Ethical Conduct in Business & Finance

• The text concerns the conduct of business with respect to ethical conduct, general and specific requirements for standards, marketing, advertising, and money broking

Ethical Conduct of Business

• Section 74 pertains to code of conduct for regulated persons

• The registrar may prescribe a code of conduct for authorized persons and other regulated persons in an appropriate consultative manner

• The code's binding extends to authorized users, participants, clearing members of independent clearing houses, other regulated individuals, their officers, employees, and clients

• Section 75 contains principles of code of conduct

• Authorised users, participants or clearing members of independent clearing houses should act honestly and fairly, with due skill, care, and diligence in interests of clients

• They are beholden to uphold the integrity of the financial markets and effectively employ the resources, procedures, and technological systems for the conduct of business

• Regulated persons should act honestly and fairly, with due skill, care, and diligence in interests of clients

• They should uphold the integrity of the financial markets

• Code may provide for certain things

• Section 81 lists false, misleading or deceptive statements, promises and forecasts

• No person may directly or indirectly make or publish any statement, promise or forecast which:

• Is false, misleading or deceptiven at the time and in light of the circumstances

• It is, by omission of material fact, rendered false, misleading or deceptive

• Anyone who becomes aware that such statement was false, misleading or deceptive, must, without delay, publish a full and frank correction

General Standards of Conduct

• Standards of integrity must be maintained
• General conduct towards clients must remain ethical
• There must be full disclosure to clients at all times

Standards of Integrity

• Members in the conduct of their business, must observe high standards of integrity and fair dealing
• Members are forbidden from knowingly circulating false or misleading information
• Members may not knowingly countenance any market manipulation attempts or influence persons
• Activities must align with the Act's objects and respect the JSE's reputation
• Members should abstain from dealings that may defame the JSE or its personnel

General Conduct Towards Clients

• Act honestly and fairly
• Act with due skill, care, and diligence, and in the interests of clients
• Exercise independent professional judgement
• Act promptly and in accordance with client instructions, exercising any discretion responsibly
• Avoid conflicts of interest, ensuring fair treatment via disclosure or declining to act
• Members must not unfairly prioritize their interests over clients'

Disclosure to Clients

• Representations made and information given to a client must be factually correct
• All communications must be in plain language, avoiding uncertainty or misleading statements
• They must be adequate and appropriate, considering the client's knowledge level
• Any monetary obligations mentioned should be reflected in specific monetary terms
• If pre-determination is not reasonably possible, then its basis of calculation must be adequately described
• Disclosures need not be duplicated unless material or significant client-affecting changes occur

Maintenance of Records

• Members must maintain proper, complete, accurate, and secure records relating to services
• Appropriate systems for storing and retrieving records are necessary, safe from destruction, and include communications, transaction documents, contractual arrangements, and client particulars
• Client records can be kept in printed, electronic, or voice-recorded format
• Members must be capable of record retrieval for inspection within seven days, even if not held themselves
• Instructions to execute transactions must be kept for six months, while other client records must be kept for five years

Advertising

• Members can advertise services responsibly and with dignity
• Advertising should be consistent with legality, decency, honesty, and truthfulness, without testimonials/endorsements
• It should not contain fraudulent, untrue, or misleading statements, promises, or forecasts
• Performance data must include sources and dates
• Illustrations, forecasts, or hypothetical data must have basic assumptions, clearly state they are not guaranteed, and indicate dependence on variable factors

Advertising Material

• It must provide accurate, complete, and unambiguous information about any JSE authorized investment or any regulated service rendered by the member
• The text must emphasize risk of loss and uncertainty of future events
• The text must discern fact from opinion
• May not be comparative in relation to another member

Use of Name and Logo

• Members can only use designations recognized by the JSE in publicity, promotional material, stationery, name plates, or office premises
• Fact that one is a member of the is to be recorded

Market Recommendation (Disclaimer)

• Circulating written comment which relates to trading results must be accompanied by name of who compiled it
• If the member has non-casual interest in listed company, the existence of such shall be disclosed
• A member may enter into a transaction with or on behalf of a person where the transaction is as a result of an unsolicited call

Unsolicited Calls

• A member might enter into a transaction after an unsolicited call if they have made proper disclosures to the clients and given advice on JSE authorized investments

Other/General Standards of Conduct

• Personal account trading
• Inducements
• Transactions in BEE securities
• Dealings can only be discretionary FSP
• Conducting business requires a nominee
• Transactions
• Best executions
• Members commissions and fees
• Contract notes
• Management of JSE authorised investments
• Advice on JSE authorised investments
• Management of Corporate actions
• Money broking transactions
• Authorisation of investments other than equity securities under other regulations
• Client statements

Personal Account Trading

• Establish and maintain controls and procedures in relation to transactions executed for the direct or indirect benefit of employees of the member, in order to avoid such transactions conflicting with the interests of the member's clients
• Review by the member, in order to identify any transactions which are in conflict with the interests of the member’s clients

Inducement

• Incentives likely to compromise a member’s duty to clients is to be discouraged

Client Acceptance

• Members are require to gather and maintain information on each client account and each account operated by a client so as to be able to identify such information as
• The client
• Where applicable, various registration and government issued numbers

Dealings with a Discretionary FSP

• A member should not transact with someone needing authorization as a financial services provider without measures to confirm they have it

Conducting Business with a Nominee

• Cannot operate controlled client account of someone member suspects needs approval to act as nominee without confirmation of necessary approval

Transactions

• Every transaction is just and equitable, fulfilling rules according to the Act, rules, and directives.
• The member represents and fully authorized to deal with persons in relation to such transactions
• Phone recordings between member, employee, client are admissible as evidence in disciplinary hearings

Best Executions

• Adherence to best execution principle is a must for member acting as advisor or consultant for purchase or sale of equity
• All transactions in security must be done through the central order book of the trading system
• Members should obtain consent before dealing as principal with client

Record-Keeping

• Members must charge different categories of transactions and in respect of an agency transaction in JSE authorised investments, may charge a commission mutually agreed

Contract Notes

• For equity security transactions via JSE, members must issue contract notes or electronic confirmation before 12h00 on the following business day
• A member can allocate transactions for a client to a specifically designated suspense account with prior approval
• Members may issue contract notes or electronic confirmations reflecting average prices in respect of transactions allocated to the accounts of the underlying beneficiaries providing such is available on request

Money Broking

• Money broking must be approved by the
• Arrangements between client/member to conduct transactions must be recorded in a written mandate
• The client must accept the terms of the mandate before any funds are accepted for such purpose. The mandate may be in electronic form
• Banks involved with money broking must offer account statements that meet required reflections

Acceptance of Cash

• No cash deposits 0ver R5000 are to transacted and must be reported

Client Statements

• A member must provide a written statement to a client which complies with rules
• Statements shall be provided at regular intervals which may not exceed three months
• Members must provide clients with necessary information to review account options, providing descriptions of account value details