Client Assets_C

Question 1

What is a CSP required to do when it receives certificated equity securities from a controlled client?

Answer 1

Forthwith issue a dated and signed receipt recording the:
1. Name.
2. Quantity.
3. Certificate number.
4. Registered holder of the equity security.

Question 2

What is a member required to do if equity securities belonging to a controlled client are held as collateral in respect of
a loan of funds or securities?

Answer 2

1. The CSP must record those securities in the nominee register as being collateral for a loan.
2. If a pledge is required by the member the CSP must keep a record or register of the pledges held.

Question 3

What are the 2 rules which cater for the safeguarding of controlled clients’ funds?

Answer 3

1. Funds received in respect of or arising from the operation of an account for a controlled client which are not paid
   over to the client upon receipt of such funds, must be deposited for the account and in the name of the client
   with JSET.
2. The difference between the total of the funds balances on all controlled client accounts in the books of account
   of the member as at the close of business on the preceding business day and the total amount held by JSET on
   behalf of the clients of such member as at the same date must be paid to or received from JSET forthwith.

Question 4

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

Answer 4

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

Question 5

Itemise 4 control procedures in the rules relating to the safeguarding of clients’ certificated securities.

Answer 5

Remember 4 of the 7

1. The certificates must be marked with the necessary details recorded and stored in BDA to readily establish the
   identity of the owner.
2. They must be protected from unauthorised access and misappropriation.
3. No transfer deed may be attached until such securities are prepared for disposal or delivery.
4. Name of issuer and number of shares must be inserted on the transfer deed before the registered owner signs
   for it.
5. No blank signed transfer deeds may be retained.
6. JSE must be satisfied that adequate insurance cover is held by the member.
7. A signed receipt recording the name of the securities, number of securities and certificate number must be
   issued forthwith on receipt of the securities.

Question 6

Before accepting clients’ assets other than equity securities for safekeeping or assuming the responsibility for
accounting to a client, what is a member required to obtain from a client and where must it be recorded?

Answer 6

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

Question 7

What are the requirements with which a member, who is responsible for clients’ assets other than equity securities,
must comply?

Answer 7

1. The relevant assets must be segregated from the member’s own assets at all times. If the assets are held in an
   account maintained by another financial services provider, including a foreign financial services provider, the
   account shall either be opened in the client’s own name or, if the member opens a single account in respect of
   transactions executed on behalf of more than one client, the member shall procure that the account is clearly
   designated in the records of the relevant financial services provider as being an account utilised for investments
   made by the member on behalf of its clients.
2. A member must maintain proper accounting records in respect of all such assets purchased, sold or held on
   behalf of clients. These records must be updated forthwith in respect of any transactions in respect of such
   assets and must clearly identify the owners of all such assets at all times.
3. A member must balance its clients’ holdings in such assets, as reflected in the member’s records, with the
   accounts maintained by the other financial services providers who hold such assets, on a monthly basis. Any
   differences identified between the respective records must be rectified forthwith.
4. A member who is responsible for safeguarding client assets other than equity securities must implement and
   maintain an effective system of internal controls to protect such assets and prevent unauthorised access thereto.