FMA definitions Flashcards
(20 cards)
‘‘advice’’
any recommendation, guidance or proposal of a financial nature furnished, by any means or medium, to a client or group of clients -
(a) in respect of the buying and selling of securities;
(b) on any corporate action or other event affecting the rights or benefits in respect of securities; or
(c) on the exercise or lapse of any right in respect of securities irrespective of whether or not such advice results in any
such transaction being effected,
‘‘advice’’ does not include -
(i) factual advice given merely -
(aa) on the procedure for entering into a transaction in respect of securities;
(bb) on the procedure relating to a corporate action or other event affecting the rights or benefits in respect of
securities;
(cc) in relation to the description of securities;
(dd) in reply to routine administrative queries;
(ee) in the form of objective information about securities; or
(ff) by the display or distribution of promotional material;
(ii) an analysis or report on securities without any express or implied recommendation, guidance or proposal that any
particular transaction in respect of the securities is appropriate to the particular investment objectives, financial
situation or particular needs of a client;
‘‘authorised user’’
a person authorised by a licensed exchange to perform one or more securities services in terms of the exchange rules and includes an external authorised user, where appropriate;
‘‘bank’’
a bank as defined in the Banks Act, 1990
a mutual bank as defined in the Mutual Banks Act, 1993
co-operative bank as defined in the Co-operative Banks Act, 2007
“central counterparty”
a clearing house that (a) interposes itself between counterparties to transactions in securities, becoming the buyer to every seller and the seller to every buyer and thereby ensuring the performance of open contract;
(b) becomes a counterparty to trades with market participants through novation, an open offer system or through a legally binding agreement.
‘‘clear’’
means -
(a) to calculate and determine
(i) the exact number or nominal value of securities to be transferred by or on behalf of a seller
(ii) amount of money to be paid by or on behalf of a buyer, to enable settlement of a transaction or group of transactions
(b) the process by means of which (i) the functions referred to in paragraph (a) are performed; and
(ii) the due performance of the transaction or group of transactions by the buyer and the seller is underwritten from the
time of trade to the time of settlement
“clearing house”
a person who CONSTITUTES, MAINTAINS and PROVIDES an infrastructure to clear transactions in securities;
‘‘clearing house directive’’
a directive issued by a licensed independent clearing house or a licensed central counterparty in accordance with its rules
‘‘clearing house rules’’
the rules MADE BY A LICENSED INDEPENDENT CLEARING HOUSE or a licensed central counterparty in accordance with this Act
‘‘clearing member’’
in relation to an associated clearing house:
a person authorised by a licensed exchange to perform clearing services or settlement services or both clearing services and settlement services in terms of the exchange rules;
in relation to a licensed independent clearing house or a licensed central counterparty:
a person authorised by that independent clearing house to perform clearing services or settlement services or both clearing services and settlement services in terms of the clearing house rules, and includes an external clearing member, where appropriate
“additional margin”
means the MARGIN PAID AS COLLATERAL by clearing members to the Default Fund for the due performance of clearing members’ obligations as set out in the rules
“agent”
a trading member who has traded with a client other than for his own account in terms
of the derivatives rules
Aggregate positions
collectively all the proprietary positions in related exchange contracts registered in the
name of a member or, collectively, all the positions in related exchange contracts registered in
the name of a client who has traded with a particular member to open such positions
“assign”
the EXERCISE by the CLEARING HOUSE of ITS RIGHT in terms of an option contract to buy or sell the underlying instrument of the option contract from or to a person holding a short position in the option contract;
“automated trading
system”/“ATS”
the computerised facility of the JSE by means of which a member shall make an offer in
respect of a trade in derivative securities that shall, in terms of the derivatives rules, be done on the ATS or reports an off-ATS trade to the clearing house and on which the JSE and the clearing house may display notices to members
Bonds
those Yield-X securities which create or acknowledge indebtedness of the issuer
“buy”
in relation to derivative securities, to enter into either -
(a) a futures contract in terms of which the BUYER IS OBLIGED to TAKE DELIVERY OF THE UNDERLYING INSTRUMENT from the seller at the agreed price on the future date OR to pay an amount of money to the seller if, on the future date, the price or value of the underlying instrument is less than the agreed price;
(b) an option contract in terms of which the buyer obtains the right from the seller to buy or
sell the underlying instrument of the option contract at the agreed price from or to the seller on or before the future date
“call option contract”
- a contract, in terms of which the holder of a long position in the call option contract has obtained the right to buy.
- the holder of a short position shall, if the option is exercised, sell,
the underlying instrument of the option contract
from or to the clearing house on or before the
future date at the strike price in accordance with these derivatives rules and the contract
specification of the option contract;
“capital adequacy
requirement”
the sum of the greater of a member’s initial capital or one quarter of its annual fixed operating costs plus the risk requirements as determined by the JSE by directive
“capital adequacy
return”
means the submission by a member of his capital adequacy requirement to the JSE in the manner and form specified by the JSE;
