis
4. The compliance risk assessment needs be proportionate to the nature, scale and
complexity of the activities of the business
14
Of the following statements which is TRUE regarding the appointment of special administrators?
1. The resolution authority may only appoint 1 person
2. A special administrator is appointed by the resolution authority for a period not

exceeding 1 year.
3. During their term, they have only restricted access to institutional data
4. Their remuneration will be paid by the resolution authority
15
Company XYZ has decided to employ a risk register. The risk register is maintained by a firm in
order to help with which of the following?
1. Register Pillar 2 risks
2. Categorize all risks they are exposed to

3. Identify operational risk
4. Measure material risks
16
An the capital of an SME who shares have been trading for 16 month, is calculated taking into
account
1. Open share price of the first year of trading
2. Closing share price of the first day of trading
3. Last closing share price of the first year of trading
4. average of the opening price of first year and close price of first year
17
An ACI operating in the republic is starting to decline in value. The CBC has special measures in
place in order to protect clients of this bank, and they are ready to implement these measures
when the economic value of the bank declines by what % of their capital?
1. More than 10% of their own capital

18
A management company from another member state operating in the republic has refused to
comply with a request from CySEC. CySEC stopped the company from undertaking anymore
activities within the republic. In order for this to have occurred CySEC first MUST have:
1. Consulted with the European Securities and Markets Authority (ESMA)
2. Informed the competent authorities in the home member state
3. Appointed an alternative management company
4. Ensured appropriate investor protection measures are in place
19
When CIFs, UCITS, Hedge funds etc enter into OTC derivatives transactions, the collateral used
to reduce counterparty risk exposure?
1. Shall not meet any criteria
2. Shall meet criteria regarding issuer credit quality, liquidity correlation and
valuation
3. Shall meet criteria regarding issuer credit quality and liquidity
4. Shall meet certain unspecified criteria

20
A CIF is obligated to conduct suitability test for all its prospective clients, how often must this
information be updated?
1. Must be updated the same for all types of clients
2. Differs between individual clients and legal persons
3. Varies based on the client's risk profile
4. Depends on how often the client visits the bank
21
Invicta trading ltd has been lucky to gain clients of all size and their profits are soaring, they
employ simplified due diligence measures mainly because their clients are?
1. Credit and Financial Institutions
2. Other CIFs
3. Private Company Pension Funds
4. Supermarkets
22
The European Securities and Markets Authority (ESMA) was recently implemented in order to
safeguard the stability of financial markets in emergency situations by doing which of the
following?
1. Ensuring consistent application of Union rules by national supervisory authorities
2. Allowing national supervisory authorities to develop their own rules
3. Acting as the CCP in transactions between national supervisory authorities
4. Appointing a third party to settle disputes between national supervisory authorities
23
Customer X and Customer Y are both customers of the same CIF and both invest in the same
financial product however Customer X requires enhanced due diligence, why would this occur?
1. Customer Y is under the age of 25
2. Customer X is investing for the longterm from China
3. Customer X is over age of 65
4. Customer y is investing for the shorterm within Cyprus

24
Which of the following methods can normally be used by a Variable Capital Investment
Company (VCIC) to decrease its capital?
1. Converting the existing structure into a common fund structure
2. It is not permitted to decrease the capital
3. Repurchasing existing shares
4. Issuing a new class of shares
25
A firm operating in the republic has recently been observed to be encountering various types of risk
factors. One of these is Market risk, or the risk of loss due to adverse market conditions this can also be
known as?
2. Business risk
3. Diversifiable risk
4. Systemic risk
26
The transparency requirements applicable to systematic internalisers can be waived or deemed not
applicable if the sizes in which they deal:
1. Are above standard market size
2. Are more than double the minimum quote size
3. Are below standard market size
4. Are more than three times minimum quote size
27
An investment firm is obligated to have proper and efficient risk management processes in place for all
aspects of the business. The risk resulting from inadequate or failed internal processes, people, and
systems or external events is known as?
1. Liquidity risk
2. Residual risk
3. Market risk
4. Operational risk
28
All investment firms seeking to operate out of the republic must go through the SREP phase Review and
Assessment of ICAAP which is carried out by CySEC. With regards to this process CySEC typically
undertakes ?
1. The reviewing of additional information
2. Assessment of supervisory measures
3. A desk-based research of the ICAAP process
4. General research of ICAAP processes in different firms
29
When a CIF has indirect, and synthetic holdings of the common equity and additional Tier 1
instruments, and Tier 2 instruments of financial sector entities where those entities have a reciprocal
cross holding with the CIF and the Commission considers them to have been designed to inflate
artificially the own funds of the CIF, as memorandum items, then for the purpose of caluclating their risk
weighted average, a percentage of needs to be applied
•to the greater of:
1. the amount of qualifying holdings in financial sector entities and non-financial sector entities that are
considered a direct extension, an ancillary of banking, or leasing, factoring, management of unit trusts or
data management in excess of 15% of the CIFs eligible capital
2. total amount of qualifying holdings of an institution in undertakings other than those referred to in
point 1 that exceeds 60% of the CIFs eligible capital.
1. 6.5%
2. 2.5%
3. 12.5%
4. 4.5%
30
A CIF is trying to decide whether to hire an internal compliance officer or to outsource one, In the event
the compliance function is outsourced, what is the main requirement of the compliance ?
1. The investment firm should not allowed access to all relevant information
2. It may not be permanent in nature
3. The service provider should be able to perform the function on an ongoing basis
4. It is the responsibility of the investment firm to ensure that the service provider perform the
function only in specific circumstances
31
Which of the following would be considered Pillar 2 risks?
2. Legal entity risk
3. Concentration risk
4. Operational risk
32
Issuers of securities are obligated to publish a prospectus for an offer of securities which is more than:
1. 7,000,000 Euros over a period of 24 months

33
The compliance function within his duties of working for a CIF must also support staff with any required
trainings. These trainings and support should:
1. d. focus, but not exclusively, on internal policies and procedures
2. be given priority than risk assessment
3. focus exclusively on internal policies and procedures
4. focus exclusively on law and associated directives and other relevant supervisory and regulatory
requirements
34
With regards to waivers for pre-trade info, and specifcally for volume caps, once the volume cap is
exceeded, the waiver shall be suspended for the period of
1. six months within two days of the limit being exceeded.
2. three months within three days of the limit being exceeded.
3. six months within three days of the limit being exceeded.
4. three months within two days of the limit being exceeded.

35
Company A has entered into an agreement to sell Company B 10,000 Barrels of WTI Crude Oil. The risk
that one party fails to deliver the asset or cash value at the time of settlement is known as?
1. Foreign exchange risk
2. Settlement risk
3. Liquidity risk
4. Operational risk
36
Every CIF or Credit institution must employ an adequate Risk Based Approach (RBA) to handling
potential risks that may arise in their operations, which of the following situations is not applicable to
RBA?
1. RBA recognizes that money laundering and terrorist financing vary across financial instruments
2. RBA recognizes that all customers have the same money laundering and terrorist financing
risk
3. RBA recognizes that money laundering and terrorist financing vary across customers
4. RBA recognizes that money laundering and terrorist financing vary across services
37
When a compliance officer is appointed in a CIF he is obligated to provide reports to the board of
directors how often?
1. At least annually and, if necessary, more often
2. At least every quarter of operations and, if necessary, more often
3. At least once per month and, if necessary, more often
4. At least Bi-annually and, if necessary, more often
38
Market makers are otherwise referred to as systematic internalisers and are required under the MIFID
pre-trade transparency law to?
1. Disclose the prices at which they are willing to buy from and/or sell to their clients
2. Disclose the prices at which they are willing to sell to their clients
3. Disclose the prices at which they are willing to buy from clients
4. Disclose what ever information they want
39
Company CFE LTD has shares currently trading on a regulated market. What is the MAXIMUM amount of
new equity that can be issued in a 12-month period WITHOUT them being obliged to issue a prospectus?
1. 10% of the same class of shares
2. 10% of any class of shares
3. 5% of the same class of shares
4. 5% of any class of shares
40
CySEC has just set a CIFs capital resource requirement as part of the SREP. What is CySECs next key stage
in the process?
1. Conducting the inspection visit
2. Requesting additional information
3. Internal validation of the results
4. Undertaking a desk based review
41
Stress tests are employed by various firms, institutions and and even governments. With regards to
firms they are designed to illustrate the impact on a firm’s position and how it changes in the event that
a single risk factor is modified, this is known as:
1. Back testing
2. Sensitivity analysis
3. Scenario analysis
4. Stressing analysis
42
A major feature of the ICAAP report is to help ensure CIFs are able to hold the appropriate level of ?
1. External capital in relation to liquidity risk
2. Internal capital in relation to its risk profile
3. Regulatory capital in relation to market risk
4. Equity capital in relation to credit risk
43
Various financial instruments are available from numerous global financial markets for the purpose of
trading, investing or speculation. Some of these instruments are called Over The Counter (OTC)
derivatives. However OTC derivatives are not considered suitable for Central Clearing Counterparties
(CCCP) because they entail which of the following?
1. Market risk
2. Counterparty credit risk and operational risk
3. Counterparty credit risk
4. Credit risk
44
Which of the following would be a reason a CIF would want to review its ICAAP within a short period of
time?
1. To validate its business recovery planning
2. To correspond with staffing levels
3. To reflect changes in its operating environment
4. To maximize cost efficiencies
45
An ACI operating in Cyprus has been investigated by the CBC and has been found to be acting unfairly to
its clients and to be soliciting funds that are in direct violation of the AML laws in place. The CBC within
its powers has the right to?
1. Require the removal of any director, chief executive or manager
2. Prohibit ACIs on the granting of credit of more than €100.000
3. Prohibit ACIs from negotiating with customers
4. Prohibit ACIs from soliciting deposits up to €100.000
46
An AIFM with third country owners is planning to open in Cyprus in order to offer services freely to
member states. In order to be granted authorization by CySEC which of the following criteria must be
satisfied?
1. Have a head office in the Republic

