Ethics and conduct.docx

### Ethics and conduct #### Code of conduct **Standards of integrity** A trading member shall, in the conduct of its business, observe high standards of integrity and fair dealing. It must -- - not provide, or accept material inducements of a non-business nature to, or from any person to o...

### Ethics and conduct #### Code of conduct **Standards of integrity** A trading member shall, in the conduct of its business, observe high standards of integrity and fair dealing. It must -- - not provide, or accept material inducements of a non-business nature to, or from any person to obtain business; - not knowingly circulate information or submit information to the JSE or JSE Clear which is false or misleading, or which affects or tends to affect unfairly the price of any an IRC security; - not knowingly countenance any attempt to manipulate the market, nor to influence persons for such a purpose; - not be a party to or facilitate or enter into a transaction which is fictitious, or which has a dishonest or unlawful motive; - conduct its activities in a manner that is compatible with the objects of the Act and with full respect for the dignity of the JSE; and - not participate in any dealings with other trading members, clients, the media, or other persons, which may be of such a nature as to discredit the JSE. **General conduct towards clients** In its dealings with clients, a trading member shall -- - act honestly and fairly; - act with due skill, care, and diligence, and in the interests of clients; - exercise independent professional judgement; - act promptly on and in accordance with the instructions of a client, and exercise any discretion in a responsible manner; - avoid conflicts of interest and when they cannot be avoided, ensure fair treatment to clients by disclosure, confidentiality or declining to act. A trading member shall not unfairly place its interests above those of its clients; and - not make any statement, promise, or forecast which it knows to be misleading or is likely to be misleading and that has the effect or may have the effect of inducing a client to enter into a client agreement. **Furnishing of investment advice and exercise of discretion-** In providing investment advice to a client or exercising discretion in relation to the management of JSE authorised investments, a trading member shall -- - take reasonable steps to seek from the client information regarding the client's financial situation, investment experience, particular needs, and objectives in connection with the services required, to enable the trading member to provide the client with sound investment advice or make an appropriate investment decision; - conduct an analysis, based on the information obtained, for the purpose of advising the client or making an investment decision; - identify the JSE authorised investments that will suit the client's risk profile and financial needs, subject to the terms of any client agreement entered into between the client and the trading member or any other mandate provided to the trading member by the client; - take reasonable steps to ensure that the client understands any investment advice that has been provided, as well as the nature and material terms and risks involved in the relevant transaction, so as to enable the client to make an informed decision; and - ensure that any investment advice provided, or discretion exercised is not for the sole purpose of maximising the income of the trading member. **Disclosure to clients** In rendering a service to a client, any representations made, and information provided by a trading member -- - must be factually correct; - must be provided in plain language, avoid uncertainty or confusion and not be misleading; - must be adequate and appropriate in the circumstances of the particular service, considering the factually established or reasonably assumed level of knowledge of the client; - must, as regards all amounts, sums, values, charges, fees, remuneration or monetary obligations mentioned or referred to therein, be reflected in specific monetary terms, provided that where any such amount, sum, value, charge, fee, remuneration or monetary obligation is not reasonably pre-determinable, its basis of calculation must be adequately described; - need not be duplicated or repeated to the same client unless material or significant changes affecting that client occur, or the relevant service renders it necessary, in which case a disclosure of the changes must be made to the client without delay. A trading member -- - must disclose full and accurate information about the fees and any other charges that may be levied on clients; - may not disclose any confidential information acquired or obtained from a client about such client, unless the written consent of the client has been obtained beforehand or disclosure of the information is required to further the objects of the Act or is required under any law; - must advise a client in advance of any restrictions or limitations that may affect the access of that client to their funds or JSE authorised investments. **Maintenance of client records** - A trading member must maintain proper, complete, accurate and secure records in relation to the services rendered to its clients. - A trading member must have appropriate procedures and systems in place to store and retrieve, in a manner safe from destruction, a record of all -- - communications relating to a service rendered to a client, including instructions given by the client