Conduct

Question 1

What are the general standards of conduct which a member is required to observe regarding co-operation with the
JSE as its regulator?

Answer 1

1. Deal with the JSE in an open and co-operative manner; and
2. Keep the JSE promptly informed of anything concerning the JSE which might reasonably be expected to be
   disclosed to it.

Question 2

What are the general principles that a member must adhere to in advertising its services to the public?

Answer 2

The advertising must:
1. Be carried out with a due sense of responsibility to the public and the profession.
2. Be consistent with the dignity of the profession.
3. Be in good taste without odious comparisons claiming superiority.
4. Conform to accepted norms of legality, decency, honesty and truthfulness.
5. Not contain testimonials or endorsements.

Question 3

What is the specific principle that a member must adhere to regarding advertising material about any JSE authorised
investment or any regulated service rendered by the member.

Answer 3

The advertising material must provide accurate, complete and unambiguous information about the JSE authorised
investment or required service.

Question 4

If an advertisement contains information about past performances, what type of statement must also be included in
the advertisement?

Answer 4

A warning that past performances are not necessarily indicative of future performances.

Question 5

What designation must a member use in publicity, promotional or advertising material or on its professional
stationery or on its name plates or on its office premises?

Answer 5

1. Only the designation (name or logo) recognised by the JSE. AND
2. That the member is “a member” of the JSE.

Question 6

What statement must accompany any written publication or circulation issued by a member relating to the trading
results of a listed company or which may influence the price of the securities?

Answer 6

The name of the person or persons who compiled it.

Question 7

If a member issues a newsletter, circular or other publication which contains an opinion on a listed company and the
member has an interest in that company, what disclosure must be included in the publication?

Answer 7

The existence of the interest.

Question 8

Can a member enter into a transaction with or on behalf of a client where the transaction is as a result of an
unsolicited call?

Answer 8

Yes, provided :
1. the general standards of conduct relating to disclosure to clients are complied with and;
2. the rules relating to advice on JSE authorised investments are complied with.

Question 9

A member is requested to establish and maintain controls and procedures in relation to transactions executed for the
direct or indirect benefit of employees of a member. What must the controls and procedures be designed to achieve?

Answer 9

To avoid such transactions conflicting with the interests of the member’s client.

Question 10

What must the controls and procedures in relation to personal account transactions, as a minimum, make provision
for?

Answer 10

The review by the member of those transactions in order to identify any transactions which are in conflict with the
interests of the member’s clients.

Question 11

What is the general principle regarding a member offering or accepting a valuable consideration as an inducement?

Answer 11

The member must take reasonable steps to ensure that it does not offer or accept such an inducement if it is likely to
conflict with any duty that it owes to its clients or any duty that the recipient of the inducement owes to its clients.

Question 12

In terms of the rules, what type of inducement offered or accepted by a member is specifically prohibited?

Answer 12

Any valuable consideration offered or accepted in terms of an agreement with a client or a third party which relates to
the provision of regulated services by the member to its clients, and which does not directly relate to, and assist in the
provision of, such services to such clients or does not otherwise directly benefit the clients of the recipient of such
valuable consideration.

Question 13

What must a member disclose to a client in writing if it accepts any valuable consideration from a third party as an
inducement in respect of a regulated service provided to a client?

Answer 13

1. The existence of the agreement.
2. The nature, extent, value and frequency of receipt of such valuable consideration. AND
3. The identity of the other person providing or offering the valuable consideration.

Question 14

What information must a member obtain and maintain for each client account?

Answer 14

Sufficient information to enable it to identify:
1. The client.
2. The account holder of a controlled client account if the account holder is not a client of the member but is a
person on behalf of a client acting as an agent.
3. The person or persons responsible for placing instructions on the account.

Question 15

What is the minimum information that a member must obtain in respect of each client?

Answer 15

1. Full name.
2. Identity number or registration number.
3. Physical and postal addresses.
4. Telephone number.
5. Legal status.

Question 16

What is the minimum information that a member must obtain in respect of the beneficial owner of each controlled
client account if the account holder is not a client but a person on whose behalf a client is acting as an agent?