2. Has sufficient resources
3. To be controlled by persons of good repute and sufficient experience
4. Have shareholders that are suitable to ensure sound and prudent management
47
A CIF is entering into an agreement with a legal entity, the firm needs to assess suitability of the most
appropriate person. If there is no agreement on the most appropriate person, the most relevant person
in this respect is the person with?
1. Most experience and knowledge
2. Most seniority in the organization
3. Weakest financial situation
4. Risk-neutral risk objectives
48
An AIFM needs to have sound and prudent risk management. Which of the following must be
implemented in the risk management procedures?
1. Be functionally segregated from the operating units
2. Focus only on the main risks associated with the AIFs
3. Have a generic risk management system
4. Avoid using collateral and guarantees

49
Various types of risk can arise when a firm is operating, especially when it deals with financial
instruments. Liquidity risk is defined as the risk that changes in market conditions and affects the firms
the ability to?
1. Find new investment opportunities
2. Liquidate assets with minimal loss of value
3. Enter into foreign exchange transactions
4. Appropriately assess credit risk
50
The outcome fo the SREP for two CIFs has shown different subsequent periodic review time frames.
What is the most plausible reason for this?
1. The turnover of their business
2. Their respective risk profiles
3. Their Pillar 2 capital requirements
4. The dates of their previous reviews

51
A compliance officer has identified in his annual report various weaknesses and deficiencies, which of
the following people within the CIF are deemed as responsible for remedying these issues?
1. The compliance officer
2. The internal Auditor
3. The Risk manager
4. The Board of Directors
52
A CIF has observed that customer X and customer Y have taken on some trades in the same financial
instrument that is considered illiquid or a risky financial instrument. However they have asked for
additional information from X as the CIF believes he is not suitable for this specific investment where as
Y is. Why would this occur?
1. Customer Y has more work experience than Customer X
2. Customer X has a larger total income than Customer Y
3. Customer X has More work Experience than Customer Y
4. Customer Y has a larger total income than Customer X
53
In the case where a CIF requires relevant personnel to perform multiple functions, what do
organizational requirements oblige them to ensure?
1. Each separate function continues to be performed soundly and professionally

2. The internal audit function verifies the soundness of the performance at least half-yearly
3. The business continuity plan guarantees the ability to maintain constant levels of service
4. Each function is reported individually as if performed by independent personnel
54
CySEC has found an MC authorized in the republic to manage a UCITS of another member state to be
performing illicit activities which may lead to fraud, hence they have decided to withdraw their license.
In order to do so they must ?
1. Notify the MC
2. Consult the competent authorities of the UCITS member state
3. Notify the UCITS
4. Notify both the MC and the UCITS
55
A firm operating in the republic has decided to outsource their ICAAP process, the responsibility and
accuracy of the ICAAP report following the outsource agreement then lies with?
1. The supervisory authority
2. The third party to whom it is outsourced
3. The firm
4. The firm and the third party to whom it is outsourced
56
Conflicts of interest is a main concern of all companies offering financial services with regards to AIFMS,
in which situation should they take reasonable steps to identify conflicts of interest?
1. Customers of an AIF not managed by the AIFM
2. The AIFM and an AIF managed by another AIFM
3. Unrelated clients of the same AIFM
4. Employees of the AIFM and customers of another AIFM
57
A CIF in the republic is planning to expand its operations to include portfolio management. In order to
employ efficient portfolio management techniques these techniques shall:
1. be disclosed upon the request of the CySEC
2. not be disclosed to investors
3. be disclosed upon the request of an investors
4. be disclosed in the prospectus along with a description of the risks involved
58
Which of the following reports would be the most important to be published by an AIFM for public view
and to satisfy regulatory authorities?
1. Compliance report
2. Investment report
3. Risk management report
4. Balance sheet or statement of assets and liabilities
59
An SME growth market can lose it status if the number of issuers admitted falls below
1. 50% for at least 3 consecutive years
60
A compliance officer has many tasks when working for a CIF one of these tasks is producing numerous
reports and implementing them. Which of the following is not a report made by the compliance officer?
1. Requirements for simplified and enhanced due diligence when entering into a relationship with
the customer
2. How to classify customers into retail, professional and eligible counterparties
3. A policy for customer acceptance

4. How to deal with suspicious transactions
61
A newly established AIFM in the republic is trying to decide whether to proceed with internal or external
management of the fund. If they decide to keep the management internal what would be their capital
requirements?
1. €125.000 for portfolio value less than €250 million
2. Additional 0.04% of the amount by which the €250 is exceeded with a maximum of €20 million
62
Customer X of Investa Trading Ltd has taken various trades over his history however recently he took
some trades that caused Investa to block and cancel some of these trades automatically, why did this
occur?
1. The CIF has no right to block or cancel any trades
2. The trader is not permitted to trade in these instruments
3. The orders had not been reported to CySEC
4. The orders were outside his predefined prize or size parameters

63
What is the MAXIMUM percentage limit a UCITS can invest in an OTC derivative transaction in which
the counterparty is a credit institution?
1. 20%
2. 30%
3. 5%
4. 10%
64
The purpose of the SREP is to ensure:
1. Clients receive suitable advice
2. CIFs have sufficient capital
3. Markets are fair and orderly
4. Robust business continuity planning

65
A master UCITS in the republic is trying to decide whether to merge and grow larger or split to better
handle risk exposure. Regardless of the outcome of the decision, how much notice must be given to
CySEC and or Unit holders of the UCIT with regards to the decision?
1. At least 30 days notice must be given to the CySEC and unit holders
2. At least 30 days notice must be given to the CySEC
3. No notification must be given to the CySEC
4. At least 60 days notice must be given to the CySEC and unit holders
66
It is well known that CIFs must conduct suitability tests for their clients, information regarding the
suitability assessment should be included in the information provided for clients for which of the
following financial services?
1. Reception and transmission of orders and Execution of orders
2. Portfolio management only
3. Investment advice and portfolio management
4. Reception and transmission of orders, Execution of orders, investment advice and portfolio
management
67
The purpose of the Supervisory Review and Evaluation Process (SREP) is to ensure that CIFs have
sufficient capital to support all?
1. Immaterial risk
2. Market risk
3. Operational risk
4. Material risk
68
A counter clearingparty (CCP) recently discovered it needs to access credit in order to meet liquidity
requirements, what is the Maximum percentage it can borrow from a single clearing member?
1. 25%
2. 10%
3. 50%
4. 75%
69
In the event that a transaction takes place between an AIF and its investment advisor, an independent
expert will be brought in to value the assets involved. Who is normally responsible for nominating the
independent expert?
1. The fund trustees
2. The investment advisor
3. The depositary
4. CySEC
70
A CIF operating out of the republic is responsible to inform CySEC when the outcome of the SREP:
1. Is expected to fall below the capital requirements set by the SREP
2. Both A and B above
3. Is below the capital requirements set by the SREP
4. None of the above

Advanced Certificate Exam 3 (2018 update)
1
The compliance department of Topline Trading Ltd has
decided its monitoring activities will be solely desk based,
this action can be considered to:
1. Be acceptable if it covers 3 month time frames.
2. Be acceptable if qualitative and quantitative data is included.
3. Cause an inspection from CySEC.
4. Be in breach of general guidelines.
2
The compliance/AML function has to carry out sample
testing of transactions for terrorism financing, this should be
carried out:
1. At least annually.
2. Based on the perceived level of Risk.
3. On a random basis.
4. Based on the directives provided by the regulator.
3
In order to operate effectively and efficiently and more
importantly to comply with regulations the risk management
function of a large bank must usually?
1. Must report directly to the CBC.

2. Conduct its operations on an Independent basis.
3. Must be headed by a board director.
4. Update it risk procedure manual semi annually.
4
CySEC has the power to withdraw a CIF authorization
based on certain circumstances such as: Providing false or
misleading information during the authorization process.
Which of the following is not considered a circumstance for
withdrawal?
1. The CIF no longer meets the conditions which authorization was

granted.
2. The CIF has systematically infringed the laws and regulations.
3. The CIF has not used it license for 6 months.
4. The CIF falls under different Cypriot legislation outside the scope of this
investment services law.
5
Under MIFID with regards to the application of the
transparancy and market integrity rules what is is
considered to be of signifigance to European wholesale
markets?
1. These Markets are not subject to pre-trade transparency rules.
2. The requirement to disclose prices applies for orders placed outside

regulated markets.
3. These markets must disclose prices especially if the risk level is
deemed significant.
4. The threshold is above the market average which pre-trade

transparency rules apply.
6
Sailor Fx has had its authorization withdrawn, within what
time frame must they settle their obligations?
1. Within three months of receiving the notification from CySEC.
2. Within six months of receiving the notification from CySEC.
3. Within 12 months of receiving the notification from CySEC.
4. Within one month of receiving the notification from CySEC.
7
Savine Investments Ltd is a legally registered UCIT
operating out of Cyprus. They decide to invest in bonds
which have been issued by Deutsche bank. What is the
maximum percent of assets they can invest?
1. 20%
2. 15%
3. 25%
4. 10%
8
With regards to SREP, CySEC has just sent the CIF Rubiks
Cube Investments Ltd their capital resource requirement.
What is CySEC's next stage in the SREP process?
1. Requesting additional Information.
2. Conducting the inspection visit.
3. Undertaking a desk based review.
4. Internal validation of the results.
9
One of the functions of the compliance officer is to provide
training to the company staff he works for. How should this
training be provided?
1. Delivered as appropriate.
2. To department by department.
3. To heads of departments.
4. One on one.
10
How many directors are required by CySEC to constantly
run the daily operations of a CIF and be part of senior
management?
1. 2 and when needed 3

