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Questions and Answers
What is the minimum initial capital required for a trading member who does not receive or hold a client's margins?
What is the minimum initial capital required for a trading member who does not receive or hold a client's margins?
What action can the JSE take if a trading member is deficient in capital adequacy?
What action can the JSE take if a trading member is deficient in capital adequacy?
Which of the following is NOT a requirement for a trading member in terms of notification to the JSE?
Which of the following is NOT a requirement for a trading member in terms of notification to the JSE?
What is the minimum initial capital required for a trading member who does receive a client's margins?
What is the minimum initial capital required for a trading member who does receive a client's margins?
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In terms of management, what is expected of officers managing a trading member?
In terms of management, what is expected of officers managing a trading member?
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Which responsibility does the JSE have regarding Compensation Funds?
Which responsibility does the JSE have regarding Compensation Funds?
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What limitation does the Compensation Fund impose on claims against a defaulting trading member?
What limitation does the Compensation Fund impose on claims against a defaulting trading member?
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Which of the following statements accurately describes the JSE's authority regarding settlement systems?
Which of the following statements accurately describes the JSE's authority regarding settlement systems?
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What is a requirement for an applicant to qualify as a trading member of the JSE?
What is a requirement for an applicant to qualify as a trading member of the JSE?
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What stipulation is placed on trading members regarding clearing agreements?
What stipulation is placed on trading members regarding clearing agreements?
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Study Notes
Trading Member Capital Requirements
- Trading members without client margins must maintain an initial capital of at least R200,000.
- Trading members that hold client margins or assets are required to have a minimum initial capital of R400,000.
- The JSE reserves the right to suspend trading members if they fail to meet capital adequacy standards.
Notification Obligations
- Trading members are required to provide the JSE with a business address, postal address, and a secured electronic delivery address for notices.
Management and Oversight of Trading Members
- Trading members must be managed by individuals with strong reputations and high business standards, as per the JSE's evaluation.
Compensation Funds
- The JSE is authorized to establish Compensation Funds to cover claims arising from transactions before a trading member defaults.
- Claims covered by these funds are subject to rules defined by the Compensation Funds and are limited to liabilities from IRC securities transactions.
- The JSE can impose a levy on trading members based on their transactions, which can be recouped from clients involved in those transactions.
- Trustees manage the Compensation Funds, including their income and resources.
Settlement System Regulations
- The JSE may create or hire a third party to manage settlement systems.
- Trading members must adhere to prescribed procedures and requirements when using JSE settlement systems, including associated fees.
General Membership Requirements
- Applicants to become trading members must satisfy the JSE's specific eligibility criteria.
- The JSE maintains a register categorizing trading members according to their authorized user status.
Member Agreement Conditions
- Trading members can contract with only one clearing member for the clearing and settlement of transactions.
- Members must have adequate procedures and resources to effectively provide regulated services, adhere to regulations, manage funds properly, and maintain accurate records.
Client Transaction Management
- Trading members are responsible for timely reporting of clients' transactions and balances.
- They must fulfill financial resource requirements as dictated by their authorized user category.
Clearing and Custody Requirements
- Any trading member engaging in transactions cleared by JSE Clear must appoint a clearing member or be authorized as one.
- Trading bonds on the JSE trading system necessitates the appointment of a Central Securities Depository Participant (CSDP).
Registration of Officers
- Trading members must ensure that a compliance officer, a settlement officer, and an alternate settlement officer are registered with the JSE.
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Description
This quiz covers the regulatory requirements for trading members on the Johannesburg Stock Exchange (JSE). It focuses on initial capital requirements and handling client margins and assets. Test your understanding of the compliance obligations that trading members must adhere to.
