Trading Standards and Integrity Quiz

Standards of Integrity

• Trading members must uphold high standards of integrity and fair dealing in their business practices.
• They are prohibited from offering or accepting material inducements, especially those of a non-business nature, to secure business.
• Trading members cannot knowingly disseminate or submit false or misleading information to the JSE or JSE Clear that could unfairly impact the price of any IRC security.
• Market manipulation or influencing individuals for such purposes is strictly prohibited.
• Engaging in fictitious transactions or those with dishonest or unlawful motives is forbidden.
• Trading members must conduct their activities in a manner that aligns with the Act's objectives and respects the dignity of the JSE.
• They must refrain from participating in dealings with other trading members, clients, media, and other individuals that could discredit the JSE.

General Conduct towards Clients

• Trading members must act honestly and fairly in their dealings with clients.
• They are obligated to act with due skill, care, diligence, and prioritize their client's interests.
• Independent professional judgment must be exercised by trading members.
• Prompt action on client instructions is necessary, and any discretionary powers must be exercised responsibly.
• Conflicts of interest must be avoided. If unavoidable, they must ensure fair treatment of clients through disclosure, confidentiality, or declining to act.
• Trading members cannot prioritize their interests over those of their clients.
• They must avoid making misleading statements, promises, or forecasts that could induce clients to enter into agreements.

Disclosure to Clients

• Trading members must ensure all representations made and information provided to clients is factually accurate and presented in plain, unambiguous language.
• The information must be adequate and appropriate based on the client's level of knowledge.
• Monetary amounts, charges, fees, remuneration, or obligations must be clearly stated. When not readily pre-determinable, their basis of calculation must be adequately described.
• Information must be disclosed to clients when material or significant changes occur.
• Trading members are required to provide full and accurate information on fees and other charges levied on clients.
• Confidential client information must not be disclosed without written consent or when required for legal or regulatory purposes.
• Clients must be notified of any restrictions or limitations affecting access to their funds or authorized investments.

Maintenance of Client Records

• Trading members must maintain accurate, complete, and secure records of all client services.
• Proper procedures and systems must be in place to store and retrieve these records securely.
• Records should include communication related to services, client instructions, transaction documentation, contractual arrangements, and client particulars.
• Records can be in printed, electronic, or voice-recorded format.
• While records need not be kept on-site, they must be accessible for inspection within seven days.
• Client instructions for transactions must be retained for at least six months, and other client records must be kept for at least five years.

Contact with the Trading Member

• Trading members must provide accessible communication channels for their clients to contact them.

Waiver of Rights

• Trading members are prohibited from requesting or inducing clients to waive any rights or benefits granted by this code or related rules.
• Such waivers are considered void.

Adequacy of Financial Resources

• Trading members are required to maintain sufficient financial resources to cover their business commitments and withstand associated risks.

Internal Resources and Risk Management

• Trading members must employ adequate resources and procedures to ensure the proper performance of their business activities.
• They are responsible for minimizing risks to clients from theft, fraud, poor administration, negligence, misconduct, or omissions.
• Internal affairs must be organized and controlled effectively, maintaining accurate records.
• Staff must be suitable, adequately trained, and properly supervised.

Co-operation with Regulators

• Trading members must cooperate openly with the JSE as their regulator, promptly informing them of any relevant information.
• They must also cooperate with other regulatory bodies and law enforcement agencies in investigations related to potential violations of the Act or other relevant laws.

Enforcement of Code on Employees

• Trading members must enforce the provisions of this code on all their employees.

Unsolicited Calls

• Transactions resulting from unsolicited calls are allowed but must comply with the requirements of the IRC Rules.

Advertising by Trading Members

• Advertising by trading members must provide accurate, complete, and unambiguous information about JSE-authorized investments and offered services.
• They must emphasize the risks, uncertainties, and lack of guarantees associated with investments.
• Advertising must clearly distinguish between facts and opinions.
• It cannot be comparative in relation to other trading members.
• It must avoid suggesting that derivative instruments on the JSE are suitable for all individuals.
• Advertisements cannot contain fraudulent, untrue, or misleading statements, promises, or forecasts.
• Performance data, including awards and rankings, must include their source and date.
• Illustrations, forecasts, or hypothetical data must be supported by clearly stated assumptions and be presented clearly as non-guaranteed and for illustrative purposes only.
• Advertisements should include warnings about the risks involved in buying or selling JSE-authorized investments, as well as warnings that past performances are not guarantees of future results.
• In cases where the investment value of a JSE-authorized investment mentioned in the advertisement is not guaranteed, a warning statement must be included.
• If the JSE believes a trading member violates advertising requirements, it may require them to submit advertising materials for review before publication.

Contraventions to be Reported

• All trading members are required to report any contraventions of the Act, these rules, or directives to the JSE.

Test your knowledge on the essential standards of integrity and conduct expected from trading members. This quiz focuses on fair dealing, prohibition of inducements, and the ethical responsibilities towards clients and the JSE. See how well you understand the importance of maintaining a reputable trading environment.