Pasaran Kewangan Malaysia Certificate (PKMC) Module I - Regulatory Framework (Malaysia)

Under the Financial Markets Association of Malaysia (FMAM) Code of Conduct, what is the standard spot settlement date (Value Spot) for interbank foreign exchange transactions involving the Malaysian Ringgit (MYR)?

• ASame business day as the transaction date (T+0)
• BNext business day following the transaction date (T+1)
• CTwo business days following the transaction date (T+2)
• DThree business days following the transaction date (T+3)

According to the ACI Model Code and FMAM Local Addendum, which of the following describes the obligation of a market participant providing a 'firm quote'?

• AThe quote is indicative only and can be adjusted after the counterparty attempts to trade.
• BThe quote-provider is obligated to trade at the quoted price up to the specified amount.
• CThe quote is only valid if confirmed in writing via email within ten minutes.
• DThe quote is binding only if the counterparty agrees to a reciprocal dealing arrangement.

Under the FMAM Code of Conduct, how long must wholesale market participants retain voice recordings (trade tapes) of telephone conversations between dealers?

• AAt least 6 months
• BAt least 1 year
• CAt least 3 years
• DAt least 5 years

When a dispute arises between two interbank dealers regarding a transaction's terms, what is the FIRST action the participants should take under FMAM guidelines?

• ARefer the matter immediately to Bank Negara Malaysia (BNM) for arbitration.
• BCancel the trade unilaterally to prevent financial exposure.
• CListen to the voice recordings of the conversation and compare transaction confirmations.
• DInitiate legal proceedings in the High Court of Malaysia.

Under the FMAM Code of Conduct, which of the following practices is considered a form of market manipulation known as 'painting the tape'?

• AProviding a firm quote that is slightly wider than the current market spread.
• BExecuting transactions that do not involve any change in beneficial ownership to create a…
• CSubmitting an order via the electronic system and cancelling it within 2 seconds.
• DExecuting trades at the end of the day to rebalance a portfolio.

What does the FMAM Local Addendum state regarding the sharing of confidential client information among dealers at different financial institutions?

• AIt is permitted if the dealers are close professional colleagues.
• BIt is permitted if the information is shared verbally rather than in writing.
• CIt is strictly prohibited unless required by law, regulators, or authorized by the client.
• DIt is permitted if the dealers sanitize the names of the clients involved.

Under the FMAM Local Addendum, when a dealer executes a transaction with an interbank broker, who is responsible for sending the trade confirmation?

• AOnly the broker is required to send a confirmation to both counterparties.
• BOnly the dealer who initiated the transaction is required to send a confirmation.
• CBoth the broker and the counterparties must exchange confirmations independently.
• DConfirmations are not required for broker-brokered transactions since they are recorded o…

What is the standard payment and settlement convention for Ringgit-denominated interbank money market loans under FMAM guidelines?

• ARENTAS real-time gross settlement on the transaction date (T+0) or next day (T+1)
• BBilateral cheque clearing within 3 business days (T+3)
• CDeferred net settlement via giro transfer at the end of the week
• DCash delivery at the Treasury department of the lending bank

Under the FMAM Code of Conduct, which of the following describes the ethical standard for 'Personal Account Dealing' (PAD) by wholesale market dealers?

• ADealers may trade freely on their personal accounts without restrictions, provided they u…
• BDealers are permitted to trade on personal accounts only using information obtained from…
• CDealers must obtain prior internal compliance approval and ensure their personal trades d…
• DPersonal account trading is completely prohibited under Malaysian law for all treasury em…

According to the FMAM Code of Conduct, if a dealer receives an entertainment invitation from an interbank broker, what rule must be observed?

• AThe dealer can accept any level of entertainment, provided it is held outside office hour…
• BThe entertainment must be of modest value, not influence the dealer's business allocation…
• CBrokers are strictly prohibited from offering any form of food or beverage to dealers.
• DThe dealer must pay for their own share of the entertainment in all circumstances.

What is the standard procedure under the FMAM Local Addendum for quoting interbank deposit rates in the Malaysian Ringgit (MYR) market?

• AQuotes must be made on a 365-day year basis.
• BQuotes must be made on a 360-day year basis.
• CQuotes must be made on a 366-day year basis during leap years only.
• DQuotes can use either 360 or 365 days, depending on the preference of the borrowing insti…

Under the FMAM Code of Conduct, what is the ethical rule regarding 'after-hours trading' by interbank dealers?