2. 1 and when needed 2
3. 2
4. 1
11
Golden Gate FX has been active for 2 years and their
business is growing. They have decided to hire managers to
help oversee their daily functions. This new staff must
receive training about the ICAAP report, who is responsible
to provide the training?
1. CEO
2. Risk Manager
3. Compliance Officer
4. Board of Directors
12
UCITS implement a synthetic risk and reward indicator
methodology which is based on the volatility of the fund. The
volatility period covered is usually for how many previous
years?
1. 5 Years
2. 10 Years
3. 7 Years
4. 3 Years
13
The finance function for Capital Gains Ltd a CIF is preparing
the firms capital plan for the Internal Capital Adequacy
Assessment Process, in order to comply with the regulations
set out by CySEC the finance function should:
1. Forward the results to their external auditor for approval.
2. Propose a Pillar 1 or Pillar 2 Capital allocation based on the nature of

the business.
3. Co-Ordinate with the risk management function.
4. Submit their results to CySEC within 28 days of calculating their final

results.
14
Julia is a senior level manager in QWE investments limited.
QWE is the issuer of a financial instrument named OKM. If
Julias spouse purchases shares of OKM for his personal
account at 13:00 on Thursday, the transaction must be
published by the latest?
1. 15:00 on Thursday.
2. 17:00 on Thursday.
3. By the end of the next working day of the stock exchange.
4. Before the start of the next working day of the stock exchange.
15
GI Investments is an issuer of a financial instrument, they
have been permitted to delay the disclosure of inside
information by CySEC, this happens in the case where?
1. It may influence the outcome of ongoing business negotiations.
2. Volatility will ensue following the release of the information causing the
price to fluctuate.
3. Members of the Staff are being investigated for criminal offences.
4. It has been discovered that some of the information has already been
leaked.
16
A Cyprus AIFM has outsourced a German company for a
certain function, this 3rd Party company has sub-delegated
this function to a 4th party in the UK. Which regulator needs
to be informed?
1. German Regulator (BAFIN)
2. Central Bank of Cyprus
3. UK Regulator (FCA)
4. Cyprus Securities and Exchange Commission (CySEC)

17
Each company planning to become a CIF must submit an
ICAAP report at the beginning of the SREP process, who
does this responsibility fall on?
1. The Board of Directors.
2. Risk Manager.
3. The consulting company helping.
4. The compliance officer.
18
With regards to stress testing firms can implement scenario
analysis. What is the main disadvantage associated with
this testing method?
1. It cannot use all appropriate factors in combinations.
2. Total business failure situations are applicable.
3. Real-life interrelationships between factors are not accurately

reflected.
4. It requires more repeat testing than other methods.
19
•When competent authorities in an equivalent third country
assign a risk lower than 100% to central banks or lower than
the rate for the quality step in the table below for exposures
to their central government and central bank denominated in
domestic currency, CIFs may assign the same risk weight to
these exposures, where a Credit Quality Step 1 is equal to
risk weight.
1. 40%
2. 30%
3. 20%
4. 0%
20
GRIP Investments Ltd is a legally registered UCIT
operating out of Cyprus. They decide to invest in money
market instruments in France. What is the maximum percent
of assets they can invest?
1. 10%
2. 20%
3. 35%
4. 40%
21
When implementing an AML policy, which of the following
statements is/are correct?
1. All clients should be high-risk
2. All non face to face clients are high risk
3. Face to face clients are low risk.
4. All clients from a specific country can be high risk
regardless if face to face or not.
1. 2 + 4
2. 1 + 2 + 3 + 4
3. 2 + 3 + 4
4. 2 + 3
22
Which of the following risks falls under Pillar 2?
1. Securitization risk
2. Credit Risk
3. Market Risk
4. Liquidity Risk
23
What is the maximum variable remuneration that can be
voted upon by the shareholders?
1. 200%
2. 300%
3. 150%
4. 100%
24
An Alternative Investmend Fund (AIF) must perform a
valuation of assets and net asset value per unit with a
minimum frequency of at least?
1. Once a month.
2. Once every six months.
3. Once a year.
4. Once a week.
25
Clean Returns Ltd is a CIF providing execution-only
services, however they are likely to be exposed to legal and
compliance risk if they?
1. Fail to execute orders as instructed.
2. Execute orders fro products which are not deemed the best in the
market.
3. Execute orders which are linked to products that are not performing
well.
4. Do not provide the opportunity for investment advice.
26
What is the best way to correctly describe the required
working relationship between the risk management
department of an AIFM and the operating units of an AIFM?
1. Functionally segregated.
2. The risk management department manages the operating units.
3. Horizontally integrated.
4. The operating units manage the risk management department.
27
For large exposures and In the event the client is an
institution, or where a group of connected clients includes
one or more institutions, the value of the exposure may not
exceed or
1. 25% of eligible capital and 150 million euros whichever higher
3. 25% of eligible capital and 150 million euros whichever lower
28
Bank of Cyprus is planning to issue marketing material for
the "Key Investment Fund". The Key Investment Fund has
been operating for nearly 30 years. With regards to past
performance to be published, the amount of time to be
covered must be a minimum of?
1. 2 Years
2. 5 Years
3. 25 Years
4. 10 Years
29
BNQ Capital has deemed that a high risk product is
appropriate for Client A, whereas a low to medium risk
product is suitable for Client B. It is likely that when
obtaining information from the clients:
1.
2. A will need to invest for a shorter period than that of B.
3. B will not need to justify affordability wheres A will have to.
4. B will need to confirm the product is suitable whereas A will not need to
confirm.
5. A will need to provide more in-depth details to that of B
30
The board of directors of SigmaPi investments Ltd a CIF
have decided to cut the compliance functions budget by
40%. According to the general guidelines what should the
board do?
1. Document in writing an explanation of the boards decision.
2. Notify CySEC of the budget cut.
3. Increase its risk assessment frequency.
4. Invite the compliance officer to justify not cutting the budget.

31
When a CIF implements electronic trading systems, they are
obligated to retain records for:
1. 7 Years
2. 5 years
3. 10 Years
4. 3 Years
32
What is the percentage that local goverments can increase
the systemic risk buffers without CySEC approval?
1. 4.5%
2. 1%-3%
3. 5%
4. 2.5%
33
According to regulations set out by CySEC, when a CIF
deals on own account with regards to a financial instrument
this activity is classified as a:
1. Investment activity.
2. Non-liable activity.
3. Non-regulated activity.
4. Semi-regulated activity.
34
A bank in the republic has executed an order on behalf of
one of their retail clients, no third party is involved,
confirmation of the order must be issued to the client by the
maximum of what business day?
1. Four business days.
2. The next business day.
3. Three business days.
4. Two business days.
35
Local regulators in the EU can demand from CIFs and
Banks to apply an additional capital buffer required to
cover national risk in addition to the capital buffer required
by the EU directives. What is the max amount that can be
demanded by local regulators?
1. 7.5%
2. 5%
3. 3%
4. 2.5%
36
What is the capital conservation buffer for all banks in the
EU based on their Common Equity Tier (CET) 1?
1. 2.5%
2. 5%
3. 3.5%
4. 3%
37
Company X has made a capital acquisition of Company Y.
At what level must Company X report the acquisition to
CySEC?
1. 13% - 19%
2. 31% - 38%
3. 42% - 49%
4. 8% - 13%
38
In the case an investment firm offers shares or units of an
AIF under a portfolio managmeent agreement, what criteria
are to be applied from a regulatory standpoint?
1.
2. The marketing of units or shares must fall under regulations.
3. A Credit institution (CI) or depository must oversee the activity.
4. The Firm must be authorized for this purpose.
5. The firm must obtain authorization as an AIFM.
39
A public offer of securities may not be made without prior
publication of a prospectus which has been approved by
CySEC in line with the approval conditions set out in the
Prospectus Law. A prospectus is also required in relation to
the placement of securities via financial intermediaries
(including IFs) provided that the placement classifies as a
public offer and is not exempt from publication of a
prospectus. Violation of this rule is an offence which is
punishable by
1. with imprisonment of up to two years and/or a fine of CYP 100.000
2. with imprisonment of up to two years and/or a fine of CYP 150.000
3. with imprisonment of up to one year and/or a fine of CYP 100.000
4. with imprisonment of up to five years and/or a fine of CYP 100.000
40
Company JKL is evaluating settlement risk. Under what
pillar does settlement risk fall?
1. Pillar 1 Fully.
2. Pillar 1 Partially.
3. Pillar 2 Fully.
4. Pillar 2 Partially
41
A new training program is being introduced by a CIF to its
employees to better educate them on compliance matters.
The program is going to be taught by the compliance
department along with the training department. What is the
best way for this training to be delivered?
1. In whatever size group which is deemed appropriate.
2. To all staff members at one time, regardless of the situation.
3. On a one on one basis through senior managers, regardless of the

situation.
4. To different departments separately, regardless of the situation.
42
Alligator FX a CIF has decided to establish a branch in
Belgium, in order to do this they must provide CySEC with
all of the following information except?
1. Organizational Structure
2. Persons responsible for management
3. Initial capital
4. Address
43
With regards to Credit concentration risk it:
1. Is a byproduct of credit risk mitigation techniques.
2. Should increase drastically when market volatility is experienced.
3. Occurs when there is poor credit quality.
4. Should be analyzed on a local level and a consolidated basis.
44
XYZ Investments Ltd has two clients which are going to
invest the same amount of money with their firm and have
requested advice where to make their investment. In order
to properly comply with general guidelines, why must the
firm seek a greater amount of information from the first client
compared to that of the second one?
1. The first client wants a more risky investment than the second
client.
2. The first client is of worse health than the second one.
3. The first client is much older than the second one.
4. The first client wants to hold the investment longer than the second one.
45
Member states may increase their systemic risk buffers for
all (general) exposures to what percentage without the prior
approval of CySEC as stated in the Capital Requirements
Directive IV (CRD IV)?
1. 1-5%
2. 3-5%
3. 1-3%
4. 2-5%
46
CySEC has discovered that an AIFM which is regulated in
another member state and is managing a UCIT established
in Cyprus has violated a law. What is the action that CySEC
must take?
1.
2. Consult with the EU.
3. Consult with ESMA regarding the violation.
4. Consult with the competent authorities in the other member state.
5. Revoke the license of the UCIT.
47
When an equivalent third-country treats exposure to public
sector entities assign risk weights to public sector entities in
accordance with the table below, CIFs may risk weight their
exposures to these entities in the same way. As such, a
credit risk weight of 100% is considered as
1. step 2
2. step 3
3. step 1
4. step 4
48
Global Quest FX a CIF recently provided an investment
service to an individual client. The firm correctly did not
make an assesment of the clients knowledge and
exepertise, why?
1. The firm provided execution services only.
2. The firm became authorized a month ago.
3. The transaction was for an OTC product.
4. The client was over the age of 65.
49
With regards to client asset rules, clients of a bank have the
right to object to their funds being transferred or placed into
a:
1.
2. An authorized member state bank.
3. Third country authorized credit institution.

