European Institute of Management and Finance | ESMA Guidelines for the Assessment of Knowledge and Competence
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ESMA Guidelines for the Assessment of Knowledge and Competence

ESMA Guidelines for the Assessment of Knowledge and Competence

 

European regulatory framework does not only affect the companies in scope but also the natural persons (including tied agents) providing relevant services to clients on behalf of the firm. When the firms provide information to clients about financial instruments, structured deposits, investment services or ancillary services, either upon the request of the client or at the initiative of the firm, the firms must safeguard that their staff acquired an appropriate qualification and the appropriate experience to fulfil the obligations in Article 24 and 25 MiFID II in order to provide the relevant services.

 

ESMA expects these guidelines to promote greater convergence in the knowledge and competence of staff providing investment advice or information about financial instruments, structured deposits, investment services or ancillary services to clients, and competent authorities to assess the adequacy of the compliance with such requirements.

 

ESMA guidelines establish minimum standards for the assessment of knowledge and competence for staff providing relevant services. Consequently, Competent Authorities can require higher levels of knowledge and competence for staff giving advice and/or for staff giving information.

 

 

Training Objectives

 

By the end of this seminar, the participants will be able to:

 

  • Understand the key characteristics, risk and features of those investment products available through the firm, including any general tax implications and costs to be incurred by the client in the context of transactions
  • Understand products characterised by higher levels of complexity
  • Understand the total amount of costs and charges to be incurred by the client in the context of transactions in an investment product, or investment services or ancillary services
  • Understand the characteristics and scope of investment services or ancillary services
  • Understand how financial markets function and how they affect the value and pricing of investment products on which they provide information to clients
  • Understand the impact of economic figures, national/regional/global events on markets and on the value of investment products on which they provide information
  • Understand the difference between past performance and future performance scenarios as well as the limits of predictive forecasting
  • Understand issues relating to market abuse and anti-money laundering
  • Assess data relevant to the investment products on which they provide information to clients such as Key Investor Information Documents
  • Understand specific market structures for the investment products on which they provide information to clients and, where relevant, their trading venues or the existence of any secondary markets
  • Have a basic knowledge of valuation principles for the type of investment products in relation to which the information is provided

 

 

Training Outline

 

Understand how financial markets function and how they affect the value and pricing of investment products on which they provide information to clients

  • The Financial Services Industry
  • The Economic Environment
  • Financial Assets and Markets
  • Introduction to Investment Funds
  • What do financial markets do?
  • Why are financial markets important?
  • What is the purpose of financial markets?
  • What are the features of financial markets?
  • Capital vs Money Markets
  • Powers of Supply and Demand

 

Understand the impact of economic figures, national/regional/global events on markets and on the value of investment products on which they provide information

  • Macroeconomic Indicators
  • Economic Calendar

 

Understand the key characteristics, risk and features of those investment products available through the firm, including any general tax implications and costs to be incurred by the client in the context of transactions

  • General Information Financial investment products
  • Main features of financial investment products
  • Risks inherent to financial investment products
  • Definitions of risks
  • Cost/premium of financial investment products
  • Tax aspects
  • Languages used

 

Understand products characterised by higher levels of complexity

  • Types of Products
  • Complex products
  • Non-complex products
  • Basics for Equities and Bonds
  • Basics for Derivatives
  • Product Governance principles

 

Understand the total amount of costs and charges to be incurred by the client in the context of transactions in an investment product, or investment services or ancillary services

  • Basics for Ethics
  • Prohibited practises by the Staff
  • The Psychology of Personal Investment Decisions
  • Mis-selling or miscommunication? Apparent mis-selling of financial products may be the result of different perceptions between advisers and clients
  • Costs and charges information and methodology

 

Understand the characteristics and scope of investment services or ancillary services;

  • Definitions for investment services and ancillary services
  • What are investment services?
  • What are the ancillary services?
  • Who is eligible to provide them?

 

Understand the difference between past performance and future performance scenarios as well as the limits of predictive forecasting;

  • What constitutes an investment recommendation?
  • What is investment research?
  • What is investment advice?
  • What is the difference between investment research and advise?
  • Who is eligible to provide those services?
  • What are the limitations for predictive forecasting?

 

Understand issues relating to market abuse and anti-money laundering;

  • Markets definition
  • Market Abuse definition
  • Inside Information and Insider Dealing
  • Money laundering and Terrorist financing definitions
  • AML directives
  • Know Your Client steps

 

Assess data relevant to the investment products on which they provide information to clients such as Key Investor Information Documents;

  • What is a Key Investor Information Document?
  • What Information is included?
  • When is it necessary to provide KIID and to whom?

 

Understand specific market structures for the investment products on which they provide information to clients and, where relevant, their trading venues or the existence of any secondary markets;

  • Definitions of Trading venues
  • Definitions for Execution Venues
  • Different Market Structures
  • Primary vs Secondary Market
  • What constitutes a transaction?
  • What constitutes transmission of a transaction?
  • What is execution of an order?

 

Have a basic knowledge of valuation principles for the type of investment products in relation to which the information is provided.

  • What are valuation principles?
  • Key principles of Value Investing
  • Methods of valuation
  • How is valuation calculated?

 

 

Training Style and Knowledge Test

 

This programme is designed in the light of ESMA guidelines relating to minimum knowledge required by natural persons. The course aims to provide practical guidance and enhanced knowledge to participants, who will learn the basic terminology and then proceed to understand an advanced level of Investment firms’ industry and the operations of CIF. Participants will also benefit from feedback at the end of the programme and take away the knowledge gained to be transferred to their workplace.

 

Upon completion of the knowledge areas, participants will be assessed via the form of Multiple-Choice Questions which will consist of questions related to the material taught. The aim of the assessment is to examine participants’ overall attention and knowledge of material taught as well as their competencies towards the implementation of practical cases.

 

 

CPD Recognition

 

This programme may be approved for up to 25 CPD units in Financial Regulation. Eligibility criteria and CPD Units are verified directly by your association, regulator or other bodies which you hold membership.

 

Professionals requiring CPD units to meet the education requirements for CySEC licence renewal, and/or for maintaining other professional memberships/certifications which accept CPD in Financial Regulation, are advised to consider training subjects in categories that indicate CPD training in Financial Regulation.

 

 

Who Should Attend

 

  • Natural persons (including tied agents) providing relevant services to clients on behalf of a firm under the scope of MiFiD 2
  • Graduate or post graduate students
  • Unemployed professionals wishing to enter Investment firms’ industry
  • Current or prospective employees of CIFs who wish to enhance their Investment firms’ knowledge and progress their career
  • Existing professionals who wish to obtain a better understanding of the Investment firms’ industry and the operations of CIF
  • Persons who wish to have a career in Compliance, Account Opening, Back Office, Sales Agent, Customer Support Representative, Retention Officer, other front facing staff who are involved in the provision of information and/or marketing communication to clients or potential clients as per CySEC Circular C181