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Questions and Answers
What information must an investment manager provide about foreign investments upon a client's request?
What information must an investment manager provide about foreign investments upon a client's request?
Which regulation must a trading member comply with when engaging with a discretionary financial services provider?
Which regulation must a trading member comply with when engaging with a discretionary financial services provider?
What must a client statement provided by an investment manager include?
What must a client statement provided by an investment manager include?
What does the FAIS Act require when transacting with a person suspected to need authorization as a discretionary financial services provider?
What does the FAIS Act require when transacting with a person suspected to need authorization as a discretionary financial services provider?
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Which information is NOT required to be furnished by an investment manager regarding foreign investments?
Which information is NOT required to be furnished by an investment manager regarding foreign investments?
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When can a trading member operate a client account on behalf of a person acting as a nominee?
When can a trading member operate a client account on behalf of a person acting as a nominee?
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What monthly requirement does an investment manager have towards their clients regarding statements?
What monthly requirement does an investment manager have towards their clients regarding statements?
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What is required regarding the foreign financial services provider's regulator?
What is required regarding the foreign financial services provider's regulator?
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What information must a client statement include regarding foreign currency investments?
What information must a client statement include regarding foreign currency investments?
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Which of the following details is NOT required to be included in a client statement?
Which of the following details is NOT required to be included in a client statement?
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What must be indicated in a client statement regarding investments not held by the trading member?
What must be indicated in a client statement regarding investments not held by the trading member?
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In terms of investment manager obligations, what must a client statement include regarding collateral?
In terms of investment manager obligations, what must a client statement include regarding collateral?
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Which element is required in a client statement to disclose details about derivative instruments?
Which element is required in a client statement to disclose details about derivative instruments?
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What aspect of investment transactions must a client statement disclose during the reporting period?
What aspect of investment transactions must a client statement disclose during the reporting period?
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What must client statements identify regarding any investments used to secure loans?
What must client statements identify regarding any investments used to secure loans?
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What information regarding margin must a client statement include?
What information regarding margin must a client statement include?
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What is required from an investment manager before affecting transactions in JSE authorised investments other than IRC securities on behalf of a client?
What is required from an investment manager before affecting transactions in JSE authorised investments other than IRC securities on behalf of a client?
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How must an investment manager handle the accounting of JSE authorised investments other than IRC securities?
How must an investment manager handle the accounting of JSE authorised investments other than IRC securities?
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Which of the following best describes how an investment manager should hold JSE authorised investments other than IRC securities?
Which of the following best describes how an investment manager should hold JSE authorised investments other than IRC securities?
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What is the primary obligation of an investment manager regarding client holdings in JSE authorised investments other than IRC securities?
What is the primary obligation of an investment manager regarding client holdings in JSE authorised investments other than IRC securities?
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Which of the following best outlines the nature of discretion exercised by an investment manager?
Which of the following best outlines the nature of discretion exercised by an investment manager?
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What must an investment manager do if discrepancies arise between client holding records and accounts maintained by other financial service providers?
What must an investment manager do if discrepancies arise between client holding records and accounts maintained by other financial service providers?
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Which statement is true regarding the segregation of JSE authorised investments other than IRC securities?
Which statement is true regarding the segregation of JSE authorised investments other than IRC securities?
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In terms of nominee accounts, what is the investment manager required to do?
In terms of nominee accounts, what is the investment manager required to do?
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What must a trading member do to trade as an investment manager in IRC securities?
What must a trading member do to trade as an investment manager in IRC securities?
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Under what condition can trading members exempt themselves from the rules regarding IRC securities management?
Under what condition can trading members exempt themselves from the rules regarding IRC securities management?
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What is prohibited for an investment manager regarding buying or selling IRC securities?
What is prohibited for an investment manager regarding buying or selling IRC securities?
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What must banks acquire to provide advice on JSE authorised investments other than IRC securities?
What must banks acquire to provide advice on JSE authorised investments other than IRC securities?
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Which requirement is necessary for all trading members managing IRC securities?
Which requirement is necessary for all trading members managing IRC securities?
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Which scenario allows trading members to provide investment services without the standard compliance rules?
Which scenario allows trading members to provide investment services without the standard compliance rules?
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What is a prerequisite for a trading member to manage a discretionary client account?
What is a prerequisite for a trading member to manage a discretionary client account?
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What must trading members avoid when providing related services to clients, particularly in IRC securities?
What must trading members avoid when providing related services to clients, particularly in IRC securities?