4. Central bank.
5. Regulated money market fund.
50
What type of illegal activity is defined by a client suddenly
entering and withdrawing large orders?
1. Placement.
2. Momentum ignition.
3. Quote stuffing.
4. Layering.
51
Munchen Investments Ltd has been discovered by CySEC
as not being subject to their supervision and is providing
services conflicting with that of EC regulations.
Cysec has notified the member state competent authority,
what is the next action CySEC must take?
1. Freeze local bank accounts held by the firm.
2. Notify the European Securities and Markets Authority (ESMA).
3. Publish a statement that the firm is operating unlawfully in the press.
4. Issue a warning to the firm to stop operations.

52
Company A and Company B submitted their ICAAP report
to CySEC at the same time. However one Company has to
submit its annual report sooner. Why is this?
1. CySEC uses a risk based approach.
2. False both companies must submit together.
3. One company doesn't need to report.
4. One company provided misleading information
53
Within what timeframe after the end of the relevant period is
a UCIT obligated to provide a publication of the summarised
statement of assets and expenses?
1. 2 Months.
2. 1 Month.
3. 4 Months.
4. 15 Days.
54
Within what timeframe after the end of the relevant period is
a UCITS obligated to provide a publication of the
summarised statements, with regards to the profit and loss
statement?
1. Within 2 Months
2. Within 6 months
3. Within 1 Month
4. Within 4 Months
55
CySEC is reviewing a CIFs ICAAP report, what is the next
step in the SREP?
1. Planning
2. Review of Additional Information
3. SREP Validation
4. Supervisory Measures
56
It has been observed that a CIFs suitability assessment
system is flawed for its intended purpose. The observation
is found to be justified in the case where?
1. Extensive client classifications are depended upon.
2. The firm uses risk-based portfolios as part of their main offering.
3. Possible investments are mainly conducted by risk-profiling tools.
4. During the advice process the results can be modified.

57
DJ Investments Limited is a newly established UCIT in the
Republic of Cyprus, they are allowed to use capital raised?
1. From the public and government bodies.
2. From the public and corporate bodies.
3. From the public and investment funds.
4. Only from the public.
58
Pineapple FX is situated in a dedicated financial and
business district, in the event of a natural disaster such as
an earthquake, flooding or fire, its business continuity plan
(BCP) should take into account many aspects but
particulalry?
1. The impact of the natural disaster beyond the firm's area.
2. Adequate business insurance coverage.
3. The ability to find an alternative premise.
4. The need to obtain emergency services reports.
59
With regards to SREP, Rubiks Trading Ltd a CIF has just
received from CySEC their capital resource requirement.
What is CySEC's next stage in the SREP process?
1. Undertaking a desk based review.
2. Internal validation of the results.
3. Conducting an inspection visit.
4. Requesting additional information.
60
For large exposures, after taking into account the effect of
credit risk mitigation, exposures to a client or a group of
connected clients may not exceed
1. 10% of a CIFs eligible capital
61
Emily Investments a VCIC has shares listed on the London
Stock Exchange (LSE). At what percent are they expected
to intervene to prevent the shares from deviating from their
net asset value?
1. 2%
2. 5%
3. 7%
4. 3%
62
Global trading Ltd has recently executed a trade on behalf
of one of its clients. What is the Minimum period that the
execution of this trade must be retained by the firm?
1. 3 Years
2. 1 year
3. 5 Years
4. Lifetime of Client
63
A client of a UCIT has decided to redeem their units, within
how many working days must the cash value of the units be
paid to the client?
1. Five
2. Four
3. Three
4. One
64
CySEC has the right to impose additional obligations on an
Alternative Investment Fund Manager (AIFM) that has been
authorized to market to potential investors in Cyprus:
1. Without any restrictions.
2. As long they are in accordance with common market practice.
3. Provided they are not stricter than those of the EU.
4. Provided they are approved by the EU.
65
Topline Investments has decided to hire Marianna as an
executive director based on her proven work experience in
the field. But she cannot be appointed, what is Topline
Investments waiting for?
1. Approval from CySEC.
2. Copy Of Academic Qualifications.
3. For her to pass the CySEC Exam.
4. Reference letter from her previous employer.
66
Credit Institutions and Investment firms are required by law
to hold a capital requirement for tier 1 and tier 2 capital.
What is this percentage for risk weighted assets?
1. 3%
2. 10%
3. 8%
4. 5%
67
With regards to staff qualifications under the General
Guideline 3, in order to provide the services of portfolio
management staff members must have:
1. Expertise to match instruments to needs of client only.
2. CySEC certification only.
3. A minimum amount of relevant industry experience.
4. Expertise to match instruments to needs of client and the

appropriate certification.
68
Regulation 575/2013 of the European parliament is subject
to review, however it has been decided that the liquidity
coverage requirement will increase in 2018 to what
percentage?
1. 100%
2. 50%
3. 90%
4. 75%
69
Of the following two examples:
a) A newly opened deposit account receives a wire transfer
from outside the country.
b) A large cash transaction into a deposit account.
The said transactions might be considered as suspicious
transactions in what regards?
1. More likely Terrorist Financing.
2. More likely Money Laundering.
3. None.
4. Money Laundering and Terrorist Financing.
70
A UCIT has invested in OTC derivatives, the market order is
of average size, to whom must the UCIT report the order?
1. Trade repository
2. Private investors.
3. CySEC
4. Professional investors.
Advanced Certificate Exam 4 (2018 Update)
1
ASD Capital Ltd, has accepted documents created and
signed by Mr. Morgans wife and brother as proof of
identification and verification. This tell us that?
1. Additional due diligence will be carried out within 14 days following the
original due diligence.
2. There has been a breach in the prevention and suppression of

money laundering and terrorist financing regulations.
3. His investment will be in fixed income securities.
4. The value of his intended transaction will be lower than € 15,000.
2
Any person who acquires shares in an issuer exceeding 5,
10, 15, 20, 25, 30, 50, or 75% where voting rights are
attached to these shares, an notification
1. must be sent to CySEC and the issuer showing the changes of

voting rights
2. must be sent to the issuers showing the changes of voting rights
3. must be sent to CySEC showing the changes of voting rights
4. is not needed as long as this is a subsequent purchase and not an initial

one
3
All CIFs can be exposed to foreign exchange risk when
dealing with different currencies, why is this a risk to firms?
It is a risk, as the risk is confined to proprietary positions.
It is not a risk, as the risk is confined to proprietary positions.
It is not a risk as volatility can lead to significant profits.
It is a risk as volatility can lead to significant losses.
4
A newly established CIF has just realised that they have a
problem realising payments from clients in a timely manner,
what kind of risk is this for the company?
1. Residual risk
2. Settlement risk
3. Reputational Risk
4. Credit Risk
5
John is in posession of data which may be deemed as
inside information, however John was able to pass this
information to George without breaching or being in violation
of any regulations. Why was this possible?
1. George previously employed John.
2. It was necessary as part of Johns normal business activities.
3. When John gave the details to George, they were already 31 days old.
4. John only communicated the details to George verbally.

6
321 Capital Ltd has decided to review its ICAAP report
within a short period of time. Why would this occur?
1. To utilize cost minimization efficiently.
2. To adjust for increases in staff levels.
3. To verify their business recovery plan.
4. To reflect changes that have occurred in the operating environme
7
A UCIT had an outstanding track record using algorithmic
trading to make profitable deals. Unfortunately,the UCIT
which is a common fund has now been dissolved, what
would be the reason for this?
1. Assets are decreased to 20% of the threshold.
8
A CIF has 2 clients, Client X and Client Y. The CIF is
offering the same investment product to both. They ask
Client X if he understands the proposed investment product
they also ask Client Y how much of his investment he can
afford to lose in one year. Which question is unreliable with
regards to suitability?
1. Questions to both X and Y
2. Question to Client Y
3. Neither Question to X and Y
4. Question to Client X
9
An ACI is planning to become incorporated in Cyprus what
would be their minimum capital requirement?
1. € 7,000,000
2. € 5,000,000
3. € 10,000,000
4. € 730,0000
10
A financial analyst working in a bank is only allowed to take
personal transactions contrary to his current
recommendations, provided that which of the following
arrangements is in place?
1. He has received previous approval from the CBC and CySEC.
2. He has received previous approval from the legal and compliance

function of the bank.
3. He has been constantly employed over the past 2 years.
4. The deal he is taking has a value less than € 5000.
11
CySEC can appoint
1. A special administrator for a period of less than 1 year
2. A temporary administrator for a period of less than 1 year
3. A special administrator for a period of less more than 1 year
4. A temporary administrator for a period of more than 1 year
12
What is the main difference between Legal and Foreign
Exchange risk?
1. Legal is not Fully Covered in Pillar 2, Foreign exchange is fully Covered

in Pillar 1.
2. Legal is not Fully Covered in Pillar 1 Foreign exchange is fully Covered

in Pillar 2.
3. Legal is Fully Covered in Pillar 1, Foreign exchange is not fully Covered

in Pillar 1.
4. Legal is Fully Covered in Pillar 2, Foreign exchange is not fully

