Trading in IRC Securities Regulations

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Questions and Answers

What is the initial capital requirement for a trading member who holds client margins?

R300 000

R400 000 (correct)

R200 000

R150 000

What must a trading member do to terminate its membership?

Pay a termination fee

Provide 30 days written notice (correct)

Submit a financial report

Notify the JSE verbally

When a trading member undergoes a change in corporate structure, what is their obligation?

Notify the JSE within 14 days

Update the company registration only

Notify the JSE immediately in writing (correct)

No notification is required

Which of the following applies to a trading member that wishes to change its authorised user status?

Applies mutatis mutandis to change status Signup and view all the answers

Which action can the Membership Committee take regarding a termination request?

Accept unconditionally or with conditions Signup and view all the answers

What is the consequence for a trading member with capital adequacy deficiency?

They may be suspended from trading Signup and view all the answers

What is required when a trading member's business structure is transferred to another entity?

The JSE must be informed at least one month in advance. Signup and view all the answers

What does the term 'mutatis mutandis' signify in the context of membership changes?

With necessary modifications Signup and view all the answers

How much initial capital is required for a trading member who does not hold client margins?

R200 000 Signup and view all the answers

What must accompany the notification of a change in membership to the JSE?

A certificate of name change. Signup and view all the answers

Upon termination of membership, what action does the JSE take regarding notification?

The JSE notifies trading members immediately upon termination. Signup and view all the answers

Which of the following is NOT a reason the JSE may require a new application for membership?

Minor adjustments to the business operations. Signup and view all the answers

What additional information might the JSE request when notified of a change in membership?

Detailed reasons for the change. Signup and view all the answers

What is the minimum notice period required for a trading member to inform the JSE about a transfer in business structure?

One month. Signup and view all the answers

Which of the following scenarios would require the JSE to determine a new membership application must be made?

A trading member merges with another entity. Signup and view all the answers

What happens to the termination of membership upon notification by the JSE?

It becomes effective immediately unless stated otherwise. Signup and view all the answers

What is a requirement for a trading member authorized as an inter-dealer broker (IDB)?

Limit business activities to arranging transactions between two counterparties. Signup and view all the answers

Which statement best describes the clearing agreement requirements for a trading member?

A trading member can only have one clearing agreement. Signup and view all the answers

What are the conditions under which the JSE may authorize an IRC trading member to provide services?

Restrictions may be based on specific securities or services. Signup and view all the answers

What happens if an inter-dealer broker wants to trade on a matched principal basis?

They may not take a proprietary position against the other trading member. Signup and view all the answers

Which of the following is NOT a requirement for IDBs to maintain their status?

Conduct proprietary transactions for clients. Signup and view all the answers

What must a trading member demonstrate to the JSE as part of the membership application process?

Compliance with general membership requirements. Signup and view all the answers

Upon which basis must IDBs operate their business activities?

Both matched principal and name give-up basis. Signup and view all the answers

What obligation does an IDB have when requested by any trading member regarding bond transactions?

To provide the list of clients who may serve as counterparties. Signup and view all the answers

Which of the following best describes the restriction placed on trading members regarding their client representations?

They cannot take proprietary positions against clients. Signup and view all the answers

Study Notes

Membership Change Notifications

Trading members must inform the JSE at least one month prior to transferring IRC securities trading to another entity, accompanied by detailed information akin to a new membership application.
In cases of mergers, take-overs, transfers, or corporate restructuring, the JSE may request additional particulars regarding reasons for changes.

Termination of Membership

The JSE must notify trading members of any membership terminations or changes, effective immediately unless specified otherwise.

General Membership Requirements

Applicants must meet specific criteria set by the JSE, including compliance with established requirements.
The JSE maintains a register of trading members, detailing their respective categories and sub-categories of authorized user.

Categories of Membership

Trading members can enter into clearing agreements with one clearing member for transaction settlement.
Members can either be clearing members or trade on behalf of clients.
Inter-dealer brokers (IDBs) are a sub-category of trading members, prohibited from being clearing members and subject to specific IDB rules.

Specific Requirements for Inter-Dealer Brokers (IDB)

IDBs must limit activities in JSE-listed bonds to facilitating transactions between counterparties or matched principal trading.
They are not allowed to take proprietary positions against clients when trading on a matched principal basis.
Must provide a list of potential client counterparties upon request from other trading members.

Capital Requirements

Trading members trading on behalf of clients without managing client margins must have a minimum initial capital of R200,000.
Those holding client margins or other assets must maintain at least R400,000 in initial capital.
The JSE can suspend members for capital adequacy deficiencies.

Membership Changes and Termination

Members seeking to change their authorized user status or sub-category must submit an application with necessary modifications.
Trading members can apply for membership termination by providing 30 days written notice to the JSE.
Changes in name or corporate structure must be communicated immediately to the JSE.
The Membership Committee has discretion over acceptance of termination applications based on fulfillment of obligations.

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Description

This quiz covers the necessary regulations and procedures for trading in IRC securities, including the protocol for name changes and the implications for trading members' businesses. Understanding these regulations is essential for compliance within the trading environment.