IRC Trading PDF

**IRC Trading** In terms of the Financial Markets Act members of the JSE-Debt Market are \"authorised users\" and the FMA defines them as: *a person authorised by a licensed exchange to perform one or more securities services in terms of the exchange rules*. Authorised Users of the JSE-Debt Market...

**IRC Trading** In terms of the Financial Markets Act members of the JSE-Debt Market are \"authorised users\" and the FMA defines them as: *a person authorised by a licensed exchange to perform one or more securities services in terms of the exchange rules*. Authorised Users of the JSE-Debt Market and some issuers are the facilitators of transactions (between the principals) in the bond market. It is essential to distinguish between the JSE-Debt Market interdealer brokers and the "ordinary" members. The "ordinary" members \[i.e., certain banks and non-bank members (smaller firms)\] deal with all market participants, whereas the interdealer brokers perform a self-imposed specialised function: they trade exclusively between other members of the JSE-Debt Market, particularly the market makers. Market makers refers to any entity / organisation that quotes buying (bid) and selling (offer) rates (prices in some countries) on bonds simultaneously and at all times when requested to do so by buyers and sellers. Interdealer brokers who operate electronic trading platforms (ETP) advertise prices and volumes of actual deals. In the financial industry, particularly in certain markets like fixed income or foreign exchange, interdealer brokers play a crucial role in facilitating transactions between financial institutions. Although nothing legal prevents them from dealing with the investing institutions, there exists an understanding among members not to deal with investing institutions if they engage with these interdealer brokers could be related to a practice known as **\"primary dealing\"** or \"**primary market access**.\" Here\'s an explanation: **Primary Dealers and Interdealer Brokers:** Primary Dealers: In the JSE-Debt Markets, there are primary dealers who are typically large financial institutions authorised to deal directly with the government or other issuers of securities. They participate in the primary market, buying newly issued securities and subsequently trading them in the secondary market. **Interdealer Brokers:** Interdealer brokers, on the other hand, facilitate transactions between different financial institutions. They act as intermediaries, helping institutions buy and sell securities from each other. **Primary Market Access:** Understanding Among Members: The \"understanding" mentioned may be an informal agreement or practice among financial institutions. Primary dealers often have a special relationship with issuers and may prefer not to compete directly with interdealer brokers for certain transactions. **Role of Interdealer Brokers:** Interdealer brokers may provide a level of anonymity and efficiency in trading. If investing institutions (like asset managers or hedge funds) were to directly engage with interdealer brokers on certain transactions, it might be seen as bypassing the primary dealer network. Internationally there are two types of interdealer broker: **"matched principal"** and **"name-give-up".** - The name-give-up brokers marry the requirements of two principals in a deal who are disclosed to one another before the deal is confirmed, to ensure that the two parties are able to deal with one another. Settlement takes place between the two principals and not between each principal and the interdealer broker. The brokers charge a small fixed (and disclosed) brokerage. - The matched principal interdealer brokers are distinguished by higher levels of capital, giving comfort to the principals in terms of settlement with them. The majority of interdealer brokers are of the matched principal variety. **secondary bond market** It is important to note that the secondary bond market in South Africa is exchange-traded. While most bonds are listed, there are a small number of bonds that are unlisted and trade in an OTC market that exists for them. It is the market that enables holders of previously issued securities to acquire funds by disposing of their holdings and enables investors to invest funds by purchasing existing securities. **Buying and selling of IRC securities** The business of the buying and selling of IRC securities by trading members as contemplated by section 24(a) and (b) of the Financial Markets Act must be conducted on the JSE trading system provided that -- - a trading member may execute transactions in IRC securities on another exchange as an authorised user or as a client of an authorised user of such exchange; or - transactions in IRC securities which meet the criteria set out in the IRC Rules may be negotiated off book and reported to the JSE trading system. A transaction negotiated off book is only deemed to be a valid transaction once the transaction has been reported to the JSE trading system by the trading member or trading members who are party to the transaction. **JSE Trading System** - In accordance with the IRC Directives, other than in relation to the transactions exempted, a trading member must execute trades in IRC securities, either for its own account or for the account of a client, on the JSE trading system. - The JSE trading system will operate on every business day according to standard periods and times as set out in the IRC Directives. **Trading members' obligations** Access to and utilisation of the JSE trading system - Trading members may only access and utilise the JSE trading system with the required approval of the Market Controller and subject to such instructions as may be issued by the Market Controller. - In order to utilise the services of, and access the JSE trading system a trading member must: - enter into and sign such agreements; and - adhere to such requirements and specifications, as may be prescribed by the JSE Executive. - Trading members accessing the JSE trading system must at all times -- - maintain and enforce appropriate security procedures which are designed to prevent unauthorised persons from having access to any JSE systems, trading member applications or client applications; and - have the necessary resources to ensure that any data sent to or received from the JSE trading system does not interfere with the efficiency and integrity of the IRC markets or the proper functioning of the JSE systems. ***Data Integrity*** - A trading member is responsible for identifying the origin and the accuracy, integrity, and bona fides of all data submitted to the JSE trading