Covered in Pillar 1.
13
The firm known as CQC Ltd acts as a Systematic
Internaliser (SI) for shares of company CQG. CQC is only
obligated to disclose quotes for CQG when requested by
clients to do so. What does this confirm?
1. CQG shares are considered illiquid in the market.
2. The market is experiencing high volatility.
3. CQC on deals with professional clients.
4. CQG is registered outside the republic of Cyprus
14
A CIF operating for 6 months has decided to hire a new
director. When will the CIF need to notify CySEC of the
hiring?
1. 15 Days Prior
2. 30 Days Prior
3. 30 Days After
4. 60 Days After
15
ESY Forex was a successful company when they started
operations in 2006. However they have failed to adapt to
their business environment. They continue to have high
spreads on their traded currency pairs where as their
competitors have lowered spreads drastically, as a result
their business has declined. What kind of risk is this?
1. Business Risk
2. Reputational Risk
3. Strategic Risk
4. Liquidity Risk
16
Acceptable market practices with regards to the buying and
selling of financial instruments or products are?
1. Monitored by the ASDCS
2. Regularly reviewed by CySEC
3. Specified by the CBC
4. Based on recommendations from ESMA
17
The Capital Requirements Directive IV (CRD IV) requires
the remuneration for the discount rate applicable to total
variable remuneration, be payable in instruments, stating it
can be deferred for a period of not less than what period?
1. 1 year
2. 6 Months
3. 3 Years
4. 5 Years
18
Within the scope of the resolution law, which of the following
measures is NOT available to the CBC
1. Sale of business
2. Write down or conversion
3. Bail-out
4. Transfer of assets
19
Stress testing is required by all CIFs to be included in their
ICAAP report; the purpose is to assess all material risks the
firm may face. Which of the following is a stress tesing
method?
1. Securitization Analysis
2. Systemic Analysis
3. Sensitivity Analysis
4. Systematic Analysis
20
Repetition of the violation of the prospectus law, specfically
making an offer for financial instruments without having a
prospectus can lead to a fine of
1. up to 200 000 CY and/or jail of up to 2 years
2. up to 1 000 000 CY and/or jail of up to 2 years

21
The Annual financial report of issuers needs to be available
to the public
1. as soon as possible but within 6 month of the end of the financial year
2. within 6 months of the end of the financial year
3. within 5 months of the end of the financial year
4. for at least ten years
22
In a firm the first point of contact with regards to The Unit for
Combating Money Laundering (MOKAS) is?
1. Head of Risk.
2. Head of Reception and Transmission.
3. CEO.
4. Compliance Officer.
23
Under the Capital Requirements Directive IV (CRD IV) all
banks in the EU should have a countercyclical capital buffer
specific to each institution with a maximum of up to?
1. 2.5%
2. 2%
3. 1.5%
4. 3%
24
In order for a CIF to meet all its obligations with regards to
required professional standards, ahead of hiring its
employees it should have done which of the following?
1. Only employ people who hold academic degrees or diplomas.
2. Checked for bankruptcy and non-criminal records.
3. Check to see if the people were endorsed by CySEC.
4. Only employ people with a minimum of 5 years’ experience.
25
RIZ Capital Ltds authorization due to unfortunate reasons
has automatically lapsed. What is the maximum time frame
granted to RIZ to settle it obligations following the lapse?
1. 1 year
2. 1 month
3. 6 months
4. 3 months
26
Company XYZ, an issuer, had 10 000 000 shares issued
and traded publicly but does not own any of its own shares.
They decided to acquire (buy back) 6 million shares, which
constitute 6% of voting rights. Such action entails that
1. The issuer needs to disclose the total proportion of own shares
2. The issuer needs to disclose the transaction size asap but at the latest
the next business day
3. The issuers has no obligations for disclosing the transaction
4. The issuer needs to disclose the size of the transaction
27
Demetris Nicolaou is a member of staff at an AIFM, he has
been specifically mentioned in the AIF annual report along
with specific details regarding his remuneration. What could
be the reason for this?
1. He earns €75,000 before bonuses.
2. He can materially affect the AIF's risk profile.
3. He transferred from a rival AIFM.
4. He joined the AIFM during the year that is being reported.

28
VLC Trading Ltd should have a risk register in place, what
is the intended purpose for such a register?
1. To document and categorize all risks that is is currently exposed to.
2. To document and categorize all risks that is is exposed to or could be

exposed to in the future.
3. To document employee complaints.
4. To document client complaints.
29
An ACI operating in the republic has failed to comply with
the rules and regulations, the CBC has the right to request
which of the following people be removed from the Board of
Directos?
1. Senior Manager Only
2. All of the above
3. Director Only
4. CEO Only
30
Which of the following tasks, a special administrator is not
enitiled to do
1. engage in another employment while being an administrator
2. revise or abolish policies and strategic decisions

3. restrict the scope of operations
4. increase the capital of the institution
31
HiDef Trading Ltd is currently suffering from liquidity risk,
this means which of the following?
1. They are unable to receive payments from clients within a suitable time
frame.
2. They have provided loans to counter-parties falling under the same

company umbrella.
3. They can only secure additional financial resources at an

excessive cost.
4. They can only meet their current financial obligations.
32
CySEC has discovered a foreign IF to be in violation of the
stipulated rules and regulations, which of the following
actions will CySEC take?
1. Issue a warning
2. Any revocation of authorization will be reported to ESMA
3. Freeze company assets
4. Make a publication in local newspapers

33
An internally managed AIF, is calculating how much capital
is required by CySEC to perform the operations effectively.
How much is required for them to manage a portfolio above
and below 250 Million?
1. Up to 10 Million / 300,000
2. Up to 5 Million / 200,000
3. Up to 20 Million / 500,000
4. Up to 15 Million / 400,000
34
Which of the following potential customers must a firm
always perform enhanced due diligence on?
1. Traded companies on an exchange in a third country.
2. Face to Face customers.
3. Financial or Credit Institutions outside of the EEA.
4. Accounts in the name of companies whose shares are in bearer

form.
35
Depending on the nature of their business CIFs should
register with the Investor Compensation Fund (ICF). When
should a CIF registered with the ICF be obligated to provide
full information regarding the funds to their clients?
1. Annually.
2. On the clients request.
3. At the first client meeting.
4. Before every new investment.
36
A CIF offering loans to other entities faces credit risk. Credit
risk will occur in which of the following situations?
1. Capital coverage is inadequate.
2. Any essential form of repayment is missed or delayed.
3. Exchange rates have influenced the principal after repayment.
4. Early settlement of loan results in loss of interest.
37
The management of Jupiter FX has decided to temporarily
cease the license for the trading activity that they received.
After what period of inactivity must CySEC revoke their
license?
1. 15 months.
2. 1 year.
3. 6 months.
4. 2 years.
38
Which of the following situations is considered to be residual
risk that a CIF may be exposed to during its operational
lifetime?
1. Banks running out of liquidity that can be offered to firms.
2. The inability to realize payments from clients in a timely manner.
3. Gold Plunging $100
4. CySEC implementing tougher laws and compliance guidelines.
39
Who is liable towards investors if they acquired securities
based on erroneous information?
1. underwriter
2. Issuer
3. Signatories
4. depository
40
The ICAAP is a set of processes, procedures and measures
implemented by all CIFs to ensure that they?
1. Identify and appropriately measure risks.
2. Have a sound understanding of their market exposure.

3. Are compliant with regulations.
4. Treat all customers fairly.
41
A Shareholder of a bank increased his voting rights…for
which of the below percentages should permission be
obtained?
1. 12% - 15%
2. 6% - 9%
3. 16% - 19%
4. 9% - 12%
42
A department in a CIF will use "Sample testing of
transactions", how would this be used and for which
department?
1. As a Suitable Testing Methodology for Compliance Monitoring
2. As a Suitable Testing Methodology for Marketing Monitoring
3. As a Suitable Testing Methodology for Risk Monitoring
4. As a Suitable Testing Methodology for Finance Monitoring

43
M1 management services Ltd is a management company
that manages UCITS in its home state, they have applied to
manage a UCITS in Cyprus. CySEC has rejected their
application. What is the likely reason for the rejection of M1
by CySEC?
1. They are only authorized in their home state to manage a different

type of UCITS
2. They only have 3 years’ experience in UCITS management.
3. They intend to provide services in Cyprus without establishing a branch.
4. Despite proceeding they do not intend to appoint a director who is a

resident of Cyprus.
44
EU regulation regarding liquidity requirements states that a
CI and/or IF must hold liquid assets at all times in which the
total value must cover the net liquidity outflows for a period
of?
1. 60 Days
2. 30 Days
3. 15 Days
4. 21 Days
45
Company AGK is assessing risks relating to credit
concentration risk? They decided to combine two types of
exposures what would be the reason for this?
1. Risk concentrations should be analysed at a local legal entity level but

not on a consolidated basis.
2. Risk concentrations should not be analysed at a local legal entity level

but on a consolidated basis.
3. Risk concentrations should be analysed at both a local legal entity level

and a consolidated basis.
4. Risk concentrations should not be analysed on a local legal entity level

or a consolidated basis.
46
BountyFX needs to hire 2 dealers and has decided to hire
Samantha and Gordan. However only Samantha appears
on the public register, before Gordan can be appointed,
BountyFX has too?
1. They do not need approval because he has already passed his CySEC
exam.
2. Get pre-approval from CySEC
3. Make Sure he has 5 years experience.
4. Make sure he has the CySEC exam.

