FMA

Question 1

What type of training must a member ensure that all its employees who are involved in the receipt of orders from
clients and the execution of transaction in equity securities on the JSE equity trading system receive?

Answer 1

Such training and guidance so as to ensure that the employees are:
1. familiar with the market abuse provisions in sections 77 to 80 of the Act and
2. able to recognise and avoid entering into any transaction on behalf of the member or its clients which will result in,
or is likely to result in, a breach of these provisions.

Question 2

Compliance monitoring procedures should, as a minimum, aim to detect activity which, to a reasonable person
observing or reviewing such trading activity, would constitute a blatant breach of the provisions of sections 78 and 80
of the Act taking into account all relevant factors such as:

Answer 2

1. the identity of the parties to the transaction;
2. the perceived intention of the parties to the transaction;
3. the frequency and pattern of transactions over a period of time;
4. the effect of the transaction on market prices or volumes;
5. the size and timing of the transaction; or
6. a combination of two or more of these factors.

Question 3

Define “inside information”

Answer 3

Specific or precise information which has not been made public and which-
1. is obtained or learned as an insider and,
2. if it were made public would be likely to have a material effect on the price or value of any security listed on a
regulated market.

Question 4

Define “insider”

Answer 4

1. A person who has inside information througha.
   being a director, employee or shareholder of an issuer of securities listed on a regulated market to which the
   information relates; or
   b. having access to such information by virtue of employment, office or profession; or
2. where such person knows that the direct or indirect source of the information was a person contemplated in (1)
   above.

Question 5

When does an insider who knows that he or she has inside information commit an offence?

Answer 5

1. When he or she deals directly or indirectly or through an agent for his or her own account in securities listed on a
   regulated market to which the information relates or which are likely to be affected by it.
2. When he or she discloses the information to another person.
3. When he or she encourages or causes another person to deal or discourages or stops another person from
   dealing.

Question 6

List 5 prohibited actions as specifically mentioned in the ACT that would create, or likely create, a false or deceptive
appearance of the demand for, or supply of a security.

Answer 6

1. Approve or enter an order to buy or sell a security which involves no change in the beneficial ownership of that
   security
2. approve or enter orders to buy a security at successively higher prices or orders to sell a security at successively
   lower prices for the purpose of unduly influencing the market price of the security
3. approve or enter an order at or near the close of the market, the primary purpose of which is to change or
   maintain the closing price of a security
4. effecting or assisting in effecting a market corner;
5. maintaining, at a level that is artificial, the price of a security