Market Conduct

Question 1

What type of training must a member ensure that all its employees involved in receipt of orders from clients and the execution of transactions in equity securities on the JSE equity trading system receive?

Answer 1

Training and Guidance so as to ensure that the employees are:
- familiar with the MARKET ABUSE PROVISIONS in sections 77 to 80 of the Act
- able to RECOGNISE AND AVOID entering into any transaction on behalf of the member or its clients WHICH WILL RESULT IN OR IS LIKELY TO RESULT IN A BREACH OF THESE PROVISIONS

Question 2

Compliance monitoring procedures should as a minimum aim to detect activity which would constitute a blatant breach of the provisions of sections 77 AND 80 of the Act taking into account all relevant factors such as?

Answer 2

1. The identity of the parties
2. The perceived intention of the parties
3. The frequency and pattern of transactions over a period of time
4. The effect of the transaction on market prices or volumes
5. Size and timing of the transaction
6. A combination of two or more of these factors

Question 3

Inside information?

Answer 3

Specific or precise information which has not been made public and which-
1. is obtained or learned as an insider
2. If it were made public would be likely to have a material effect on the price or value of any security listed on a regulated market

Question 4

Define insider?

Answer 4

1. A person WHO HAS INSIDE INFORMATION through-
   a. Being a director, employee or shareholder of an issuer of securities listed on a regulated market to which the information relates; or
   b. Having access to any such information by virtue of employment, office or profession or
2. Where such person knows that the direct or indirect source of information was a person contemplated in (1) above

Question 5

When does an insider who knows that he/she has insider information committed an offence?

Answer 5

1. When he or she has deals directly or indirectly or through an agent for his or her own account in securities listed on a regulated market to which the information relates or which are likely to be affected by it.
2. When they disclose the information to another person.
3. When they ENCOURAGES or CAUSES another person to DEAL or DISCOURAGES or STOPS another person from dealing

Question 6

List 5 prohibited actions specifically mentioned in the Act that create or are likely to create a false or deceptive appearance of supply or demand for a security?

Answer 6

Approve or enter an order to buy or sell a security
1. Which involves NO CHANGE IN THE BENEFICIAL OWNERSHIP of that SECURITY
2. With the KNOWLEDGE THAT an opposition order or orders at substantially the same price, have been or will be entered by or for the same or different persons with the INTENTION OF CREATING; A FASE or DECEPTIVE APPEARANCE of the TRADING ACTIVITY or an ARTIFICIAL MARKET PRICE for that security
3. BUY a security AT SUCCESSIVELY HIGHER prices or orders to SELL a security at successively LOWER PRICES FOR the purpose of UNDULY INFLUENCING THE MARKET price of the security