Client Assets_D

Question 1

What is a member required to do with funds held on behalf of a client intended for the purchase of JSE authorised
securities other than equity securities or, held by a member from time to time relating to regulated services (i.e.
margins and cash collateral)?

Answer 1

Deposit the funds which have not been remitted in JSET for the account of the client for value on the date of receipt of
such funds.

Question 2

Clients funds may not be deposited in JSET for the sole purpose of earning interest. True or False?

Answer 2

True.

Question 3

1. What must a TSP do prior to entering into an arrangement with another member to act as its settlement agent?
   AND
2. What may the agreement provide?

Answer 3

1. Advise the JSE of its intention to do so.
2. That the settlement agent:
   a. Assists the TSP in meeting its obligations to ensure settlement of proprietary trades and trades executed on
   behalf of non-controlled clients.
   b. Monitors unsettled proprietary and non-controlled clients’ trades.
   c. Institutes any action which is necessary to ensure the TSP meets its obligations to settle.

Question 4

If a settlement agent has been appointed by a TSP, who is ultimately responsible for meeting the TSP’s settlement
obligation?

Answer 4

The TSP itself.

Question 5

What are the key objectives regarding their structures, systems and resources which a member applying to be
authorised to perform custody services be able to demonstrate to the JSE so as to assure continuity of business and
the total protection of client assets?

Answer 5

1. MANAGEMENT OVERSIGHT which evidences commitment to effective control.
2. PEOPLE AND RESOURCE - adequate numbers of suitably qualified personnel of integrity.
3. INTERNAL CONTROL - documented, designed to ensure business is properly conducted and that the assets of a
   member are safeguarded.
4. CONTINUITY OF BUSINESS - adequate financial resources and risk management systems.
5. INFORMATION TECHNOLOGY SYSTEMS - documented, designed to prevent unauthorised use, properly tested to
   assure continuity of operation.

Question 6

The CSP is ultimately responsible for any obligation to the JSE or other broking members or its TSP’s clients through
the performance of its function as a CSP. True or false?

Answer 6

False

Question 7

The arrangement between a TSP and its CSP shall be recorded in writing, a copy of which must be lodged with the JSE.
What shall such arrangement provide?

Answer 7

1. That the functions for which the CSP is responsible are performed strictly in terms of the Act, rules and
   directives.
2. That the CSP acts as an agent for the TSP in all actions it performs.
3. That the CSP permits an audit of its role as a CSP on behalf of the TSP.
4. That the CSP utilise the BDA system.