• ADealers are permitted to trade at any time of night from home without restrictions.
• BAfter-hours transactions are prohibited unless executed through a recognized electronic b…
• CAfter-hours trading must be authorized by management, properly logged, and executed withi…
• DTransactions executed after 5:00 PM are legally void under the Financial Services Act 201…

Under the FMAM Code of Conduct, what must a dealer do if they receive an order from a client that could potentially manipulate a benchmark rate, such as KLIBOR or MYOR?

• AExecute the order immediately to prioritize the client's interests.
• BRefuse to execute the order and report the incident to compliance.
• CExecute the order but charge a higher commission to compensate for the risk.
• DShare the order details with other dealers to see if they can match the price.

What is the standard settlement convention for spot foreign exchange transactions between Malaysian Ringgit (MYR) and US Dollar (USD)?

• AValue Today (T+0)
• BValue Tomorrow (T+1)
• CValue Spot (T+2)
• DValue Spot (T+3)

Under the FMAM Code of Conduct, which of the following is correct regarding 'frontrunning'?

• AExecuting a trade for a client before executing a trade for the bank's own account.
• BExecuting a proprietary trade ahead of a client's order when the dealer has prior knowled…
• CExecuting trades at the beginning of the market day to establish a price level.
• DActing as a lead manager in a debt issuance before other syndication members.

According to the ACI Model Code and Local Addendum, what must a dealer do if they notice an obvious error in a price quoted by a counterparty?

• AAccept the price immediately to lock in a profit for the bank.
• BPoint out the apparent error to the counterparty before executing a transaction.
• CExecute the transaction and then negotiate a settlement afterward.
• DReport the counterparty to Bank Negara Malaysia for incompetent pricing.

Under the FMAM Local Addendum, what is the standard settlement date for a Ringgit-denominated overnight interbank loan initiated on a Friday?

• AThe following Saturday
• BThe following Sunday
• CThe following Monday
• DThe following Tuesday

Under the FMAM Code of Conduct, which of the following is correct regarding the use of brokers in wholesale financial markets?

• ABrokers are permitted to act as principal counterparties in transactions.
• BBrokers must act as pure intermediaries and must not position trades or trade for their o…
• CBrokers can hide the identity of counterparties even after a trade is executed.
• DBrokers can share commissions with bank dealers to incentivize order routing.

Under the FMAM Code of Conduct, what is the role of a 'compliance officer' in a licensed financial institution's treasury department?

• ATo maximize trading profits by identifying regulatory loopholes.
• BTo monitor, assess, and ensure that treasury operations and dealers comply with internal…
• CTo execute transactions on behalf of the bank when dealers are unavailable.
• DTo settle disputes directly with counterparty dealers without involving management.

According to the FMAM Code of Conduct, what is the standard cut-off time for resolving trade confirmation discrepancies on the transaction date (T+0)?

• ABefore the RENTAS system closes for the day.
• BBy 12:00 PM the following business day.
• CWithin 48 hours of trade execution.
• DConfirmations can be resolved at any time before the settlement date.

Under the FMAM Code of Conduct, which of the following actions is required if a dealer intends to execute a transaction at an 'off-market rate'?

• AOff-market rate transactions are completely illegal and cannot be executed.
• BThe dealer can execute the transaction freely, provided the client agrees to the rate.
• CThe dealer must obtain prior senior management and compliance approval, and document the…
• DThe dealer must notify Bank Negara Malaysia within 24 hours of executing the trade.

According to the FMAM Code of Conduct, what is the ethical duty of a dealer regarding client orders in a volatile market?

• AThe dealer may execute proprietary trades first to protect the bank's capital.
• BThe dealer must handle client orders fairly and sequentially, without exploiting the vola…
• CThe dealer is allowed to unilaterally change the order price to reflect the volatility.
• DThe dealer should advise the client to cancel the order to avoid treasury workload.

Under the FMAM Code of Conduct, what is the standard convention for a dealer who wishes to leave a quote 'subject' or 'indicative'?

• AThe dealer must explicitly state 'subject' or 'indicative' at the time of quoting.
• BAll quotes are assumed to be indicative unless the dealer explicitly states 'firm'.
• CThe quote is indicative only if it is transmitted via a Bloomberg chat message.
• DIndicative quotes are not permitted under the Code; all quotes must be firm.

