Equity Compliance: Authorisation & approvals Flashcards
(33 cards)
Define “agency office”
- an office that can do SCRIP AND CASH SETTLEMENTS
- but does not undertake any of the FUNCTIONS of a BRANCH OFFICE
Define a “branch office”
An office of a member, other than its primary/head office, which does trading services and investment services
Define “JSE listed securities”
Listed Securities included in the list of securities kept by the JSE
Define “member”
An EQUITIES MEMBER, which is A CATEGORY of AUTHORISED USER ADMITTED TO MEMBERSHIP of the JSE under the rules
Define “non-executive director” of a member
A person appointed as a director of the member under the Companies Act who is not employed by such member.
Define “nominee register”
The electronic RECORD OF OWNERSHIP of UNCERTIFICATED equity securities BALANCES of controlled accounts maintained by a CSP.
(It is the record of money held by the CSP)
Defined “regulated services”
Those SECURITIES SERVICES and OTHER ACTIVITIES which are REGULATED BY THE JSE and WHICH the** JSE AUTHORISES MEMBERS to PERFORM**, namely:
1. Trading services
2. Investment services
3. Custody services;
4. Money broking
Define “trading services”
The EXECUTION of TRANSACTIONS IN EQUITY SECURITIES by a member:
1. For the members own account
2. With or on behalf of a client
Define “trading service provider (TSP)”
A member which has been authorised by the JSE to perform trading services in terms of the rules.
What regulated services are authorised by the JSE?
- trading services
- custody services
- investment services
What regulated service must an applicant have applied for authorisation to perform in order to apply for authorization to perform investment services?
Trading services.
What are the requirements to be admitted as a member and to remain a member?
- Be incorporated and registered as a domestic company under the Companies Act
- Only appoint executive and non-exec directors who comply with the fit and proper requirements
The last 5 requirements to be admitted and remain admitted as a member
- Appoint a compliance officer who complies with the fit and proper requirements
- Ensure that a shareholder, who is a natural person, and who directly or indirectly holds in excess of 10% of the issued shares of the applicant or member complies with the fit and proper requirements;
- Appoint a settlement officer and an alternate settlement officer who comply with the fit and proper requirements;
- Appoint a CSDP, unless it only performs, or intends to perform, custody services and it does not require a CSDP in order to perform such services
- Meet the specific conditions of membership relating to: - resources, procedures and systems; - business activities; - financial resources.
Minimum conditions relating to R, P & S to be granted and to retain membership and to be authorised to perform regulated services?
A member must
- employ adequate resources, procedures and systems (R,P & S) necessary for
- effective performance of the regulated service which the member provides
- & ensuring compliance with the Act and the rules and directives that are relevant to the performance of such regulated services and ensuring compliance with the Financial Intelligence Centre Act
- a member must ensure that its employees are suitable, adequately trained and properly supervised
What must the dominant business activity of a member be?
What may be included in the scope of a member’s business activities?
- Must be the performance of regulated services in respect of JSE authorised investments.
- May also include the management of investments or provision of advice in relation to other financial products, subject to the member having been granted the appropriate licence to conduct such activity in terms of the FAIS Act
In what circumstances will activities not related to regulated services or services provided in terms of the FAIS Act be deemed to be part of the business activities of a member?
Activities which are
- a regular feature of the member’s business
- activities that are held out by the member , in any communication with any person, to be part of the business activities of that member,
will be deemed to be part of the business activities of that member
Minimum conditions relating to financial resources which an applicant for membership or a member must satisfy to be granted and to retain membership to be authorised to perform regulated services
- A member must on attendance and AT ALL TIMES [first two statements start w/ this]
- ensure that it maintains adequate financial resources to meet its business commitments and to withstand the risks to which its business is subject
- hold adjusted liquid capital which complies with minimum requirements calculated in accordance w/ directive DC 2, sufficient to meet its base requirements and risk requirements - Base requirements = the higher of a. an amount determined in accordance with the directives as being adequate to meet a member’s fixed
expenditure for a period of 13 weeks; or
b.R400 000. - The risk requirement is the sum of its position, counterparty, foreign exchange, custody and large exposure requirements determined in accordance with the directives
Which intermediary services are members not permitted to provide?
- Collecting or accounting for premiums or other monies payable BY a client to a product supplier.
- Receiving, submitting or processing the claims of a client against a product supplier i.r.o
a) a long or short term insurance contract or policy
b) a benefit provided by a **pension fund organisation **
c) a benefit provided by a friendly society
d) a health service benefit provided by a medical scheme
What are the requirements to perform trading services?
- An applicant for membership or a member must provide evidence to the satisfaction of the JSE that it is able to comply with the operational requirements set out in the directives
- An authorised TSP must continue to comply with the operational requirements on an on-going basis.
- TSP with controlled clients must be authorised to perform custody services or must appoint a CSP and must establish and maintain a nominee company
What are requirements to perform investment services?
- An applicant for membership or a member must be authorised to perform trading services i.r.o JSE authorised investments.
- An applicant for membership or a member must provide evidence to the JSE that it has employed or will employ adequate resources, procedures and systems necessary for the effective performance of investment services and for ensuring compliance with the Act, rules and directives.
- An authorised ISP must continue to meet these requirements on an on-going basis
Can an authorised ISP conduct transactions on behalf of clients or provide investment advice to clients in JSE authorised investments, other than equity securities
- Yes, only after prior notification, in writing to the Director: Market Regulation of its intention to conduct transactions or provide advice in JSE authorised investments
- Notification is not required if the member will be conducting transactions in listed securities on another JSE market or another exchange as an authorised user of such market or exchange.
What must an ISP do if it ceases to conduct activities in any JSE authorised investment, other than equity securities with no intention ti resume such activities
- notify the Director: Market Regulation forthwith, in writing, of such cessation of activity
What are the requirements to be authorised to perform custody services?
- must provide evidence to the satisfaction of the JSE that it is able to comply with the criteria to operate as a CSP, as set out in the directives
- an authorised CSP must continue to comply with the criteria on an on-going basis
- if an authorised CSP provides custody services to control clients it must establish and maintain a nominee company approved by the JSE
the requirements to conduct money broking activities?
- an applicant … must provide evidence to the satisfaction of the JSE that it has employed or will employ adequate R, P & S necessary for the effective conduct of money broking transactions and for ensuring compliance with the rules relevant to the performance of such transactions.
- a member authorised to conduct money broking transactions must continue to meet these requirements on an on-going basis
