WEDNESDAY: 23 August 2023. Afternoon Paper. Time Allowed: 3 hours

Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper.


1. Highlight FOUR limitations of raising capital in the Securities Exchange. (4 marks)

2. In terms of the financial system, in an increasingly technological and digital world, handling physical
documents may hamper the functioning of securities trading and broking. The move to dematerialisation is in line with the global move of all systems to go online and transact via smart devices.

With reference to the above statement:

Explain the term “De-materialisation” of securities. (2 marks)

Summarise SIX benefits of a dematerialised account to an investor. (6 marks)

3. Capital markets have continued to support access to resources for business development.
Discuss FOUR challenges that may hinder the development of an effective Capital market in your country. (8 marks)

(Total: 20 marks)



1. The term “frontier markets” was coined in 1992 by Farida Khambata.

Outline FIVE characteristics of these markets. (5 marks)

2. Describe the term “insider trading” as used in the securities exchange. (2 marks)

Outline THREE effects of insider trading. (3 marks)

Explain TWO categories of insider trading. (2 marks)

3. Explain FOUR roles of Unclaimed Financial Assets Authority (UFAA). (8 marks)

(Total: 20 marks)



1. Identify THREE roles of regulatory sandbox in financial service. (3 marks)

2. Companies that are expanding operations may use internally generated or external funding from the capital markets.

Outline FOUR benefits that would accrue to companies from listing in the securities exchange. (4 marks)

3. Summarise FIVE functions of money markets in the development of financial systems of your country.
(5 marks)

4. Explain FOUR hypothesis of Initial Public Offering (IPO) in the securities market of your country. (8 marks)

(Total: 20 marks)



1. Most jurisdictions have implemented Central Depository Systems (CDS) to transact and transfer shares between parties. Identify FOUR challenges that may affect the effective implementation of CDS in your jurisdiction. (4 marks)

2. Explain THREE benefits of holding shares in the Direct Registration system (DRS) in the securities exchange market. (6 marks)

3. The Securities Exchange in many countries has experienced low rate of listing of companies over time. Analyse FIVE factors that could have contributed to the low rate of listing. (10 marks)

(Total: 20 marks)



1. Yefwe Self Help Group intends to register a Deposit Taking Sacco. Explain FIVE good governance practices that it must adhere to for it to be compliant with SACCO Society Regulatory Authority (SASRA) regulations. (10 marks)

2. The International Organisation of Securities Commissions(IOSCO) is an association of organisations that regulate the world’s securities and futures markets.

With reference to the above statement:

Highlight TWO objectives of the IOSCO Principles of Self-Regulation. (2 marks)

Analyse FOUR risks faced by depository institutions when generating spread income. (8 marks)

(Total: 20 marks)

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