Under FMAM rules, what is the term used to describe a transaction where a dealer buys a security from a counterparty and simultaneously agrees to sell it back at a specified price on a future date?

• AForeign exchange swap
• BRepurchase agreement (Repo)
• CInterest rate swap
• DNegotiable instrument of deposit

Under the FMAM Code of Conduct, which of the following is correct regarding 'wash sales'?

• AThey are transactions designed to clear outstanding ledger balances.
• BThey are transactions that involve no change in beneficial ownership or risk, executed to…
• CThey are transactions executed to hedge foreign exchange risk for retail clients.
• DThey are transactions involving the clearing of physical bank notes.

According to the FMAM Code of Conduct, what is the ethical standard for dealers when participating in chat rooms with competitors?

• ADealers can discuss general market sentiment but must never share proprietary trading str…
• BDealers are free to discuss anything, provided they use private messaging channels.
• CDealers should use chat rooms to coordinate price levels to stabilize the Ringgit.
• DDealers are prohibited from joining any electronic communication systems.

Under the FMAM Code of Conduct, what is the term 'one-way market' or 'one-sided quote' used to describe?

• AA market where only buying is permitted due to currency controls.
• BA price quote that provides either a bid or an offer, but not both.
• CA market where all participants belong to the same banking group.
• DA trading system that only accepts limit orders.

Under the FMAM Code of Conduct, what is the standard practice if a dealer receives an order that they cannot fill internally?

• APass the client's information to a competitor to execute the trade.
• BInform the client transparently and seek their instructions on whether to route the order…
• CHold the order indefinitely in hope that the market moves in the bank's favor.
• DExecute the trade at an unfavorable rate and blame market volatility.

According to the FMAM Code of Conduct, what is the consequence of a wholesale market dealer failing to record a transaction immediately after verbal agreement?

• AThe verbal agreement is legally void and no trade exists.
• BThe dealer is exposed to operational, market, and credit risk, and violates audit trail r…
• CThe trade is automatically settled at the end of the month instead of the spot date.
• DNothing, as verbal agreements do not require immediate entry under Malaysian law.

Under the FMAM Code of Conduct, which of the following is correct regarding 'back-to-back' deals executed by dealers?

• AThey are executed to hide speculative positions from treasury risk managers.
• BThey are matching transactions executed simultaneously with two counterparties to lock in…
• CThey are prohibited under the Financial Services Act 2013.
• DThey are transactions executed to clear overnight overdrafts at Bank Negara Malaysia.

Under the FMAM Local Addendum, what is the standard value date for a Ringgit-denominated foreign exchange forward transaction maturing in 3 months?

• AExactly 90 calendar days from the trade date.
• BThree calendar months from the spot value date, adjusted for holidays.
• CThe last business day of the third calendar month.
• DExactly 90 business days from the trade date.

According to the FMAM Code of Conduct, which of the following is correct regarding a broker's responsibility in the event of an error trade?

• AThe broker must absorb the full financial loss of the error trade.
• BThe broker must work immediately to facilitate a bilateral resolution between the princip…
• CThe broker is allowed to unilaterally change the trade details on behalf of the counterpa…
• DThe broker has no responsibility once the trade is executed.

Under the FMAM Code of Conduct, what is the requirement for dealers regarding the signing of confirmations?

• AConfirmations must be signed by the dealer who executed the trade.
• BConfirmations must be processed and verified by an independent back-office or operations…
• CConfirmations are optional if the trade is settled through RENTAS.
• DConfirmations must be signed by the corporate client's managing director.

Under the FMAM Code of Conduct, what is the term used to describe the practice of trading based on non-public information regarding a central bank's upcoming interest rate decision?

• AMarket making
• BInsider trading
• CSpread trading
• DArbitrage

According to the FMAM Code of Conduct, how should a dealer handle an order from a corporate client that is executable at a specific benchmark fixing time?

• AThe dealer should trade aggressively ahead of the fixing to shift the benchmark rate in t…
• BThe dealer must execute the order carefully to minimize market impact and avoid manipulat…
• CThe dealer must refuse to accept benchmark-linked orders.
• DThe dealer must execute the trade through a broker to hide the bank's involvement.

Under the ACI Model Code and Local Addendum, which of the following is correct regarding the cancellation of a mutually agreed trade?

