CMFAS M8 What a CIS Is & the Regulatory Framework question: Before recommending a fund to a retail

CMFAS M8What a CIS Is & the Regulatory Framework

Before recommending a fund to a retail client, the key regulatory check a representative must make is whether the scheme is:

A authorised or recognised, and so offerable to retail clients, rather than a restricted scheme
B open-ended rather than closed-ended, since only open-ended funds may be sold to retail clients
C managed by the largest available fund house, which has the best track record
D priced below S$1.00 per unit, so the client can buy a larger number of units

Show the answer and explanation

Answer: A. authorised or recognised, and so offerable to retail clients, rather than a restricted scheme

The representative's key check is whether the scheme is authorised or recognised (and so offerable to retail) or a restricted scheme confined to accredited/qualified investors; offering a restricted scheme to a retail client breaches the framework.

Common mistake

Substituting a structural or pricing feature for the authorised/recognised eligibility check.

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CMFAS M8 What a CIS Is & the Regulatory Framework question: Before recommending a fund to a retail

Answer: A. authorised or recognised, and so offerable to retail clients, rather than a restricted scheme

Common mistake

Related CMFAS M8 questions

CMFAS M8 What a CIS Is & the Regulatory Framework question: Before recommending a fund to a retail

Answer: A. authorised or recognised, and so offerable to retail clients, rather than a restricted scheme

Common mistake

Related CMFAS M8 questions