Conduct of Business Flashcards
foreign client
A client who does not reside in the Republic
foreign investment
“Foreign investment” means the following JSE authorised investments:
1. securities listed on an external exchange;
2. units or any other form of participation in a foreign collective investment scheme approved by the Registrar of Collective Investment Schemes in terms of section 65 of the Collective Investment Schemes Control Act, 2002;
3. units or any other form of participation in a collective investment scheme licensed or registered in a foreign
country; and
4. foreign funds intended for the purchase of such securities, units or participation.
What type of advice is included in the definition of “advice”?
Any recommendation, guidance or proposal of a financial nature furnished, by any means or medium, to a client or group of clients:
1. in respect of the buying and selling of securities; or
2. on any corporate action or other event affecting the rights or benefits in respect of securities; or
3. on the exercise or lapse of any right in respect of any JSE securities; irrespective of whether or not such advice results in any transaction being effected.
What type of factual advice is not included in the definition of “advice”?
Factual advice given merely :
1. on the procedure for entering into a transaction in respect of securities;
2. on the procedure relating to a corporate action or other event affecting the rights or benefits in respect of securities;
3. in relation to the description of securities;
4. in answer to routine administrative queries;
5. in the form of objective information about securities; or
6. by the display or distribution of promotional material.
for the content of an analysis or a report on a JSE authorised investment not to constitute “ advice”, what must the analysis or report not contain?
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
there’s 4
investment services
The services provided by an investment services provider to its clients, and includes:
1. exercising discretion in the management of JSE authorised investments on behalf of clients;
2. providing advice to a client in respect of JSE authorised investments;
3. executing transactions in JSE authorised investments other than equity securities; and
4. safeguarding JSE authorised investments other than uncertificated equity securities and funds intended for the purchase of equity securitiesinvestment services
investment services provider
A member which has been authorised by the JSE to perform investment services in terms of the rules.
Define “manage” in relation to JSE authorised investments
Any arrangement entered into between a client and a member which authorises such member to buy or sell JSE authorised investments on behalf of such client, either with full discretion or with prior reference to the client or exercise any rights attached to those investments
define
money broking transactions
Funds accepted by a member from a client and invested by the member in the money market with one or more banks, in terms of the rules, and subject to any conditions published by the Registrar of Banks.
definition
“unsolicited call”
Any first communication made to a person by a member or an employee of a member, without an express or tacit
invitation from such person.
standards of integrity (4)
General standards of integrity which members are required to observe in their dealings with clients and the JSE?
A member must :
1. not knowingly circulate information which is false or misleading;
2. not knowingly countenance any attempt to manipulate the market, nor to influence persons for such a purpose;
3. not participate in any dealings with other members, clients, the media or other persons which may be of such a nature as to defame the JSE or any of its officers or employees
4. conduct its activities in a manner that is compatible with the objects of the Act and with full respect for the reputation of the JSE; and
standards of conduct (5)
general standards of conduct which a member is required to observe in its dealings with a client?
- Act honestly and fairly.
- Act with due skill, care and diligence, and in the interests of clients.
- Exercise independent professional judgement.
- Act promptly on and in accordance with the instructions of a client, and exercise any discretion in a responsible manner. AND
- Avoid conflicts of interest and when they cannot be avoided, ensure fair treatment to clients by disclosure, confidentiality or declining to act. A member must not unfairly place its interests above those of its clients.
standards regarding disclosure (6)
the general standards regarding disclosure of information to clients?
- The information must be :
a. factually correct;
b. provided in plain language, avoid uncertainty or confusion and not be misleading;
c. adequate and appropriate, in the circumstances. - Amounts, sums, values, fees must be stated in specific monetary terms or if not pre-determinable, the basis of calculation must be adequately described.
- The information need not be repeated to the same client unless any material or significant changes occur.
- Full and accurate information about fees and charges must be disclosed.
- Confidential information must not be disclosed.
- Restrictions or limitations that may affect access to their assets must be disclosed.
there’s 4
Which client records are retained by the member?
- All communications relating to a service rendered to a client, including instructions given by the client to the
member. - All transaction documentation relating to clients.
- All contractual arrangements between the member and its clients, including mandates prescribed by the rules.
- All client particulars required to be provided in terms of the rules or which are necessary for the effective
operation of client accounts.
how long must client records be retained?
- All instructions given by clients to execute transactions must be kept for at least six months after the date of the transaction.
- All other client records prescribed by the rules must be kept for at least five years after the rendering of the services.
obviously…
Can a member request or induce a client to waive any right or benefit conferred on a client in terms of the rules or
accept any such waiver from a client?
No, and any such waiver is void.
the general standards of conduct which a member is required to observe regarding co-operation with the JSE as its regulator?
- Deal with the JSE in an open and co-operative manner; and
- Keep the JSE promptly informed of anything concerning the JSE which might reasonably be expected to be disclosed to it.
that’s interesting…
the general principles that a member must adhere to in advertising its services to the public?
The advertising must:
1. Be carried out with a due sense of responsibility to the public and the profession.
2. Be consistent with the dignity of the profession.
3. Be in good taste without odious comparisons claiming superiority.
4. Conform to accepted norms of legality, decency, honesty and truthfulness.
5. Not contain testimonials or endorsements.
the specific principle that a member must adhere to regarding advertising material about any JSE authorised investment or any regulated service rendered by the member
The advertising material must provide accurate, complete and unambiguous information about the JSE authorised investment or required service
If an advertisement contains information about past performances, what type of statement must also be included in the advertisement?
A warning that past performances are not necessarily indicative of future performances.
What designation must a member use in publicity, promotional or advertising material or on its professional stationery or on its name plates or on its office premises?
- Only the designation (name or logo) recognised by the JSE. AND
- That the member is “a member” of the JSE.
What statement must accompany any written publication or circulation issued by a member relating to the trading results of a listed company or which may influence the price of the securities?
The name of the person or persons who compiled it.
If a member issues a newsletter, circular or other publication which contains an opinion on a listed company and the member has an interest in that company, what disclosure must be included in the publication?
The existence of the interest.
Can a member enter into a transaction with or on behalf of a client where the transaction is as a result of an unsolicited call?
Yes, provided :
1. the general standards of conduct relating to disclosure to clients are complied with and;
2. the rules relating to advice on JSE authorised investments are complied with.
