Conduct of Business (Part VI)

Question 1

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

Answer 1

No.

Question 2

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 2

By 12h00 on the day following the transaction.

Question 3

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

Answer 3

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 4

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 4

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 5

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 5

Clients whose equity securities are managed by the member.

Question 6

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

Answer 6

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 7

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 7

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 8

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 8

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.