Conduct of Business (Part IX)

Question 1

What records are required to be kept as support for all sundry accounts?

Answer 1

Appropriate records identifying the clients on whose accounts the transactions have been executed or on whose behalf the securities are held.

Question 2

By when must all purchases and sales executed with or on behalf of clients be allocated to the client?

Answer 2

By the close of business on the date of the transaction.

Question 3

What is a member required to demonstrate if it allocates transactions to interested parties from suspense accounts?

Answer 3

That no client is prejudiced as a result of the use of a suspense account.

Question 4

What controls are required to be implemented to prevent prejudice to clients when utilising suspense accounts?

Answer 4

1. Use of separate suspense accounts for interested parties, e.g. employee suspense.
2. Use of separate suspense accounts dedicated to specified clients.
3. Use of separate suspense accounts where the trading instruction and allocation vests with one person, such as a portfolio manager.
4. Ensuring that an employee on whose behalf the member operates a full discretionary managed account has no influence over either the trading instruction or the allocation instruction.

Question 5

Who is considered to be an interested party in relation to the use of suspense accounts?

Answer 5

A member or employee of the member who has a direct or indirect beneficial interest in a trade.

Question 6

Is a member permitted to realise a profit or loss in a suspense account?

Answer 6

No.

Question 7

What is the sole purpose of a misdeals account?

Answer 7

It is an account in which all error transactions and missed deals shall be recorded.

Question 8

In what manner are members obliged to close out positions on misdeals accounts?

Answer 8

Only through the JSE equities trading system.