47
A CIFs board of directors nor senior management have
reviewed their ICAAP for two years, this means which of the
following?
1. Their capital adequacy ratio is 50% above the required minimum level.
2. The firm is in breach of regulations.
3. The firm will receive a low risk rating from CySEC.
4. An inspection visit will take place within 12 months.
48
A CIF is found to be facing market risk when exposed to
which of the following situations?
1. Bond Yields Drop
2. Large Option Expiries
3. Stock Market Rallies
4. Interest Rates Increase
49
Upon investigation Bank of Cyprus has identified a potential
conflict of interest with regards to one of its clients, before
officially providing a service to the specific client. When
must the bank inform the client of this conflict?
1. Seven business days after providing the service.
2. Three working days after providing the service.
3. Immediately after providing the service.
4. Before providing the service.
50
The CBC has obtained sensitive data relating to confidential
information, with respect to supervision activities the
information was made public. What justification did the CBC
have to make the data public?
1. The data released was limited to statistical aggregates.
2. The bank had a daughter company operating outside the republic.
3. Prior approval to release the information was obtained from CySEC
4. Money laundering played a major role.
51
In the event that period information about issuers wasn't
made public, the company/management are subject to
which of the below fines:
1. an administrative fine of no more than 10 000 000 euros and twice the
amount of profits or losses avoided on the company
amount of profits or losses avoided on a natural person
amount of profits and losses avoided on a natural person
4. an administrative fine of no more than 10 000 000 euros or twice the

profits or losses avoided on the company
52
With regards to money laundering and terrorist financing
what is required for a risk-based approach to be effective?
1. Services provided to customers are treated as low risk where as

financial instruments provided to customers are high risk.
2. The higher the risk classification of a product the higher the amount that
is invested in the product.
3. An accurate differentiation between different types of risk posed by

each customer, country, services and financial instruments.
4. Customers from the same country are placed in the same risk category.
53
Company HJK FX last reviewed its ICAAP report 2 years
ago. When should the next review take place and is the
company in breach of regulations?
1. The following year / No
2. This Year / No
3. The Following Year / Yes
4. This year / Yes

54
Market operators should ensure that systems for order
pairing execute transactions fairly, why is this important?
1. Maximizes liquidity in the market place.
2. Leads to lower charges for clients.
3. To prevent market manipulation
4. To combat money laundering.
55
TMNT Capital Ltds Board of Directors has failed to include
the compliance officers duties and responsibilites in their
report. The omission of these details is:
1. Acceptable since the compliance officer is a member of the board of

directors.
2. Acceptable if CySEC has been informed.
3. Likely to lead to an external auditor from MOKAS visiting for an

inspection.
4. Likely a breach of the prevention and money laundering

regulations.
56
CySEC is reviewing the results of its inspection visit to AYG
Global Ltd. What stage of the SREP is next?
1. Review and Assessment of ICAAP
3. SREP Validation
57
Which of the following individuals who have a direct
relationship with a person effectively managing the
operations within an issuer are not obligated to publish all
transactions they have made for their own personal account
in financial instruments of the issuer?
1. Any partner of the manager according to Cyprus law to be considered a

spouse.
2. An ex-spouse of the manager that has not lived at the same

address for 15 months.
3. The managers child who is considered a dependent.
4. An ex-spouse of the manager that has not lived at the same address for
10 months.
58
CySEC has requested that Golden Investments Ltd submit
its ICAAP report, in which stage of the SREP is this done?

3. Planning
4. Review and Assessment of ICAAP
59
In the case where an AIFM whose client an AIF obtains
control over a non listed company, whose exercise of voting
rights has become suspended. Control can be defined as
more than what % of the companies voting rights?
1. 30%
2. 40%
3. 60%
4. 50%
60
Christopher has recently joined a CIF as a compliance
officer, with regards to the prevention of money laundering
and terrorist financing within the company, Christophers
main responsibility is to?
1. Hire an assistant compliance officer.
2. Make sure all staff sign disclaimer forms regarding the monitoring of
customer transactions.
3. Make sure all staff within the company receive the risk management
and procedures manuals.
4. Follow the policies and principles which have been set and
approved by the board of directors.
61
A VCIC listed in a stock exchange operating in Germany is
not required by law to appoint a depositary as long as?
1. At least 70% of the VCIC shares are listed in the above exchange.
62
All CIFs are exposed to certain types of risk. In which of the
following situations would a CIF be indirectly exposed to
market risk?
1. If more capital is required to support or mitigate a loss.
2. If they trade on instruments that a counterparty is involved.
3. If a deal taken as an agent to fulfill a client order does not clear or

settle properly.
4. On any deal taken on its own account.
63
A bank based in the republic of Cyprus used a third party
firm to deposit client assets. In order to comply with
regulations:
1. The arrangement should be documented and the agreement should be

for a minimum of 12 months.
2. The deposits of the clients affected must remain separately
identifiable.
3. The arrangement should not include professional client deposits.
4. The clients affected should all be permanent residents in the republic of

Cyprus.
64
CySEC is currently reviewing the outcome of an inspection
visit to a firm as part of the SREP process. Which of the
following does this confirm?
1. The ICAAP submitted by the firm has been assessed.
2. CySEC has finished with the validation stage.
3. The firm has been flagged and will undergo additional monitoring.
4. The firm is still in the early stages of the SREP.
65
One of the below conditions for not needing a prospectus is
wrong; which one?
1. is addressed solely to qualified investors
2. is denominated in units of at least 10.000 Euro.
3. requires a deposit of 100.000 Euro per investor for each separate offer
4. is addressed to fewer than 150 natural or legal persons per member

state who are not qualified investors
66
The compliance function has various roles when working for
a CIF, with regards to training and maintaining competence
and awareness, where should the major focus be?
1. Internal policies and procedures.
2. Remuneration policies.
3. Capital adequacy requirements.
4. Rules and regulations.
67
All banks in the republic have reporting obligations. Which of
the following reports which are sent periodically, have to be
sent to a client when a bank executes an order related to
units in a UCITS?
1. Quarterly
2. Monthly Report
3. Yearly
4. Six-monthly
68
Before granting authorization to a CIF, CySEC must be
provided with information regarding the identity of any
shareholder who holds at least a minimum of what % of the
CIFs of voting rights?
1. 10%
2. 20%
3. 5%
4. 30%
69
According to General Guideline 9 - Record Keeping,
investment firms need to at a minimum:
1. Maintain adequate recording and retention arrangements.
2. Ensure that paper hard copies are kept as a back up electronically.
3. Keep audit ex-post records.
4. Keep the records for seven years.
70
When a CIF executes a transaction for a financial
instrument on a regulated market, when should the
transaction be reported?
1. No Later than the close of the same day.
2. 10 Days after
3. 21 Days after
4. No later than the close of the next business day

Advanced Certificate Exam 5 (2018)
1
When inside information is discovered it is the obligation of
the Company to disclose this information to the public but
more importantly it ?
1. Should be disclosed first to retail clients since they do not have

sufficient experience in Financial instruments
2. Might not be disclosed to professional clients
3. Should be synchronized as closely as possible between all

categories of investors
4. Should be disclosed first to professional clients
2
A CIF operating in the Republic has decided to restructure
their entire operation, in order to implement their new
business strategies they have decided to reduce their share
capital, in order to do this they must?
1. Ask investors if they have any concerns
2. Notify CySEC within 5 days after the reduction
3. The Law L144(I)/2007 does not allow a CIF to reduce its share capital
4. Ask prior written authorization from the CySEC

3
Which of the below is correct: A company officer who is in
possession of inside information can?
1. buy or sell on his account financial instruments not related to the

inside information
2. Tell his wife the inside information, given she she will not use it or
disclose it
3. encourage another person indirectly to buy or sell financial instruments

related to the inside information
4. none of the above
4
A market operator has decided to make changes to the
ownership levels of persons with significance influence,
within how long MUST CySEC issue notification of its
decision to permit or prohibit the changes?
1. 1 month
2. 12 months
3. 3 months
4. 6 months
5
A VCIC has decided to go public and has had great success
in their IPO and is now having its shares actively traded on
the Cyprus Stock Exchange it:
1. Shall always appoint a Depository
2. May not appoint a Depository if this is pre-approved from the CySEC

and at least 50% of its shares are marketed through the exchange
3. May not appoint a Depository if this is pre-approved from the

CySEC and at least 80% of its shares are marketed through the
exchange
4. May not appoint a Depository if this is pre-approved from the CySEC
6
A CIF has accepted documents created and signed by
Bamboos wife and brother as proof of identification and
verification. Which of the following is correct?
1. Prevention and suppression of money laundering and terrorist

financing regulations have been breached
2. Original customer due diligence will be followed by additional due

diligence carried out within 14 days
3. Investment is to be in fixed interest securities
4. Value of of the intended transaction is less than 15,000 Euros
7
Company XYZ has had a formal complaint filed against
them by one of its customers. CySEC has the power to
collect information, to carry out investigations and can
appoint as an investigating officer who of the following?
1. Only members of its Board of Directors or an officer of CySEC or

representative of the governor of the Central Bank of Cyprus
2. Any person
3. Only members of its Board of Directors or an officer of CySEC
4. Only members of its Board of Directors
8
A regulated market can also be referred to as?
1. an Organized Market
2. CIF
3. Stock exchange
4. Forex Market
9
Issuers of financial securities should provide the holders of
their debt securities with a notice detailing which of the
following?
1. The place, time and date of meetings
2. The time and date of meetings
3. The date and agenda of meetings
4. The place, time and agenda of meetings