• AA trade can be cancelled unilaterally by the party facing a loss.
• BA trade can only be cancelled or amended with the mutual consent of both counterparties.
• CTrades can be cancelled by the interbank broker if the market moves significantly.
• DTrades can be cancelled unilaterally if a confirmation has not yet been printed.

According to the FMAM Code of Conduct, what is the responsibility of a dealer when giving market commentary to clients or the media?

• AThe dealer must present information objectively and avoid spreading false, misleading, or…
• BThe dealer should manipulate market sentiment to support the bank's active trading positi…
• CThe dealer is prohibited from providing any market commentary whatsoever.
• DThe dealer must obtain prior written approval from Bank Negara Malaysia for every media c…

Under the FMAM Code of Conduct, what is the standard term 'modified following business day convention' used to adjust?

• AThe calculation of dealer bonus pools.
• BMaturity and settlement dates that fall on a weekend or public holiday.
• CThe interest rate of a loan when the OPR changes.
• DThe day-count convention from 365 to 360 days.

Under the ACI Model Code, which of the following is considered an ethical breach regarding 'stop-loss orders'?

• AExecuting a stop-loss order at the exact price requested by the client.
• BTrading intentionally to trigger a client's stop-loss order for the bank's benefit.
• CAdvising a client on the risk of placing a stop-loss order too close to the market price.
• DRefusing to accept a stop-loss order due to extreme market volatility.

According to the FMAM Code of Conduct, what is the requirement for treasury departments regarding 'business continuity planning' (BCP)?

• ABCP is optional and only recommended for foreign-owned banks.
• BTreasury departments must maintain a disaster recovery site and regularly test BCP scenar…
• CBCP must be managed entirely by Bank Negara Malaysia on behalf of all banks.
• DBCP plans are confidential and must not be shared with internal compliance auditors.

Which Malaysian statute provides the legal framework for the licensing and regulation of conventional banking, investment banking, and money-broking businesses?

• ACapital Markets and Services Act 2007 (CMSA)
• BFinancial Services Act 2013 (FSA)
• CIslamic Financial Services Act 2013 (IFSA)
• DCompanies Act 2016

Under the Capital Markets and Services Act 2007 (CMSA), which regulator is empowered to supervise capital market activities, license intermediaries, and enforce investor protection laws in Malaysia?

• ABank Negara Malaysia (BNM)
• BSecurities Commission Malaysia (SC)
• CBursa Malaysia Berhad
• DMinistry of Finance (MoF)

Under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFPUAA), what is the obligation of a reporting institution regarding 'Suspicious Transaction Reports' (STR)?

• ASTRs must be submitted only if the transaction exceeds RM 50,000.
• BSTRs must be submitted promptly to Bank Negara Malaysia when there are reasonable grounds…
• CSTRs must be approved by the client before submission to the regulator.
• DSTRs should be submitted to the local police department within 30 days.

Under the Financial Services Act 2013, what is the maximum penalty for an individual convicted of market manipulation or benchmark rate rigging in wholesale markets?

• AImprisonment for up to 5 years, or a fine of up to RM 1 million, or both
• BImprisonment for up to 10 years, or a fine of not less than RM 1 million, or both
• CA administrative warning and suspension of FMAM membership for 1 year
• DA maximum fine of RM 50,000, with no imprisonment

What is the primary objective of Bank Negara Malaysia's guidelines on 'Customer Due Diligence' (CDD)?

• ATo verify the creditworthiness of clients seeking loans.
• BTo identify and verify the identity of customers and their beneficial owners to prevent m…
• CTo ensure that customers receive the highest deposit interest rates available.
• DTo collect demographic data for national marketing purposes.

Under the Capital Markets and Services Act 2007, what is 'insider trading' defined as?

• ATrading by employees of a financial institution on behalf of their employer.
• BTrading in securities or derivatives while in possession of material information that is…
• CExecuting trades directly on the exchange floor rather than electronically.
• DBilateral trading between two licensed banks without the use of an intermediary broker.

Under BNM's Guidelines on Investor Protection, what is a financial institution's obligation regarding the assessment of 'suitability' for wholesale treasury products?

• ASuitability assessments are not required for any corporate clients.
• BThe institution must conduct a suitability assessment to ensure that the product matches…
• CThe institution must guarantee that the client will not suffer any losses from the produc…
• DSuitability is assessed solely based on the net worth of the client's managing director.