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Under what condition can a trading member conduct transactions in investments listed on an exchange other than the JSE?
Under what condition can a trading member conduct transactions in investments listed on an exchange other than the JSE?
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What must be included in the written notification to the Director: Market Regulation by an investment manager?
What must be included in the written notification to the Director: Market Regulation by an investment manager?
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What consequence may occur if an investment manager fails to notify the Director: Market Regulation before conducting activities?
What consequence may occur if an investment manager fails to notify the Director: Market Regulation before conducting activities?
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What action must an investment manager take if they no longer intend to conduct activities in specific JSE authorised investments?
What action must an investment manager take if they no longer intend to conduct activities in specific JSE authorised investments?
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Which of the following is not a requirement for a trading member when acting as an investment manager?
Which of the following is not a requirement for a trading member when acting as an investment manager?
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In which scenario would a trading member be subject to the rules of another exchange?
In which scenario would a trading member be subject to the rules of another exchange?
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What specific information does not have to be included in the notification to the Director: Market Regulation?
What specific information does not have to be included in the notification to the Director: Market Regulation?
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What is the primary purpose of notifying the Director: Market Regulation?
What is the primary purpose of notifying the Director: Market Regulation?
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What must an investment manager do to ensure compliance when investing in JSE authorised investments other than IRC securities?
What must an investment manager do to ensure compliance when investing in JSE authorised investments other than IRC securities?
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How should an investment manager handle the ownership of JSE authorised investments other than IRC securities?
How should an investment manager handle the ownership of JSE authorised investments other than IRC securities?
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What accounting requirement must an investment manager fulfill concerning JSE authorised investments other than IRC securities?
What accounting requirement must an investment manager fulfill concerning JSE authorised investments other than IRC securities?
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How often must an investment manager balance client holdings in JSE authorised investments other than IRC securities with external accounts?
How often must an investment manager balance client holdings in JSE authorised investments other than IRC securities with external accounts?
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What should an investment manager do if discrepancies are identified between their records and those from other financial service providers?
What should an investment manager do if discrepancies are identified between their records and those from other financial service providers?
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Which statement best describes the treatment of accounts opened by investment managers for multiple clients regarding JSE authorised investments other than IRC securities?
Which statement best describes the treatment of accounts opened by investment managers for multiple clients regarding JSE authorised investments other than IRC securities?
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What general conduct standards must an investment manager adhere to when acting on behalf of clients?
What general conduct standards must an investment manager adhere to when acting on behalf of clients?
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Which of the following actions is NOT required of an investment manager when dealing with JSE authorised investments other than IRC securities?
Which of the following actions is NOT required of an investment manager when dealing with JSE authorised investments other than IRC securities?
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What must an investment manager do upon a client's request regarding foreign investments?
What must an investment manager do upon a client's request regarding foreign investments?
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What must a trading member ensure before transacting with a person believed to need authorization under the FAIS Act?
What must a trading member ensure before transacting with a person believed to need authorization under the FAIS Act?
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In the context of client statements, what information is essential for determining the portfolio's composition?
In the context of client statements, what information is essential for determining the portfolio's composition?
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What must an investment manager establish before operating a client account on behalf of a suspected nominee?
What must an investment manager establish before operating a client account on behalf of a suspected nominee?
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Which of the following statements regarding the foreign financial services provider's regulator is accurate?
Which of the following statements regarding the foreign financial services provider's regulator is accurate?
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What key information must a client statement contain to help clients produce financial statements?
What key information must a client statement contain to help clients produce financial statements?
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Which document must an investment manager provide to clients on a monthly basis?
Which document must an investment manager provide to clients on a monthly basis?
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What does a trading member need to verify before affecting a transaction on behalf of a client?
What does a trading member need to verify before affecting a transaction on behalf of a client?
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Which of the following must be reflected in a client statement regarding investments made on behalf of the client?
Which of the following must be reflected in a client statement regarding investments made on behalf of the client?
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What specific information must be included in a client statement about foreign currency investments?
What specific information must be included in a client statement about foreign currency investments?
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Which detail must be identified in a client statement concerning non-cash transactions?
Which detail must be identified in a client statement concerning non-cash transactions?
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What must a client statement disclose regarding investments that are loaned to a third party?
What must a client statement disclose regarding investments that are loaned to a third party?
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Which aspect of funds or investments used for securing loans must be included in the client statement?
Which aspect of funds or investments used for securing loans must be included in the client statement?
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What important detail is required in a client statement regarding margin positions?
What important detail is required in a client statement regarding margin positions?
