Conduct of Business (Part IV)

Question 1

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 1

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

Question 2

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

Answer 2

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 3

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

Answer 3

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 4

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

Answer 4

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 5

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 5

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 6

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

Answer 6

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 7

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

Answer 7

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

Question 8

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 8

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