Answer 16

1. Full name.
2. Identity number or registration number.

Question 17

Is a member permitted to open a client account with a name other than that of a person with legal status?

Answer 17

No. Accounts may not be opened with fictitious names or names that do not represent a person with legal status,
commonly referred to as trading account names.

Question 18

Unless the client is a bank or a financial services provider or the foreign regulated equivalent of such entities, what
information must be obtained in respect of the persons responsible for placing instruction on a client account if the
person placing the instructions is not the individual in whose name the account is held or the account is not in the
name of an individual?

Answer 18

1. Full name.
2. Identity number.
3. Physical and postal addresses.
4. Telephone number.

Question 19

Other than obtaining the information referred to in rules 8.60.2 to 8.60.4, what are the other requirements regarding
the prescribed information to be obtained from clients?

Answer 19

1. All of the information must be confirmed by the client in writing and the member must maintain a record of such
   confirmation. Any changes to the said information shall be advised by the client in writing as soon as practicable.
2. As a minimum, the identity of the client must be authenticated by the member and the member must maintain a
   record of the means of such authentication.

Question 20

What must a member do before effecting a transaction with a person whom the member reasonably believes requires
authorisation as a discretionary service provider?

Answer 20

Take reasonable steps to ascertain that such person has the required authorisation.

Question 21

A member is required, at all times, to adhere to the best execution principle when acting for a client in the purchase
or sale of equity securities. What is a member required to do to adhere to this principle?

Answer 21

1. Take reasonable care to obtain the result which is the best available for the client, subject to the terms and
   conditions of the agreed mandate with the client.
2. All transactions must be conducted through the central order book of the JSE equities trading system unless the
   execution of an off-book trade is in the best interests of the client.

Question 22

What is a member required to do before acting as a principal with a client?

Answer 22

Obtain the client’s prior consent.

Question 23

What are the requirements as to how a member determines the value or rate of commission to be charged to a client
on an agency transaction?

Answer 23

The commission must be mutually agreed with the client in advance of the transaction.

Question 24

Is a member permitted to charge a fee in respect of a transaction executed as principal with a client?

Answer 24

Yes, provided it has been mutually agreed with the client in advance of the transaction.

Question 25

Other than the agreed commission, is a member permitted to make a profit on an agency transaction?

Answer 25

No.

Question 26

What must a member disclose in advance to a client in relation to interest on client funds deposited in JSET?

Answer 26

1. The rate at which such fee or charge will be determined; or 2. The manner of calculation of such fee; or 3. The actual fee or charge so deducted.

Question 27

By what time is a member required to issue a client a contract note or transmit to a client, via electronic means acceptable to the JSE, a confirmation of a transaction?

Answer 27

By 12h00 on the day following the transaction.

Question 28

What shall a contract note or electronic confirmation of a transaction in equity securities disclose?

Answer 28

1. The date and time of the transaction. 2. The identification number of the transaction. 3. The amount and nature of the member's charges in connection with the transaction. 4. The price at which the transaction was executed and the total consideration due from or to a client. 5. The settlement date of the transaction. 6. Whether the member acted as an agent or as a principal in the transaction.

Question 29

What is a specifically designated suspense account and what are the provisions regarding the use of such accounts in relation to the issuing of contract notes with average prices?

Answer 29

1. It is an account to which a member may, with the prior consent of a client, initially book transactions. 2. It may be opened either: a. in the name of the client; or b. in the name of an agent appointed by the client to transact on his behalf. 3. Transactions in the same security on the same day may be allocated from the suspense account to the accounts of the underlying beneficiaries at an average price based on the instruction of the client or agent. 4. Contract notes or confirmations must disclose that the transactions are at an average price. 5. The member must notify the client or agent that the prices and times of each transaction are available from the member on request.

Question 30

In respect of which clients is a member not required to obtain consent to allocate transactions to such clients at an average price nor to notify the client that the prices and times of each transaction are available from the member?

Answer 30

Clients whose equity securities are managed by the member.

Question 31

What must an ISP obtain from a client prior to managing JSE authorised investments on behalf of a client?

Answer 31

A written mandate recording the arrangement containing the minimum requirements prescribed by the JSE signed by the client or accepted by the client by electronic means.