10
UCITS undertake various financial security investments in
order to gain profits. However, in doing so they must base
allocation of these funds on the required risk management
approach. When entering into an OTC derivative transaction
with a counter party that is not a credit institution what is the
amount of capital (%) that shall not be exceeded?
1. Shall not exceed 5%
11
When a transaction report has references to risk reduction,
then this has been done because
1. The transaction was done over the counter
2. The transaction involved is for commodity derivatives
3. The transaction involved is for CFDs
4. The transaction is usually less than the normal size
12
The compliance officer of a CIF has prepared a list of
customers and their risk classification based on money
laundering requirements. In order to comply with these
regulations which of the following MUST his records
include?
1. Dates that due diligence was carried out on the customers
2. Customers' places of birth
3. Customers' dates of birth
4. Dates that the relationship with the customers commenced
13
Following the end of the financial year what is the maximum
period allowed for banks to submit a copy of their audited
annual accounts to the CBC?
1. 18 weeks
2. 4 months
3. 6 months
4. 2 months
14
Omega Trading Ltd is no longer performing well under the
current director’s vision. Staff are unhappy and company
profits have plunged while the director is consistently going
on vacations. This has prompted the board to appoint a new
director. In order to this to happen the CIF must?
1. Ensure that the new director has at least the same qualifications as the
other members of the board
2. Inform CySEC immediately after the appointment
3. Immediately notify clients
4. Provide all necessary details for CySEC to be able to assess that the
new director is of sufficiently good repute
15
In the eyes of the law, which of the below qualifies as a
professional client?
1. a retail trader whose main activity is investing in financial markets
2. A cyprus company which does not need authorization to operate in the

financial markets
3. Regional Government
4. An entity with a balance sheet of 19m euros, net turnover of 41m euros,
and own funds of 1.9m euros.
16
A qualifying holding is defined as:
1. a shareholder who indirectly or directly holds 10% or more of the

capital of the firm
3. a shareholder who directly holds 10% or more of the capital of the firm
4. a shareholder who indirectly holds 10% or more of the capital of the firm
17
On which of the following customers must enhanced due
diligence ALWAYS be taken?
1. Financial institutions outside the EEA
2. Accounts in the name of companies whose shares are in bearer

form
3. Listed companies trading in a third country
4. Face-to-face customers
18
A tied agent cannot:
1. hold client’s funds
2. solicit new clients
3. perform RTO
4. promote the CIF's services
19
In order for a counterparty to be treated as an eligible
counterparty it must:
1. Cancel all relevant prior agreements
2. Register this publicly

3. Seek specific authorization
4. Expressly consent to do so
20
A market operator in the republic is obligated to implement
efficient and effective systems with respect to the detection
of market manipulation. Which of the following would not be
a requirement for detection?
1. Fair systems of order pairing
2. Transparency of concluded transactions
3. Priority to retail clients transactions
4. Effective atypical order detection
21
A CIF must inform CySEC of all shareholders who have a
qualifying holding within what time frame?
1. Every 3 months
2. Every year before 31st of January
3. Every month
4. only when a change takes place (i.e someone buys or sells shares in
the CIF)
22
The minimum capital requirements for a regulated market
is?
1. 10m euros
2. 5m euros
3. 3m euros
4. 1m euros
23
Based on EU Capital Requirements Regulations which of
the following best describes large exposure limits?
1. Institutions may not incur net exposures of a value in excess of 25%

of their eligible capital
2. Institutions may not incur net exposures of a value in excess of 20% of

their eligible capital


24
In which of the following incidents below can a person who
has inside info disclose the same to another person?
1. In the normal course of business and only when it is required
2. If the other persons knows that what he will get is inside info
3. Only through third parties who are authorized
4. With the written approval of at least 2 directors in the company
25
The practice of Front Running?
1. Is prohibited, including front running in commodity derivatives
3. Is allowed in general, as long as the runner is not an employee of the

said firm
4. Is prohibited but allowed in commodity derivatives
26
With regards to client information which contains simulated
past performance, the information MUST:
1. Cover more than one financial index
2. Be relevant to the date of disclosure
3. Be spread over at least five years
4. Include relevant links to future performance

27
In relation to the Investment Compensation Fund (ICF),
when a member decides to cease providing investment
services, then the process of withdrawing itself from the
fund is to:
1. ask for CySEC approval, publish it online
2. ask for CySEC approval, publish it in 3 news papers
3. file a withdrawal directly with the ICF
4. cannot cancel subscription with the ICF
28
AIFMs have an obligation to manage any potential conflicts
of interest that may arise, which of the following is a
common method used to manage these risks?
1. Segregate certain classes of investor to be managed by dedicated staff
2. Appoint an independent consultant to manage conflicts as they arise
3. Ensure that certain classes of business are placed through prime

brokers
4. Segregate incompatible tasks and responsibilities

29
In relation to an issuer listed on the CSE, any information
that needs to be disclosed should be made available:
1. to the CSE and CySEC and the internet site
2. on a public newspaper
3. to the CSE, and CySEC only
4. to CySEC only
30
With regards to the Capital Requirements Directive, which of
the following statements is TRUE?
1. Settlement risk is classed as a Pillar 2 risk
2. Credit risk is classed as a Pillar 2 risk
3. Settlement risk is not fully covered within Pillar 1
4. Credit risk is not fully covered within Pillar 1
31
A company's director sold all of his shares in his own
company. The next day, in a closed board meeting, all
directors discussed downsizing the firm, which if
announced, would cause share prices to fall. Which of the
below is true?
1. The director although did not know at the time he concluded the
transaction, however he did violate the insider trading rules
2. Since the information was never made public yet, the director is liable
3. The director although is said to have inside information by virtue of his

position, however the insider trading rules do not apply on the
transaction he concluded
4. The board of directors violated the insider trading rules
32
A publicly traded hedge fund has a Portfolio manager that
has numerous responsibilities along with a team of 5 traders
under him. He decides to take a trade for his own account in
the financial instruments of the issuer (hedge fund) that are
traded on a regulated markets. how much time should
elapse before he reports his trades?
1. Within 5 working days after the transaction has taken place
2. Before the closing of the CSE at the date the transaction has taken
place
3. Immediately after the transaction has taken place
4. Prior to the start of the next working day of the stock exchange after
the transaction has taken place.
33
Following an in depth investigation of Agenta trading Ltd,
the investigating officer has discovered some irregularities in
the companies business practices with regards to its clients.
The investigating officer shall?
1. Provide a written report of his findings to the legal advisor of the CIF
2. Provide a written report of his findings to CySEC and the legal advisor
of the CIF
3. Provide a written report of his findings to CySEC
4. Provide a written report of his findings to the Attorney General
34
Possible CySEC fines to a firm can fall under which of the
following risks?
1. Reputation Risk
2. Liquidity Risk
3. Legal and Compliance Risk
4. Business Risk
35
If a company is said to possess inside information about a
merger of another company, then?
1. All directors are said to be in possession of inside information

regardless if the know or not
2. A legal person cannot possess inside information
3. It is not easy to decide who has inside information within a company
4. All-natural persons, who are involved in the decision making process

related to the transaction involved, are also said to be in possess of
inside information, if they knew or ought to have known
36
The board of directors are trying to decide what would be
the best-case scenario for their company (CIF) with regards
to a change in capital. Depending on the direction the board
decides to follow, in which of the following circumstances
would it be necessary to notify CySEC?
1. Any acquisition of holdings in its capital that causes its holding to

increase from 31% to 49%
2. Any disposal of holdings in its capital that causes its holding to decrease
from 19% to 11%
3. Any disposal of holdings in its capital that causes its holding to decrease
from 49% to 31%
4. Any acquisition of holdings in its capital that causes its holding to

increase from 29% to 31%
37
Various Banks provide various services to their clients.

According to the CBC personal transactions are prohibited,
however there is always exemptions to the this rule. Which
of the following would be an example of this exemption?
1. If the relevant person makes a loss because of the transaction
2. If the transactions are undertaken via a portfolio management

service where there is no prior communication between the
portfolio manager and the relevant person
3. If the transactions are undertaken through a third party on behalf of the

relevant person
4. If the relevant person reports the transaction within 24 hours to the
Central bank of Cyprus
38
In which of the following situations can institutions only
provide financial support to group entities encountering
financial difficulties?
1. It does not represent a risk for the whole group
2. If there is a financial agreement in place
3. It is done as parent to subsidiary
4. It is done as a subsidiary to subsidiary
39
Company XYZ is preparing to issue shares in their company
to the public. Issuers have the obligation to prepare a list of
all persons working for them who have access to inside
information. Which of the following is not valid concerning
this list?
1. The List should be maintained for a period of five years after being
drawn up
2. The reason for inclusion in the list needs to be recorded
3. The List should be updated on monthly basis
4. The identity of each person on the list needs to be recorded

40
A new and exciting market place is being established , the
market will offer financial instruments not previously offered
in the republic. However there are certain risks associated
when implementing new financial instruments, who would
be responsible for implementing procedures aimed at the
prevention and detection of market manipulation?
1. Issuers
2. CySEC
3. The market operator
4. Ministry of Finance
41
CySEC will inform applicants of their decision with regards
to whether they have been approved to provide professional
investment services within:
1. 1 month of their application
2. 6 months of their application

