CISI Transfer Agency flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Forward pricing

A dealing method where the price for a subscription or redemption is the net asset value struck at the next valuation point after the order is accepted, so the investor does not know the price at order entry.

Dilution adjustment

An upward or downward adjustment to a fund's NAV per share applied on large net inflows or outflows, so that dealing costs are borne by the transacting investor rather than by existing holders.

Swing pricing threshold

The net flow level, set in the prospectus, at which the fund switches from unadjusted to adjusted pricing; flows below it are met from the fund's normal cash buffer without adjustment.

Beneficial owner test

Under MLR 2017, a natural person who ultimately owns or controls more than 25% of the shares or voting rights, or who otherwise exercises control, must be identified and verified.

Politically exposed person

An individual entrusted with prominent public functions, plus family members and close associates, who is subject to enhanced due diligence, senior approval and source-of-wealth checks.

CDD record retention

UK MLR 2017 requires customer due diligence records to be kept for five years after the business relationship ends; transaction records are also kept for five years.

Suspicious activity report

A report to the National Crime Agency made by the nominated officer when there is knowledge or suspicion of money laundering; tipping off the customer is a criminal offence.

Dealing cut-off time

The time stated in the prospectus by which an order must be received to be priced at that day's valuation point; later orders roll to the next dealing point.

In-specie settlement

Settlement of a large subscription or redemption by transferring assets rather than cash, used above a prospectus threshold with manager and depositary approval, and valued at the dealing point.

Contract note

A confirmation issued to the investor after a deal showing the trade date, price, number of units, gross and net consideration, and any charges applied.

Equalisation

A mechanism allocating the income element embedded in a purchase price so that new investors do not receive a distribution containing income earned before they joined the fund.

Record date

The date on which the register is struck to determine which holders are entitled to an income distribution or to vote at a general meeting.

Stock transfer form

The instrument used to transfer legal title in registered shares; the transferee must complete CDD before the transfer agent updates the register.

UCITS 5/10/40 rule

A UCITS may hold no more than 10% of its NAV in securities of a single issuer, and holdings above 5% across issuers must total no more than 40% of NAV.

ICVC

An Investment Company with Variable Capital, the UK open-ended investment company structure: a corporate fund whose share capital can vary and which is single-priced with a dilution mechanism.

Unit trust spread

The difference between the offer price at which units are issued and the bid price at which they are redeemed in a dual-priced fund, covering dealing costs and any initial charge.

Depositary

The entity that safekeeps a fund's assets, monitors the manager's compliance with investment and valuation rules, and must be satisfied that pricing and dilution are operated as disclosed.

SYSC 8 outsourcing

FCA rules requiring a firm to retain responsibility for outsourced functions, perform due diligence, set service levels and ensure regulators can access the provider's records.

Client money segregation

CASS 7 requires investor cash held by a firm to be kept in a segregated client money account, reconciled daily, and not mixed with the firm's own funds.

Payment-versus-payment

An FX settlement arrangement where each currency leg is released only when the counterparty leg is confirmed, reducing Herstatt risk of paying out without receiving.

Payment diversion fraud

A fraud where a criminal impersonates an investor or adviser to change bank details; controls include independent call-back verification and dual authorisation of amendments.

Pricing error tolerance

The prospectus-defined percentage breach above which a pricing error must be corrected, affected investors compensated, and the depositary and regulator notified.

Fair value pricing

An adjustment to a stale or closed-market price using a model or index proxy, applied to prevent market timing and to reflect the true value of the fund's holdings.

Register reconciliation

A control confirming that shares in issue on the transfer agent's register agree to the fund accounting records and the depositary's records at each valuation point.

Maker-checker control

A control where one person inputs a transaction or static-data change and a second, independent person reviews and approves it before the change takes effect.

Recovery time objective

The maximum acceptable time to restore a business process after disruption, set in the business impact analysis and tested through business continuity exercises.

FATCA reporting

Under the UK-US intergovernmental agreement, funds identify US persons, collect W-8/W-9 forms and report specified account data to HMRC for onward transmission to the IRS.

Common Reporting Standard

An OECD automatic-exchange regime requiring financial institutions to identify account holders' tax residence and TIN and report the data annually to their local tax authority.

KIID/KID

A short, standardised pre-contractual document giving the fund's objectives, risk-reward indicator, costs and past performance, which must be offered to the investor before investment.

Accumulation share class

A class that reinvests income into the fund rather than paying a cash distribution, so holders receive no distribution but must still report notional income for tax.

Enhanced due diligence

Additional checks applied to higher-risk investors such as PEPs or those in high-risk jurisdictions, including establishing source of funds and source of wealth and obtaining senior approval.

Three lines of defence

A risk governance model in which the business owns risk, an independent compliance function provides oversight, and internal audit gives independent assurance over the control framework.