Authorisations and Approvals (Part II)

Question 1

Define “trading services provider”

Answer 1

A member which has been authorised by the JSE to perform trading services in terms of the rules.

Question 2

What regulated services are authorised by the JSE?

Answer 2

Trading services, custody services and investment services.

Question 3

What regulated service must an applicant have applied for authorisation to perform in order to apply for authorization to perform investment services?

Answer 3

Trading services.

Question 4

What are the requirements to be admitted as a member and to remain a member?

Answer 4

Must :
1. Be incorporated and registered as a domestic company under the companies Act;
2. Only appoint executive and non-executive directors who comply with the fit and proper requirements;
3. Ensure that a shareholder who is a natural person and who directly or indirectly holds in excess of 10% of the issued shares of the applicant or member complies with the fit and proper requirements;
4. Appoint a compliance officer who complies with the fit and proper requirements;
5. Appoint a settlement officer and an alternate settlement officer who comply with the fit and proper requirements;
6. Appoint a CSDP, unless it only performs, or intends to perform, custody services and it does not require a CSDP in order to perform such services; and
7. Meet the specific conditions of membership relating to :
a. resources procedures and systems;
b. business activities and;
c. financial resources.

Question 5

What are the minimum conditions relating to resources, procedures and systems which an applicant for membership and a member are required to satisfy in order to be granted and to retain membership and to be authorised to perform regulated services?

Answer 5

1. A member must employ adequate resources, procedures and systems necessary for the effective performance of the regulated service which the member provides and for ensuring compliance with the Act and the rules and directives that are relevant to the performance of such regulated services and ensuring compliance with the Financial Intelligence Centre Act.
2. A member must ensure that its employees are suitable, adequately trained and properly supervised

Question 6

What must the dominant business activity of a member be and what may be included in the scope of a member’s business activities?

Answer 6

1. The dominant business activity of a member must be the performance of regulated services in respect of JSE authorised investments.
2. The scope of a member’s business activities may also include the management of investments or provision of advice in relation to other financial products, subject to the member having been granted the appropriate licence to conduct such activity in terms of the FAIS Act.

Question 7

In what circumstances will activities not related to regulated services or services provided in terms of the FAIS Act be deemed to be part of the business activities of a member?

Answer 7

Any activities which are a regular feature of the member’s business and are held out by the member, in any communication with any person, to be part of the business activities of that member, will be deemed to be part of the business activities of that member.

Question 8

What are the minimum conditions relating to financial resources which an applicant for membership and a member are required to satisfy in order to be granted and to retain membership to be authorised to perform regulated services?

Answer 8

1. A member must on admittance and at all times ensure that it maintains adequate financial resources to meet its business commitments and to withstand the risks to which its business is subject.
2. A member must on admittance and at all times thereafter hold adjusted liquid capital which complies with minimum requirements calculated in accordance with directive DC 2, sufficient to meet its base requirement and its risk requirement.
3. The base requirement of a member is the higher of:
   a. an amount determined in accordance with the directives as being adequate to meet a member’s fixed expenditure for a period of 13 weeks; or
   b. R400 000.
4. The risk requirement of a member is the sum of its position, counterparty, foreign exchange, custody and large exposure requirements determined in accordance with the directives.

Question 9

Which intermediary services are members not permitted to provide?

Answer 9

1. Collecting or accounting for premiums or other monies payable by a client to a product supplier.
2. Receiving, submitting or processing the claims of a client against a product supplier in respect of:
   a. a long or short-term insurance contract or policy;
   b. a benefit provided by a pension fund organisation;
   c. a benefit provided by friendly society or
   d. a health service benefit provided by a medical scheme.