Trading Part 2 Flashcards
Under what circumstances may the Director: Market Regulation instruct members to enter an on book or off book trade without having received a formal request to do so by any member?
If in his opinion a trade –
1. materially impacts the integrity or transparency of the market or the correctness of the statistics.
What is a late trade?
The transaction is:
1. Executed by a member acting on behalf of a client, in fulfilment of any order already entered into the JSE equities trading system, and where either the buyer or the seller is a foreign professional market participant or
2. Executed by a member for a professional market participant, in fulfilment of an order received prior to the end of the closing auction call session, at a price which can only be established after the closing auction call session
or
3. Executed by a member for or on behalf of a professional market participant, in fulfilment of an order received after trading hours, where the counterparty is a foreign professional market participant or
4. Executed by a member as a principal for its own account where the counterparty is a foreign professional market participant.
What is a delta trade?
A transaction where a member trades as a principal with another member, who also trades as a principal, in a single equity security where** the transaction transfers the delta hedge from one member to another member in respect of a derivative transaction** which has been reported to either the JSE derivative trading system or the derivative trade recording system referred to in the directives.
Define
“hidden order”
an order submitted to the central order book where the order is not visible to other members and may execute in full or in part against eligible visible orders or other hidden orders
why would you do that?
Who may grant permission to or instruct the respective members to execute a trade cancellation?
The Director: Market Regulation.
Under what exceptional circumstances will a trade cancellation be considered?
If the trade meets at least the following requirements:
1. the request is received by the Director: Market Regulation within 20 minutes from the time of the erroneous trade; and
2. the price of the trade or trades for which the trade cancellation is requested is 5% or more away from the reference price at the time that the erroneous order was placed; and
3. the difference between the aggregate value of the trades that qualify in terms of rule 6.50.2.2 and the value that would have resulted had such trades been executed at the reference price is R50 000 or more; or
4. the quantity of shares traded exceeds 5% of the equity security in issue.
During what period may a member execute transactions in pre-issued securities?
During the period permitted by the JSE.
On what terms and conditions will settlement be made in transactions effected during the period of pre-issued trading if the listing is approved?
On the same terms as all other transactions in equity securities.
What are the consequences if a listing of pre-issued securities does not commence on the intended commencement date of official trading?
Every transaction will be null and void ab initio and neither the member nor a client will have recourse against the JSE or a member.
Under what circumstances may the Director: Market Regulation declare an unreasonable transaction void?
Where, for a lack of clarity in the published information available at the time of the transaction a member deals in a quantity or at a price which in his opinion is unreasonable.
During a trading halt, may a member:
1. trade that equity security;
2. delete orders in that equity security from the central order book.
- No.
- Yes.
What is a non-exchange traded derivative instrument?
A derivative instrument not listed on a licensed exchange.
To which system must non-exchange traded derivative instruments be reported and how frequently?
To the derivatives trade recording system on a daily basis.
Itemise 10 items of information which the non-exchange traded derivative instrument register must contain.
- Deal date.
- Trade number.
- Contract number.
- Purchase or sale.
- Type of option - put or call.
- Type of option - American or European.
- Premium.
- Quantity.
- Strike price.
- Settlement date.
Whose approval must a member obtain to access and utilise JSE systems?
Market Controller.
What is a TSP required to do in order to utilise the services of and access JSE systems?
Enter into and sign agreements and adhere the requirements and specifications of such agreements.
what must an order or an off book trade submitted to the JSE equities trading system contain in order to facilitate proper disclosure to clients and effective regulation of transactions by the JSE?
- Capacity (principal or agent)
- Client or stock account number to which any associated trades will be booked
- Minimum execution size (MES) in respect of a hidden order
- Trader group
- Trader identification number
If an order submitted to the JSE equities trading system by a registered securities trader was not received or initiated by that registered securities trader but was instead received or initiated by another employee of the member, such as a sales trader or a portfolio manager, what must the member ensure that it records?
The identity of the other employee who received or initiated the order.
Trade Cancellations
What is a TSP seeking permission for a cancellation of an on book trade required to do?
Immediately upon becoming aware of the erroneous trade, request permission from the Director: Market Regulation to cancel the trade by informing him of the original trade, giving details of such trade and the circumstances or reason which resulted in the original trade.
Having been granted permission to enter into a trade cancellation, within what time must the designated TSP enter the trade into the JSE equities trading system?
Without delay.
What is a TSP who is unable to submit a trade cancellation to the JSE equities trading system on the same day as the erroneous on book trade, required to do?
The TSP must submit the trade cancellation as a next day cancellation of an on book trade without delay on the following business day.
What is the administration fee payable by a TSP if it requests permission to cancel an on book trade if such request fails to meet the prescribed criteria?
R2000.
How much is the administration fee for an executed trade cancellation of an on book trade and who is liable to pay it?
Who must be compensated for any damage suffered due to loss of price/time priority?
- R10 000.
- The TSP responsible for the error.
- The opposite TSP who in turn must compensate its client.
In managing orders received from clients and submitting client and proprietary account orders to the JSE trading system what objectives is a TSP required to meet in addition to other requirements in the rules and directives?
-
AVOIDANCE OF ERRONEOUS ORDERS
The TSP must implement appropriate procedures to ensure that orders are not submitted to the JSE equities system or left open in the JSE equities trading system where such orders could result in erroneous trades. -
SETTLEMENT ASSURANCE
The TSP must implement appropriate procedures to ensure, prior to submitting a client or proprietary order to the JSE equities trading system, that it has the capacity to settle trades resulting from such orders on the settlement date, and that all such trades will not adversely affect the TSP’s ability to meet its financial resources requirements as set out in the rules and directives.