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What must a client statement indicate regarding investments not held by the trading member?
What must a client statement indicate regarding investments not held by the trading member?
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Which data concerning income and expenditure must be included in a client statement?
Which data concerning income and expenditure must be included in a client statement?
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An investment manager may conduct transactions in foreign investments without a tax clearance certificate from the South African Revenue Service.
An investment manager may conduct transactions in foreign investments without a tax clearance certificate from the South African Revenue Service.
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A mandate between the investment manager and client must include a statement about the risks associated with foreign investments.
A mandate between the investment manager and client must include a statement about the risks associated with foreign investments.
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Foreign investments strictly refer to securities listed only on the Johannesburg Stock Exchange.
Foreign investments strictly refer to securities listed only on the Johannesburg Stock Exchange.
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Investment managers are exempt from maintaining internal controls for IRC securities transactions on behalf of clients.
Investment managers are exempt from maintaining internal controls for IRC securities transactions on behalf of clients.
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The client mandate must specify whether there are any jurisdiction restrictions regarding the foreign investments.
The client mandate must specify whether there are any jurisdiction restrictions regarding the foreign investments.
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Transactions in JSE authorised investments other than IRC securities by a trading member are not required to follow the relevant exchange rules if they are identified as IRC securities.
Transactions in JSE authorised investments other than IRC securities by a trading member are not required to follow the relevant exchange rules if they are identified as IRC securities.
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An investment manager does not need to provide prior written notification to the Director: Market Regulation before conducting activities in JSE authorised investments.
An investment manager does not need to provide prior written notification to the Director: Market Regulation before conducting activities in JSE authorised investments.
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A trading member must obtain a licence to operate as a financial services provider if the majority of their services relate to IRC securities.
A trading member must obtain a licence to operate as a financial services provider if the majority of their services relate to IRC securities.
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If an investment manager ceases activity in a specific type of JSE authorised investment, they must inform the Director: Market Regulation promptly.
If an investment manager ceases activity in a specific type of JSE authorised investment, they must inform the Director: Market Regulation promptly.
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A trading member is allowed to trade IRC securities for clients without a discretionary client agreement.
A trading member is allowed to trade IRC securities for clients without a discretionary client agreement.
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Written notifications from investment managers to the Director: Market Regulation must specify the exact names of each investment they intend to trade.
Written notifications from investment managers to the Director: Market Regulation must specify the exact names of each investment they intend to trade.
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Investment managers are prohibited from buying or selling IRC securities from their own accounts to clients.
Investment managers are prohibited from buying or selling IRC securities from their own accounts to clients.
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The failure of an investment manager to notify the Director: Market Regulation may lead to a complete prohibition on their activities in all JSE authorised investments.
The failure of an investment manager to notify the Director: Market Regulation may lead to a complete prohibition on their activities in all JSE authorised investments.
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A trading member can engage in transactions without conforming to exchange rules if they are operating as an authorised user of another exchange.
A trading member can engage in transactions without conforming to exchange rules if they are operating as an authorised user of another exchange.
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The provisions regulating IRC securities management are applicable to banks as trading members.
The provisions regulating IRC securities management are applicable to banks as trading members.
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An investment manager must provide detailed descriptions of all types of JSE authorised investments they will be handling to the Director: Market Regulation.
An investment manager must provide detailed descriptions of all types of JSE authorised investments they will be handling to the Director: Market Regulation.
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An investment manager can provide advice about JSE authorized investments without complying with the FAIS Act.
An investment manager can provide advice about JSE authorized investments without complying with the FAIS Act.
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Investment managers are required to seek permission to offer investment advice concerning IRC securities prior to doing so.
Investment managers are required to seek permission to offer investment advice concerning IRC securities prior to doing so.
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A client must be registered with the JSE as a client of the trading member to trade IRC securities.
A client must be registered with the JSE as a client of the trading member to trade IRC securities.
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A trading member can operate investment services without any compliance rules if they are an authorized user on the JSE markets.
A trading member can operate investment services without any compliance rules if they are an authorized user on the JSE markets.
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Investment managers who fail to comply with the local regulations for IRC investments may face penalties.
Investment managers who fail to comply with the local regulations for IRC investments may face penalties.
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An investment manager can effect transactions in JSE authorised investments without the client's written mandate if it is in the best interest of the client.
An investment manager can effect transactions in JSE authorised investments without the client's written mandate if it is in the best interest of the client.
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The investment manager must keep clients' holdings in JSE authorised investments separate from their own assets at all times.
