Proving and Maintaining Competence in the Global Financial Centres

1
Proving and Maintaining Competence in the Global
Financial Centres

• Simon Culhane
• Chief Executive
• 13th October 2005

2
Outline

• Trends to Global Centres

• UK as Global Financial Centre

• Best Practice
• Education Training

• Developments in Global
• Certification

3
Characteristics of Global Centres

• Support from host Government
• Critical mass
• Highly trained and plentiful staff
• High quality support services
• Substantial physical assets and infrastructure
• Proportionate Regulation
• Shared responsibility between firm and individual
• Non aggressive tax regime
• English language base

4
Financial Services Trade Balances

• UK largest surplus in trade in financial
  services - 25.3bn
• Switzerland 11bn
• US -8.bn but highest surplus of commercial
  invisibles 81bn

5
International Financial Markets
6
Foreign Equity Markets
7
Foreign Exchange Trading
8
Central Registration

• Key to linking accountability between the firm
  and individual
• Probity and Fitness
• Not a barrier but a standard
• Demonstrate initial competence exam

9
Examinations - Merits

• Protects clients
• Transparent standards
• Economies of scale
• High quality
• Low cost
• Provides common currency
• Valid, consistent, reliable
• Supports international reputation

10
Quality Examinations

• Practitioners driven
• Syllabus panel
• Quality built in
• Fraud prevention
• Meets regulation standards
• Computer Based Testing
• On demand

11
Who takes Exams when?

• MiFID requirement
• Mandatory v Optional
• Firm v Regulator
• Front v Operations
• Entry level
• Grandfathering
• Role of Experience

12
Trends in Global Exams

• Regulatory v Practical
• Common Core
• Portability
• Mutual recognition

13
Securities Exam in UK
FSA local Regulations Module 50 Questions 1
Hour Created and administered by SII
Technical Module in Securities 100
Questions 2 Hours Created and administered by
SII
Award Certificate in Securities Awarded by
SII Approved by UK Financial Services Skills
Council


14
Global Exam Trends The SII Model

• Local Regulations
• Module
• 50 Questions
• 1 Hour
• Created and
• administered by
• countrys own
• regulator/or in
• Consultancy with SII

International Technical Module 100 Questions 2
Hours Created and administered by SII
Award Certificate in Securities Awarded by SII
Technical Module


15
Exam Structure in Ruritania
SAC Principles local Regulations Module Created
and administered by Securities Association of
Ruritania
Technical Module in Securities 100 Questions 2
Hours Created and administered by SII
Award Certificate in Securities -
Ruritania Awarded by SII Technical Module
approved by UK Financial Services Skills
Council


16
International Portable Qualification
FSA local Regulations Module 50 Questions 1
Hour Created and administered by SII
Technical Module in Securities ?
SAC Principles local Regulations Module Created
and administered by Securities Association of
Ruritania
Technical Module in Securities 100 Questions 2
Hours Created and administered by SII


17
Cross Border Cooperation

• Islamic Finance Qualification
• NASD/NYSE/SII
• ICAEW Corporate Finance

18
Entry v Maintenance

• Initial emphasis on entry level
• Now on Maintenance
• Focus on CPT
• Input or Output

19
CPD in UK Firms
Are you part of a CPD scheme in your firm?

• 47 YES
• 53 NO

20
What happens if its optional?
Are you part of a Optional CPD scheme in your
firm?

• 62 take part
• 38 dont join

21
Should CPD be Compulsory?
Should CPD be Compulsory?

• Strong support
• 75 YES

22
Test to check if currently proficient?
Should Current Proficiency be tested?

• Strong support
• 78 YES
• 14 NO

23
Spectrum

• Attendance
• Random audit
• Internal Accreditation
• Refresher check
• Pass/Fail test

24
Refresher Coaching

• Designed to pass
• Coaching
• Principles checked and reinforced
• Not time sensitive

25
Revalidation

• PN
• P4
• P3
• P2
• P1

Q1 Q5
?
Time
26
Revalidation

• PN
• P4
• P3
• P2
• P1

?
Q1 Q5
Q1 Q5
?
Time
27
Revalidation

• PN
• P4
• P3
• P2
• P1

?
Q1 Q5
?
Q1 Q5
Q1 Q5
?
Time
28
Revalidation

• PN
• P4
• P3
• P2
• P1

Q1 Q5
Time
29
Revalidation

• PN
• P4
• P3
• P2
• P1

?
Q1 Q5
Q6 Q10
Time
30
Revalidation

• PN
• P4
• P3
• P2
• P1

?
Q1 Q5

?
Q1 Q5
Q6 Q10
Time
31
Incentives

• Revalidation period linked to refresher
  performance
• High performance leads to longer gap between
  refresher
• Lower performance leads to shorter gap

32
Summary

• Global centres are enlarging
• Fitness Probity paramount
• Strong role of exams
• Common core
• Mature markets move from entry to maintenance