JSE Interest Rate and Currency Derivatives Rules
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Questions and Answers

What is the primary function of the Compensation Funds established by the JSE?

  • To pay claims arising from all trading activities of a member.
  • To compensate for liabilities originating from defaulting trading members only. (correct)
  • To provide interest earnings for the JSE from trading transactions.
  • To ensure profits for trading members in IRC securities.

    • What determines the amount that can be claimed from the Compensation Funds?

  • The specified amount in the rules of the respective funds. (correct)
  • The total value of transactions conducted by the trading member.
  • The discretion of the trustees managing the Compensation Funds.
  • The profitability of the trading member's operations.

    • How may the JSE manage the assets and liabilities of the Compensation Funds?

  • Via automatic allocation by government regulations.
  • Through trustees appointed to oversee the funds. (correct)
  • Direct management by the JSE's board of directors.
  • By outsourcing to external financial consultants.

    • In relation to transactions involving IRC securities, what is the role of a trading member regarding the levy for the Compensation Funds?

    <p>A trading member may recover the levy from the involved buyer or seller.</p> Signup and view all the answers

    What authority does the JSE have regarding settlement systems?

    <p>It can prescribe fees for trading members using the settlement systems.</p> Signup and view all the answers

    What is the primary purpose of the Johannesburg Stock Exchange (JSE) IRC Rules and Directives?

    <p>To establish fair and efficient markets</p> Signup and view all the answers

    Which entities are bound by the JSE IRC Rules and Directives?

    <p>All trading members, their clients, and any transaction participants</p> Signup and view all the answers

    What condition must be met for every transaction in IRC securities to be valid?

    <p>It must adhere to the JSE's Rules, the Act, and Directives</p> Signup and view all the answers

    What is the role of a clearing house as described in the JSE IRC Rules and Directives?

    <p>To clear and settle trades in IRC securities</p> Signup and view all the answers

    What has been the effect of the integration of Yield-X and BESA in the JSE?

    <p>The renaming and unification of rules and directives</p> Signup and view all the answers

    How did the Yield-X rules influence the newly integrated markets under the JSE?

    <p>They formed the basis for the integrated JSE IRC Rules</p> Signup and view all the answers

    What is the primary function of the objects of the JSE as outlined in its Memorandum and Articles of Association?

    <p>To ensure orderly market conduct and business operations</p> Signup and view all the answers

    Which of the following best describes the concepts of fairness and efficiency in market transactions according to the JSE IRC Rules?

    <p>Fairness entails transparent transactions and efficiency ensures minimal costs</p> Signup and view all the answers

    The Compensation Funds established by the JSE are intended to cover losses related to transactions involving ABC securities.

    <p>False</p> Signup and view all the answers

    Trading members must comply with specific procedures when using the JSE's settlement systems.

    <p>True</p> Signup and view all the answers

    The trustees of the Compensation Funds are responsible for determining the levy imposed on trading members.

    <p>False</p> Signup and view all the answers

    The income derived from trading members' levy contributions is owned by the trading members themselves.

    <p>False</p> Signup and view all the answers

    A defaulting trading member is allowed to deny responsibility for claims made against them at any time.

    <p>False</p> Signup and view all the answers

    The JSE can appoint a clearing house for the purpose of clearing and/or settling trades in IRC securities.

    <p>True</p> Signup and view all the answers

    The rules and directives of the JSE are only binding on trading members and their officers.

    <p>False</p> Signup and view all the answers

    Every transaction in IRC securities must comply with provisions of the Act, the Rules, and Directives.

    <p>True</p> Signup and view all the answers

    The Yield-X and BESA rules and directives were integrated, resulting in the creation of a new set of rules named Yield-BESA.

    <p>False</p> Signup and view all the answers

    Clearing members of the JSE are exempt from the requirements set by the IRC Rules and Directives.

    <p>False</p> Signup and view all the answers

    The primary objective of the JSE IRC Rules and Directives is to ensure that trade is carried out in an orderly manner.

    <p>True</p> Signup and view all the answers

    The JSE operates interest rate securities and currency derivatives through independent markets without integration.

    <p>False</p> Signup and view all the answers

    Only the Johannesburg Stock Exchange can determine the procedures necessary for regulating markets.

    <p>False</p> Signup and view all the answers

    Study Notes

    Purpose and Enforcement of Rules

    • The JSE IRC Rules aim to regulate fair and efficient markets while ensuring orderly business operations aligned with the Act's objectives.
    • These rules are binding on trading members, their officers, employees, clients, and any entity conducting transactions with trading members.

    Transaction Conditions

    • All IRC securities transactions by trading members are subject to the Act's provisions, as well as the JSE's Rules and Directives.

    Clearing House Appointment

    • The JSE can appoint a clearing house or central counterparty (CCP) for clearing and settling trades in IRC securities according to established rules.

    Integration of Markets

    • Yield-X and BESA markets were integrated, combining their rules and directives.
    • The integrated framework is known as the JSE IRC Rules and Directives, building on the Yield-X rules with necessary amendments.

    Compensation Funds

    • The JSE can establish Compensation Funds to settle claims against defaulting trading members, limited to IRC securities transactions.
    • The funds are financed by levies on trading members, which can be passed on to clients involved in transactions.
    • Trustees manage the Compensation Funds' assets, liabilities, and income, including member levies.

    Settlement System Operations

    • The JSE may operate settlement systems or partner with third-party providers, enforcing compliance with procedures and fees for trading members.

    Purpose and Enforcement of Rules

    • The JSE IRC Rules aim to regulate fair and efficient markets while ensuring orderly business operations aligned with the Act's objectives.
    • These rules are binding on trading members, their officers, employees, clients, and any entity conducting transactions with trading members.

    Transaction Conditions

    • All IRC securities transactions by trading members are subject to the Act's provisions, as well as the JSE's Rules and Directives.

    Clearing House Appointment

    • The JSE can appoint a clearing house or central counterparty (CCP) for clearing and settling trades in IRC securities according to established rules.

    Integration of Markets

    • Yield-X and BESA markets were integrated, combining their rules and directives.
    • The integrated framework is known as the JSE IRC Rules and Directives, building on the Yield-X rules with necessary amendments.

    Compensation Funds

    • The JSE can establish Compensation Funds to settle claims against defaulting trading members, limited to IRC securities transactions.
    • The funds are financed by levies on trading members, which can be passed on to clients involved in transactions.
    • Trustees manage the Compensation Funds' assets, liabilities, and income, including member levies.

    Settlement System Operations

    • The JSE may operate settlement systems or partner with third-party providers, enforcing compliance with procedures and fees for trading members.

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    Description

    This quiz covers the general provisions and admittance requirements for the Johannesburg Stock Exchange's Interest Rate and Currency Derivatives. It focuses on the rules and directives that aim to maintain fair and efficient markets. Test your understanding of these essential regulations.

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