Settlement_D

Question 1

What are the settlement obligations of a controlled client?

Answer 1

By no later than 16h00 on the first business day after trade date to ensure that the member will be in a position to
settle the transaction on settlement date either by
1. providing the equity securities or funds required to settle the transaction. OR
2. Entering into an arrangement with the member to facilitate settlement of the transaction.

Question 2

Itemise 7 of a member’s settlement obligations.

Answer 2

1. Endeavour to ensure settlement of transactions it has effected.
2. Settlement officer must advise SA when any equity securities transaction is unlikely to settle.
3. It may not alter or stop payment in respect of a STRATE settlement instruction.
4. Ensure that its CSP or settlement agent (if applicable) complies with the rules.
5. By no later than 12H00 on the 2nd business day after the trade to ensure that its CSDP has committed to settle in
   respect of controlled accounts.
6. Assume the obligation to settle by 16h00 on the 2nd business day after the trade date if a non-controlled client is
   unable to settle.
7. By 18h00 on the 2nd business day after trade date to ensure that the CSDP of a member commits to settle any
   transactions in respect of the member’s non-controlled clients assumed in terms of 6 above.

Question 3

What is a member required to do if a client, at any stage, advises the member that it is unable to settle or the member
otherwise becomes aware that the client is not able to settle?

Answer 3

1. Endeavour to enter into an arrangement to ensure settlement.
2. If unable to do so, immediately notify the Settlement Authority.

Question 4

Having notified the SA that a client is unable to settle and the SA is able to procure settlement of the transaction by
means of borrowing equity securities or funds, as the case may be, what is a member required to do by no later than
close of business on the next business day?

Answer 4

1. In respect of a sale transaction, buy such securities either for the account of the relevant client or for the
   member’s own account; or
2. In respect of a purchase transaction, sell such securities either for the account of the relevant client or for the
   member’s own account;
   in order to ensure the return of the securities or funds to the Settlement Authority.

Question 5

What is a member specifically prohibited from using when complying with settlement obligations?

Answer 5

A member must not use a client’s equity securities to settle the obligations of:-
1. Another client or
2. A proprietary position