to the trading member; - transaction documentation relating to clients; - contractual arrangements between the trading member and its clients, including client agreements and mandates prescribed by these rules; and - client particulars required to be provided in terms of these rules or which are necessary for the effective operation of client accounts. - The client records may be kept in printed, electronic or voice-recorded format. - Trading members need not keep the records themselves but must be capable of making such records available for inspection within seven days. - All instructions given by clients to execute transactions must be kept for a period of at least six months after the relevant transactions and all other client records must be kept for at least five years after the rendering of the services concerned. **Contact with the trading member** A trading member must provide for the necessary resources and functionality to ensure that clients are able to readily contact the trading member. **Waiver of rights** A trading member may not request or induce in any manner a client to waive any right or benefit conferred on the client by or in terms of this code or these rules, or recognise, accept, or act on any such waiver by the client, and any such waiver is void. **Adequacy of financial resources** A trading member shall ensure that it maintains adequate financial resources to meet its business commitments and to withstand the risks to which its business is subject. **Internal resources and risk management** A trading member shall effectively employ the resources and procedures that are necessary for the proper performance of its business activities and to eliminate, as far as is reasonably possible, the risk that clients will suffer financial loss through theft, fraud, other dishonest acts, poor administration, negligence, professional misconduct, or culpable omissions. It shall organise and control its internal affairs in a reasonable manner and keep proper records. Its staff shall be suitable, adequately trained and properly supervised. **Co-operation with regulators** A trading member shall deal with the JSE as its regulator in an open co-operative manner and keep the JSE promptly informed of anything concerning the JSE which might reasonably be expected to be disclosed to it. A trading member shall also provide reasonable co-operation to any other regulatory body or any law enforcement agency in respect of any matters which are the subject of an investigation by such body or agency relating to an alleged contravention of the Act, or any equivalent foreign legislation or any other law governing the activities of the trading member. **Enforcement of code on employees** A trading member shall enforce the provisions of this code on all its employees. #### Unsolicited calls A trading member may enter into a transaction with or on behalf of a person where the transaction is as a result of an unsolicited call, provided that the trading member has complied with the requirements of the IRC Rules. #### Advertising by trading members Advertising material of a trading member -- - must provide accurate, complete, and unambiguous information about any JSE authorised investment or any service rendered by the trading member; - must emphasise the risk of loss and uncertainty of future results; - must discern fact from opinion; - may not be comparative in relation to another trading member; and - may not make the statement or suggest that trading in derivative instruments on the JSE is appropriate for all persons. An advertisement by a trading member -- - may not contain any statement, promise, or forecast which is fraudulent, untrue, or misleading must, if it contains -- - performance data (including awards and rankings), include references to their source and date; - illustrations, forecasts, or hypothetical data -- - contain support in the form of clearly stated - basic assumptions (including, but not limited to, any relevant assumptions in respect of performance, returns, costs and charges) with a reasonable prospect of being met under current circumstances; - make it clear that they are not guaranteed and are provided for illustrative purposes only; and - also contain, where returns or benefits are dependent on the performance of underlying assets or other variable market factors, clear indications of such dependence; - a warning statement about risks involved in buying or selling a JSE authorised investment, prominently display such statement; and - information about past performances, also contain a warning that past performances are not necessarily indicative of future performances; and - must, if the investment value of a JSE authorised investment mentioned in the advertisement is not guaranteed, contain a warning that no guarantees are provided. In the event that the JSE considers that a trading member has failed to conform to any of the advertising requirements published by the JSE under rule 10.230.1 or 10.230.2, it may at its discretion (without prejudice to its other powers under these rules) require that no further advertising material or other promotional or marketing material shall be published by or on behalf of such trading member unless it has been submitted to the JSE in advance and the JSE has notified the trading member that the material is suitable for publication. #### Contraventions to be reported Every trading member shall report to the JSE any contravention of the Act, these rules, and the directives that comes to its attention.