Settlement_C

Question 1

Define “terminating transaction”

Answer 1

A purchase of equity securities which have not subsequently been sold or a sale of equity securities which have not
subsequently been purchased.

Question 2

Define “uncertificated equity securities”

Answer 2

Equity securities that are not evidenced by a certificate and are transferable by book entry without a certificate.

Question 3

Define “uncommitted settlement”

Answer 3

A settlement obligation for which a CSDP has not provided a settlement undertaking.

Question 4

What are the principles relating to the settlement of equity securities transactions through Strate?

Answer 4

1. Contract note by contract note.
2. Between the ultimate buyer and the ultimate seller.
3. On a rolling and contractual basis, whereby transactions become contractually due to be settled a prescribed
   number of days after the trade date.
4. On a net basis per member per trade type and per equity security, whereby individual contract notes are
   consolidated and offset into net amounts of securities and funds for settlement.

Question 5

Itemise 6 powers of the Settlement Authority?

Answer 5

1. In exceptional circumstances, extend the times referred to in rules 10.60 to 10.110.
2. Monitor settlement obligations of members and their clients.
3. Ensure that the settlement obligations of members are met on the settlement date.
4. Monitor uncommitted settlements and take appropriate action in respect of such settlements.
5. Take action when a settlement of a transaction in equity securities is unlikely to take place on settlement date.
6. Buy and sell equity securities through the JSE equity trading system to meet any obligations arising from the
   management of the settlement process and the risks associated with such process.
7. Manage the settlement of off book trades where ring-fencing has occurred.

Question 6

What is a client required to do prior to placing a sale order in Equity Securities?

Answer 6

1. In the case of a non-controlled client, ensure that the client has appointed a CSDP.
2. In respect of a sell order ensure that:
   a. the equity securities to be sold are held in uncertificated form by the member’s CSDP, in the case of a
   controlled client, or by the client’s CSDP, in the case of a non-controlled client; or
   b. a controlled client is able to evidence to a member that they own the equity securities to be sold in
   uncertificated form and that such securities will be available for on settlement date; or
   c. another transaction has been concluded which provides for an equivalent amount of equity securities being
   available for settlement on settlement date; or
   d. a satisfactory borrowing arrangement is in place which provides for an equivalent amount of equity securities
   being available for settlement on settlement date; or
   e. a corporate action provides for an equivalent amount of equity securities being available for settlement on
   settlement date; or
   f. the equity securities to be sold will be transferred from a foreign register to the local register and such
   securities will be available for settlement on settlement date.

Question 7

What are the settlement obligations of a non-controlled client?

Answer 7

1. Settle through the client’s CSDP.
2. Give instructions to CSDP to settle by not later than 12h00 on the first business day after trade date.
3. If a correction of an allocation results in a new trade the client must give its CSDP the instruction to settle in
   sufficient time to enable the CSDP to commit to settle by 12h00 on the 2nd business day after trade date.
4. Ensure and procure that his CSDP has committed to settle by 12h00 on the 2nd business day after the trade date.
5. If his CSDP has not committed to settle in terms of 4 above, ensure that his CSDP commits to settle by 15h00 on
   the 2nd business day after the trade date.