The investment manager must keep clients' holdings in JSE authorised investments separate from their own assets at all times.
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An investment manager is obligated to balance client holdings in JSE authorised investments on a quarterly basis.
An investment manager is obligated to balance client holdings in JSE authorised investments on a quarterly basis.
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If discrepancies arise between records of client holdings and external accounts, the investment manager must rectify such differences immediately.
If discrepancies arise between records of client holdings and external accounts, the investment manager must rectify such differences immediately.
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Investment managers must maintain detailed accounting records for transactions executed in securities not listed on the JSE.
Investment managers must maintain detailed accounting records for transactions executed in securities not listed on the JSE.
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An investment manager may open a single account for transactions on behalf of multiple clients without designating it properly.
An investment manager may open a single account for transactions on behalf of multiple clients without designating it properly.
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The beneficial owners of all JSE authorised investments must be clearly identified and maintained in accounting records at all times.
The beneficial owners of all JSE authorised investments must be clearly identified and maintained in accounting records at all times.
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Investment managers are not required to update their accounting records immediately following transactions in JSE authorised investments.
Investment managers are not required to update their accounting records immediately following transactions in JSE authorised investments.
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A client statement must include a detailed list of non-cash transactions during the reporting period.
A client statement must include a detailed list of non-cash transactions during the reporting period.
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All investments held in a foreign currency must be reported at the previous exchange rate at the reporting date.
All investments held in a foreign currency must be reported at the previous exchange rate at the reporting date.
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Investments purchased during the reporting period do not need to be included in a client statement.
Investments purchased during the reporting period do not need to be included in a client statement.
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A client statement does not require identification of loaned investments that the trading member is accountable for at the reporting date.
A client statement does not require identification of loaned investments that the trading member is accountable for at the reporting date.
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Client statements must include the quantity, description, and market value of financial products held as collateral for any loans made by the client.
Client statements must include the quantity, description, and market value of financial products held as collateral for any loans made by the client.
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Investments used to secure loans need to be specifically identified in the client statement at the reporting date.
Investments used to secure loans need to be specifically identified in the client statement at the reporting date.
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Details of income and expenditure incurred during the reporting period are optional in a client statement.
Details of income and expenditure incurred during the reporting period are optional in a client statement.
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The exercise or strike price of options must be reported in the client statement.
The exercise or strike price of options must be reported in the client statement.
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Study Notes
Investment Manager's Obligations Regarding Foreign Investments
- Clients may request detailed information about foreign investments, including the exchange's name and licensing authority.
- Required details include the licensed external exchange, country of registration, and foreign financial service provider's information.
- Must disclose the regulator's details for the foreign financial service provider and their approval status.
Trading with Discretionary Financial Services Providers
- Trading members must ensure the counterparty is authorized under the FAIS Act before completing transactions.
- Reasonable measures should be taken to confirm their authorization status.
Client Account Operations
- Trading members cannot operate accounts on behalf of clients needing approval to act as nominees without verifying their status.
Client Statements
- Investment managers are obligated to provide monthly written client statements.
- Statements must include sufficient information for clients to:
- Produce financial statements.
- Assess investment compositions and changes over the reporting period.
- Evaluate market value of investments and changes during the reporting period.
Required Information in Client Statements
- Quantity, description, and market value of each investment at the reporting date.
- Total funds held or invested by the trading member on behalf of the client.
- Currency exchange rate if investments or funds are reflected in a foreign currency.
- Summary of transactions, including purchases, sales, income, expenditure, and non-cash transactions.
- Details on investments transferred and loans secured by investments.
- Identification of investments loaned to third parties but still accountable to the client.
- Description of any financial products or funds held as collateral for client loans.
- Information regarding investments used as margin or to secure loans.
JSE Authorised Investments
- Investment decisions must consider the conduct provisions towards clients and the use of discretion.
- Transactions in JSE authorised investments require written consent from the client through a mandate.
- JSE authorised investments should remain segregated from the investment manager's own assets.
Accounting and Record-Keeping Requirements
- Proper accounting records must be maintained for all JSE authorised investments.
- Records must identify beneficial owners and be updated promptly after transactions.
- Monthly reconciliations are required between client holdings and records from other financial service providers.
- Immediate rectification of discrepancies between records is mandated.
Authority to Manage Investments
- Trading members can manage investments in IRC securities provided they comply with relevant rules and client agreements.
- Banks or trading members whose services do not primarily focus on JSE listed securities are exempt from these provisions and must obtain a FAIS Act licence for IRC-related advice or services.