Question 32

What information is an ISP required to obtain from a client prior to exercising discretion in the management of JSE authorised investments on behalf of the client?

Answer 32

Information regarding the client's financial situation, investment experience and particular needs and objectives in connection with the services required, to enable the member to make an appropriate investment decision.

Question 33

In exercising discretion in the management of JSE authorised investments, what steps is an ISP required to take prior to making an investment decision, based on the information provided by the client?

Answer 33

1. Conduct an analysis, based on the information obtained, for the purpose of making an investment decision. 2. Identify the JSE authorised investments that will suit the client's risk profile and financial needs, subject to the terms of any mandate provided to the member by the client.

Question 34

In exercising discretion in the management of JSE authorised investments, what steps is an ISP required to take prior to conducting transactions in derivative instruments?

Answer 34

1. Obtain consent in writing from the client authorising it to invest in derivative instruments on behalf of the client. 2. Consider whether such investments are appropriate for the client in relation to the client's financial situation, investment experience and investment objectives. 3. Advise the client, in writing, of the risks associated with trading in derivative instruments.

Question 35

In exercising discretion in the management of JSE authorised investments, what steps is an ISP required to take prior to entering into transactions in foreign investments on behalf of a client?

Answer 35

1. Ensure that the mandate provided by the client: a. stipulates that the ISP is authorised to invest in foreign investments; b. contains a statement pertaining to the risks associated with foreign investments, with particular reference to any currency risk; c. states whether there are any jurisdictional restrictions in respect of the particular foreign investments; and d. contains full particulars of a manner in which such foreign investments shall be made and in whose name such investments shall be held or registered; and 2. Confirm that the client has obtained a tax clearance certificate from SARS.

Question 36

What information must an ISP who manages foreign investments furnish to a client on the client's request?

Answer 36

1. The name of the licensed external exchange on which the foreign investments are listed, if applicable. 2. The country in which the foreign investments are licensed or registered and the name and address of the relevant licensing or registration authority, if applicable. 3. The name and address of the foreign financial services provider used by the ISP to purchase or hold the foreign investments, if applicable. 4. The name and address of the regulator of the foreign financial services provider and whether such foreign financial services provider is approved or registered by such regulator.

Question 37

In providing advice in respect of JSE authorised investments to a client, other than a professional client, what steps must an ISP take prior to providing such advice?

Answer 37

1. Take reasonable steps to obtain information regarding the client's financial situation, investment experience, and particular needs and objectives in connection with the services required, to enable the member to provide the client with sound advice. 2. Conduct an analysis, based on the information obtained, for the purpose of advising the client. 3. Identify the JSE authorised investments that will suit the client's risk profile and financial needs, subject to the terms of any mandate provided to the member by the client. 4. Take reasonable steps to ensure that the client understands any advice that has been provided, as well as the nature and material terms and risks involved in the relevant transaction, so as to enable the client to make an informed decision and; 5. Ensure that any advice provided is not for the primary purpose of maximising the income of the member.

Question 38

What must a member do before providing unsolicited advice to a client with the purpose of encouraging or inducing the client to transact in derivative instruments?

Answer 38

1. Consider whether such investments are appropriate for the client in relation to the client's financial situation, investment experience and investment objectives. 2. Advise the client, in writing, of the risks associated with trading in derivative instruments.

Question 39

What must the written arrangement between a member and a controlled client contain regarding instructions relating to corporate actions?

Answer 39

1. Whether the client wishes to receive all company reports, proxy forms, notices, circulars, listing particulars and any other issuer communications in respect of equity securities of which such client is a beneficial owner. 2. Whether the member is entitled and obliged to utilise its discretion in electing particular options in respect of all or certain corporate action events which require such an election to be made. 3. Whether the member may utilise its discretion in exercising voting rights on behalf of the client. 4. The means of communication between the member and the client if the member is not granted discretion to act. This will apply to the communication of the relevant issues to the client by the member as well as the client's response thereto. 5. The date and time by which the client is required to make an election, if applicable. 6. The option which the member may elect if the client fails to advise the member of their election before the relevant deadline.