Client Assets_B

Question 1

Define “safeguarding”

Answer 1

Safeguarding means the activities performed by an authorised user –
(a) for the purposes of holding securities or funds in custody on behalf of another person; or
(b) where the authorised user is accountable to another person for a third party’s holding of securities or funds
in custody on behalf of that other person, and includes the administration of matter incidental to those
securities or funds

Question 2

A member may accept from or hold uncertificated equity securities or funds intended for the purchase of equity
securities for a client for safekeeping. Who must control such assets?

Answer 2

An authorised CSP.

Question 3

Before accepting equity securities and funds from a controlled client for custody, what is a member required to obtain
from a client and where must it be recorded?

Answer 3

1. The arrangements must be recorded in a written mandate incorporating the minimum requirements as
   prescribed by the JSE.
2. Electronic acceptance or signed acceptance of the mandate by the client.
3. In a custody mandate register.

Question 4

What is a CSP required to do regarding the safeguarding of controlled clients’ equity securities?

Answer 4

1. Keep a nominee register, in terms of criteria prescribed by directive, of the controlled client equity securities that
   are being held from time to time. Full details of any change must be recorded forthwith in the nominee register.
2. Pre-validate equity securities in terms of generally accepted market practice.
3. Dematerialise equity securities that are eligible to be dematerialised in terms of the processes required by the
   member’s CSDP.
4. The necessary details of all equity securities of a controlled client must be recorded and stored in a nominee
   register in the BDA system in a manner which will render it possible at any time thereafter to establish readily
   the identity of the person entitled to the ownership of those equity securities. Such equity securities must be
   held in a securities custody account with a CSDP.

Question 5

When is dematerialisation of equity securities complete?

Answer 5

When notification has been received by the member’s CSDP that the equity securities are available for electronic
settlement.

Question 6

A CSP that controls a nominee register must balance the equity securities with the securities custody account at the
CSDP on a daily basis. What must be confirmed in the monthly certificate to be furnished to the Director: Market
Regulation on the third business day after BDA month end?

Answer 6

1. The equities securities balances in the nominee register have been agreed with the CSDP controlled client
   custody account balances or, if there are differences, explaining the reasons for such differences.
2. The equities securities balances in the nominee register have been reconciled daily with the CSDP controlled
   client custody account balances and that all differences occurring during the month were either rectified within
   one day or if circumstances beyond the control of the CSP prevented any differences from being rectified within
   one day, those differences were rectified as soon as was reasonably possible; and
3. No circumstances have arisen that have resulted in the improper use of controlled clients’ equity securities.