42
An AIFM is planning to make an application for
authorization. It offers a capital guarantee from a credit
institution, what is the maximum permitted percentage of the
total capital subject to this guarantee?
1. 50%
2. 45%
3. 30%
4. 25%
43
In the case where a firm provides investment advice which
is based on a selection of financial instruments, the firm
would be required to ensure which of the following?
1. There are no financial instruments issued by the firm or a closely linked

entity
2. The selection criteria shall predominantly focus on costs and complexity
3. The number and variety of instruments considered is adequately

representative of the market
4. There are a wide variety of instruments under consideration
44
Issuers can be deemed to be SMEs if
1. shares have been admitted to trading for less than three years
2. shares have been admitted to trading for less than five years and have
a market capitalization of less than 200 million euros
3. have market capitalization of less than 200 million euros
4. shares have been admitted to trading for less than three years and
have a market capitalization of less than 200 million euros
45
A bank in the Republic of Cyprus has decided to proceed
with an outsourced agreement from a service provider for
the purpose of loan restructuring. However before
proceeding with the agreement the Bank stipulated that it?
1. Should appoint at least one member of the service provider to the board
of directors
2. Should provide a Bank guarantee to cover possible client losses
3. Needs to retain the necessary expertise to supervise and manage

effectively the risks associated with the outsourced functions
4. Should also delegate the risks associated with the outsourced functions
46
A CIF authorization can lapse within months if the
company does not use its authorization.
1. 1
2. 6
3. 3
4. 12
47
CySEC is considering entering a bilateral information
sharing resolution with third countries, this is acceptable
provided it has notified:
1. The European Banking Authority (EBA)
2. The European Central Bank (ECB)
3. The European Financial Stability Facility (EFSF)
4. The European Systemic Risk Board (ESRB)
48
In accordance with the law 87(I)/2017, providing misleading
information to CySEC can carry a penalty of
1. Jail for 5 years and a fine of 350.000 euros
2. Jail up to 5 year and/or a fine of 700.000 euros
3. Jail for 3 year and a fine of 450.000 euros
4. a fine of 700.000 euros
49
Jimmy works for a company in he gained access to
confidential information, he should have known that this was
inside information but assumed it was not. This means that
Jimmy:
1. Is not deemed to be in possession of inside information under any

circumstances
2. Is only deemed to be in possession of inside information if it was
acquired criminally
3. Is only deemed to be in possession of inside information if it was

acquired in the course of their employment
4. Is automatically deemed to be in possession of inside information
50
Why has it been deemed important for market operators to
ensure their systems for order pairing execute transactions
fairly?
1. To minimize charges
2. To counter money laundering
3. To maximize liquidity
4. To prevent manipulation
51
In the case where a CIF is exposed to the risk of not being
able to realise payments from clients in a timely manner,
this can be normally described as:
1. Credit concentration risk
2. Market risk
3. Securitization risk
4. Residual risk
52
Apart from distribution, redemption and repurchase dates,
as a MINIMUM MUST the assets of an AIF be valued?
1. Whenever a charge is created over any of the assets
2. On the reference dates mentioned in the annual and half-yearly

reports
3. Quarterly
4. Monthly
53
A company that has had shares admitted to trading for
LESS than three years can be deemed as a small and
medium enterprise (SME) provided that the market
capitalization is below:
1. 65 million EUROS
2. 200 million EUROS
3. 300 million EUROS
4. 25 million EUROS
54
All CIF licenses which have been revoked should be
reported :
1. to the European commission only in the case the company revokes its
own license
2. to the European Commission in all cases of revocation
3. to the European commission only in the case CySEC revokes the

license
4. to ESMA in all cases of revocation
55
When a CIF or IF wishes to establish a branch in Cyprus,
they need to:
1. Establish its branch and then notify CySEC
2. Send a written notification to CySEC which will give its response

within 3 months
3. Do nothing other than establish the branch and work
4. Send a written notification to CySEC which will give it s response within

6 months
56
Profita Bank is preparing all their documents to be sent to
the CBC for approval. One of the most important reports is
the policies and procedures associated with detecting risks.
The report should clearly?
1. Take into account policies and procedures implemented by AAA rating

banks
2. Take into account the potential profits to be made from risk associated
activities
3. Take into account the nature, scale, and complexity of the bank
4. Take into account policies and procedures implemented by the biggest
banks in Cyprus in terms of turnover
57
When a bank receives a fee for offering investment advice
while not taking into consideration whether it is in the best
interest of the client, then this is referred to as?
1. an inducement
2. a normal fee paid to banks
3. a bribe
4. churning
58
It is wise for UCITS to hold their funds in credit institutions
as this also invokes customer confidence. However in order
to come to an agreement with the credit institution the
UCITS will require which of the following?
1. The deposits are repayable on demand with a maturity of less than 12

months

months

months

months
59
In the case where a CIF has failed which of the following will
occur?
1. The CBC must notify the European Systemic Risk Board (ESRB)
2. CySEC must notify the European Securities and Markets Authority

(ESMA)
3. CySEC must notify the European Systemic Risk Board (ESRB)
4. The CBC must notify the European Securities and Markets Authority
(ESMA)
This must be from previous chapters- check answer
60
A CIF has decided to change its share holdings, this has
caused concern at CySEC with regards to the companies
sound and prudent management. CySEC feels they must
act accordingly to protect the CIF's customers by taking
which of the following measures?
1. Prohibiting the transfer of shares
2. Immediately withdrawing the CIFs authorization
3. Imposing an administrative fine to CIFs directors
4. Demanding an increase of the share capital to euro 1.000.000

61
A foreign firm has been discovered to carrying out an act
contrary to EC regulations, the firm is not subject to CySECs
supervision. CySEC notified the competent authority of the
relevant member state, what other action MUST CySEC
take?
1. Issue a statutory warning notice to the firm
2. Advise the European Securities and Markets Authorities (ESMA)
3. Publish a referral statement in the national press
4. Freeze any local assets held by the firm
62
Which of the following persons, Law 87(I)/2017 does not
apply to:
1. Banks offering investment services
2. Third-country firms providing investment services or activities

without the establishment of a branch in the Republic.
3. IFs operating in the republic
4. CIF
63
A company with a license to provide investment advice and
holds clients funds needs a capital of:
1. minimum 125.000 euros

64
A bank has a solid reputation for having strong risk
management procedures in place. the reason they have
such a good reputation is because their risk management
procedures carry out which of the following?
1. Enable the bank to identify all risks
2. Enable the bank to identify systemic risk
3. Enable the bank to eliminate all risks
4. Enable the bank to identify at least Credit risk
65
What is the MINIMUM number of directors a CIF must have
among its management?
1. Two if it provides investment advice, otherwise one
2. One in all cases
3. Two in all cases
4. Two if it holds client money, otherwise one

66
Investa Bank which is registered in the Republic of Cyprus
has decided that due to a current restructuring of their
operations it will outsource their portfolio management
division for retail clients to a service provider that is claiming
to be making an annual return of 8%. The service provider is
located in Dubai. In order to proceed with the outsourcing
which of the following provisions needs to be satisfied?
1. There must be an appropriate co-operation agreement between the

CBC and the supervisory authority of the service provider
2. The third country should fully implement MiFID regulation
3. The third country should apply equivalent money laundering procedure

as in Cyprus
4. The bank should always obtain the written approval of the CBC
67
Thermal FX got their license from CySEC three years ago
but has NOT provided any investment services or activities
for the last 6 months. The firm faces which of the following
consequences?
1. The employees must undertake mandatory retraining
2. Their authorization will automatically lapse
3. The board of directors must complete a legal undertaking
4. Capital adequacy requirements will be reduced

68
Every CIF authorized in the republic must provide certain
information or reports at some point during their trading
activities. Which of the following is considered one of
those necessary reports?
1. Each year at the latest by 30 April, must inform CySEC of all

shareholders possessing qualifying holdings during the previous
calendar year
2. Each year at the latest by 31 January, must inform CySEC of all

shareholders possessing qualifying holdings during the previous
calendar year
3. Each year at the latest by 31 January, must inform CySEC of all

shareholders as of 31 December of the previous calendar year
4. On a quarterly basis, must inform CySEC of all shareholders

possessing qualifying holdings during the previous calendar year
69
Units in a Collective Investment Undertaking are classified
as:
1. Forex
2. CFDs
3. Financial Instruments
4. Financial Services
70
In relation to banks authorized in Cyprus, any
recommendation that does not qualify as investment
research will be treated as which of the following?
1. investment service
2. investment updates
3. marketing material
4. An investment advice

Questions Without Answers For CySec Exam 1

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Advanced Certificate Exam 1 (2018 Update)

1. The amount of investment involved

1. Deal on their own account

1. The new level of capital that a CIF should hold

1. Depends size of client deposit

1. It is appropriate in all situations

1. CIF should first get CYSEC approval

1. non-equity securities issued in a continuous or repeated manner by credit institutions,

1. acquire precious metals or certificates representing them

1. Managers and senior managers

1. may rely on client information provided by Firm B

1. The compliance function is the main responsible department

1. 150 000 euros

1. Origin, parties, nature, place and time

1. The sound and prudent management of all CIFs

1. The exercise of shareholders right by proxy is prevented

3. entering large numbers of orders and/or cancellations/updates to orders so as to create

4. entry of orders, or a series of orders, intended to start or exacerbate a trend, and to

5. the registration of all risks with CySEC

3. Review of additional information

2. A notification is required in Q2 and Q4 only

3. A notification is required in all quarters

4. A notification is required in Q2, Q3 and Q4 only

2. Annually, but with reviews

3. One time, but periodic reviews should follow

1. 24 hours after publication

2. beginning of the next trading day

3. 15 minutes after publication

4. the end of the next trading day

1. Disaster Recovery Plan is part of the Business Continuity Planning

2. Business Continuity Program is part of the Disaster Recovery Plan

3. Disaster Recovery Plan is part of the Business Continuity Program

4. Business Continuity Planning is part of the Disaster Recovery Plan

2. Immaterial changes to the fund

3. Total amounts of variable and fix remuneration paid to staff

4. Income and expenditure report

1. Uses capital raised from the public

2. Operates on the principle of risk spreading

4. Uses privately or publicly raised capital

3. there is no communication at all

4. there is no communication until CySEC finalizes the process

2. The 3rd party which did the sub delegation

1. Has given its consent

2. Has a head office in the republic

3. Has appropriate risk management procedures in place

4. Has been informed

3. entry of orders, or a series of orders, intended to start or exacerbate a trend, and to

1. 1 executive and 3 non-executive directorships

3. 3 executive and 1 non-executive directorships

2. within 6 months for a common fund, and 2 months for a VCIC

3. within 6 months for a VCIC and 12 months for a common fund

4. within 3 months regardless if it is a VCIC or common fund

1. Costs and revenues for each of their services

2. Any breaches that might seriously jeopardise the financial markets

3. Any breaches that constitute a threat to market confidence

4. Prices and fees for each of their services

1. any one of the owners of the joint account

3. Both owners of the account

1. 125 000 euros

2. 150 000 euros

3. 100 000 euros

4. 200 000 euros

3. No, he is responsible in the participation of establishing them.