Trading as an Investment Manager
- Trading members must establish a discretionary client agreement to trade as an investment manager of IRC securities for clients.
- Investment managers are prohibited from trading IRC securities for their own accounts or accounts in which their employees have an interest.
Management and Advice for JSE Authorized Investments
- The regulations apply primarily to trading members managing IRC securities under JSE guidelines.
- Banks or appropriate trading members need FAIS Act licences for services relating to JSE authorized investments except for IRC securities.
- Transactions related to other exchanges are governed by those exchanges' rules, not the JSE's.
Notification Requirements
- Trading members must notify the Director: Market Regulation before conducting transactions or providing advice regarding JSE authorized investments other than IRC securities.
- Notifications must specify the type of investments managed or advised on, without naming individual securities.
Compliance and Accountability
- Failure to notify may lead to restrictions on investment activities.
- Investment managers must inform the Director if they cease activities in any JSE authorized investments.
- All transactions must be conducted in consideration of client interests and proper consent documented in writing.
Segregation of Assets and Record-Keeping
- Client investments must be segregated from the investment manager's own assets, ensuring clear distinction in accounts.
- Investment managers must maintain thorough accounting records, updated upon transactions, identifying beneficial ownership of investments.
- Monthly reconciliations of client holdings with external accounts are mandatory.
Information Disclosure for Foreign Investments
- Investment managers must provide clients with detailed information about foreign investments, including regulatory authorities and financial service providers involved.
Transactions and Client Accounts
- Trading members should verify authorizations before engaging with discretionary financial services providers or nominees requiring approval.
Requirements for Client Statements
- Monthly written statements to clients are mandatory, providing comprehensive financial information.
- Statements must include details on investment composition, market value, funds held, and specific transactions over the reporting period.
- Each statement must clarify any investments not directly held by the trading member.
Key Components of Client Statements
- Quantity, description, and market value of each investment at the reporting date.
- Overview of investments and funds involved in transactions, their earnings, and expenditures during the period.
- Non-cash transactions and any collateral held on behalf of the client must be documented.
- Clear identification of investments used as margin or collateral in loan arrangements or client borrowings is essential.
Authority to Manage Investments
- Trading members can manage IRC securities investments if they adhere to specific rules and client agreements.
- Banks and members whose services do not primarily involve JSE listed securities are exempt from these regulations.
- Such exempt trading members must obtain a FAIS Act license for any client advice or intermediary services relating to IRC securities.
Trading as an Investment Manager
- Investment managers must have a discretionary client agreement and the client must be registered with the JSE.
- Investment managers cannot trade IRC securities for personal accounts or accounts with employee interests if it involves clients.
Management and Investment of Non-IRC Securities
- Rules apply only to trading members regulated by the JSE in managing IRC securities.
- Exempt trading members need a license under the FAIS Act for non-IRC JSE authorized investments.
- Trading members dealing with non-IRC investments from exchanges other than the JSE must follow those exchanges’ rules.
- Prior notification to the Director: Market Regulation is required for any transactions or advice on non-IRC investments.
- Notification must specify the types of authorized investments involved in intended transactions or advice.
Client Mandates and Accounting
- Clients must consent to transactions in non-IRC investments via a written mandate.
- Investments must be accounted for separately from the investment manager's own assets, ensuring proper segregation.
- Accurate and timely accounting records of all transactions must be maintained to show beneficial ownership.
- Monthly reconciliations between the investment manager's records and financial providers are mandatory.
Internal Controls and Safeguards
- Investment managers must implement effective internal controls to secure client investments against unauthorized access.
Management of Foreign Investments
- Foreign investments include securities from external exchanges and collective investment schemes licensed abroad.
- Contracts with clients must specify the authority to invest in foreign entities, the associated risks, and any jurisdiction considerations.
- Clients must provide tax clearance from SARS before entering into foreign investment transactions.
Client Statement Requirements
- Client statements must include specific details such as quantities, market value of investments, cash amounts, currency exchange rates, and transaction summaries.
- Statements are required to detail earnings, expenditures, non-cash transactions, transfers, collateral holdings, and any loans or margin uses.
- Derivative instruments must be clearly described, including underlying assets and relevant strike prices.
- Any investments not under the managing trading member’s accountability must be notably identified in client statements.
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Test your knowledge on the requirements for investment managers regarding foreign investments. This quiz covers essential information about licensed external exchanges and registration processes. Perfect for finance students and professionals seeking to understand international investment compliance.
