Default Flashcards
When is a member in “default”?
if –
1. it is unable to MEET ITS COMMITMENTS to another member, the JSE, a JSE settlement system or a non-member, arising out of a transaction or a JSE settlement system instruction; or
2. the JSE, in its sole discretion, considers that it has defaulted
the rights of the JSE if a member is in default
What are the rights of the JSE if a member has been declared to be in default and membership is provisionally terminated?
- member will be suspended from trading;
- Any amount payable by the JSE to the member shall be set off against any amount payable by the member including penalties;
- the member must hand over to the JSE –
- such financial records of the member as the Director: Market Regulation deems necessary for the identification, protection and return of client assets and to facilitate the settlement of outstanding transactions in equity securities;
- and the control of all client assets;
how should JSE settle open transactions of a defaulted member?
The JSE must first use any guarantees or margin provided by the defaulting members to settle open transactions when buying in or selling out securities.
if guarantees and margins are insufficient
how will the JSE recover any loss or costs from the defaulting member? costs for payment of all the costs of the proceeding?
The JSE will recover any loss or costs from a defaulting member by selling as many of the defaulting member’s remaining equity securities as is necessary to realise an amount equal to the amount still owing to the JSE.
If a member is declared to be in default, what are the duties of the Director: Market Regulation with regards to client assets? The Director: Market Regulation must ensure that:
- Any client assets are identified as such and
- Only unencumbered client assets are returned to the client