system by or on behalf of that trading member. Any information received by the JSE trading system is deemed for all purposes under these rules and directives to have been submitted to the JSE trading system by, and with the knowledge of, the trading member. - Data from or submitted on behalf of trading members may only be submitted to the JSE trading system in a manner approved by the JSE. ***Authorised Personnel*** A trading member represents and warrants to the JSE and to persons with or on behalf of whom the trading member executes transactions in IRC securities, that any person employed by the trading member to deal with such persons in relation to such transactions, has full authority to act on the trading member's behalf. A trading member must ensure that all registered dealers meet the requirements of rule. ***Recording of Transactions*** Every trading member must, record, report and retain details of every transaction in IRC securities entered into by it or on its behalf and it shall be the duty of every person executing a transaction on behalf of a trading member to ensure that these rules are complied with. ***Broadcasting of market prices*** - Subject to authorisation from its clients, an IDB must broadcast bid and offer prices in relation to its clients' orders to buy and sell JSE listed bonds in a non-discriminatory manner which ensures that such bid and offer prices are accessible at the same time to all other trading members with whom the IDB transacts who wish to access those prices. - A trading member may only broadcast a bid or offer price in a JSE listed bond if it has the intention of trading at that particular price either for its own account or based on an order received from a client to buy or sell the JSE listed bond, subject to any counterparty limits, contractual provisions and regulatory or internal compliance restrictions that may prevent the trading member from trading with a person who wishes to trade at the broadcast price. - Any trading member that broadcasts bid and offer prices in JSE listed bonds or spreads comprising two bonds, either on its own behalf or on behalf of clients, must make such prices available to the JSE on request. - The JSE may use the broadcast prices for the purpose of effective regulation of trading in JSE listed bonds and may also specifically use prices broadcast by IDBs to promote liquidity and transparency of trading in JSE listed bonds. **Market Integrity** - Where, from a lack of clarity in the published information available at the time of the transaction, a trading member trades in a quantity or at a price which in the opinion of the JSE Executive is unreasonable, the JSE Executive may declare such transaction void. Such declaration is binding on the trading members who entered into such transaction and on the clients for or on whose behalf the transaction was executed. - The JSE Executive may prohibit trading by trading members in any particular IRC security either for a specified or for an indefinite period. - If, in the opinion of the Director: Market Regulation, an automated trade, auction trade or off book transaction materially impacts the integrity or transparency of the IRC markets, or the correctness of the statistics, the Director: Market Regulation may cancel such trade or off book transaction without having received a formal request to do so by any trading member. The Director: Market Regulation may -- - instruct the trading member or trading members to enter an equal and opposite correction trade on the trade date of the original trade; or - instruct the Settlement Authority to effect an equal and opposite correction trade on behalf of the trading member or trading members on the day after the original trade. - The Market Controller and any one member of the JSE Executive may decide that the IRC markets be closed in the event that a fair and realistic market does not exist. A fair and realistic market will be deemed not to exist at the discretion of the Market Controller after consideration of the percentage of trading members not able to access the JSE trading system, the reasons for such lack of access and their contribution to price formation. - Notwithstanding any other provision of these rules or any directive, the JSE Executive, in accordance with prevailing circumstances may -- - reduce or extend the hours of operation of the JSE trading system for any particular business day; - without prior notice to any person, halt or close the JSE trading system for trading at any time and for any period; - without prior notice to any person suspend automated trading; - if there has been any failure of the JSE trading system, for any reason, or if the JSE trading system has been closed, suspended, or halted, declare that a transaction executed through or by the JSE trading system is void. Such declaration is binding on the trading members who entered into such transaction and on the clients for or on whose behalf the transaction was executed; - exercise such further powers and take such further action as may be exercised or taken by the JSE in terms of these rules and directives, and as may be necessary to resolve any issue which may arise from the closure, suspension, halt, or failure of the JSE trading system; and - take such other steps as may be necessary to ensure an orderly market. - Notwithstanding any other provisions of the rules and directives -- - the Market Controller may instruct a trading member to immediately discontinue using a trading member or client application; or - the Market Controller may restrict the usage by a trading member of any or all components of a trading member or client application. - The Director: Market Regulation or his deputy, in conjunction with the Executive Officer or acting Executive Officer or failing the Executive Officer or acting Executive Officer, the Director: Issuer Regulation, may declare a trading halt in an IRC security in circumstances where the Director: Market Regulation or his deputy determines that the trading activity in an IRC security - - is being or could be undertaken by persons possessing unpublished price-sensitive information that relates to the underlying instrument to which the IRC security relates; or - is being influenced by a manipulative or deceptive trading practice; or - may otherwise give rise to an artificial price in that IRC security. - No trading member may trade an IRC security for the duration of a trading halt but may delete orders from the JSE trading system. **Orders** - All orders received by a trading member which are to be executed in the central order book of the JSE trading system must be recorded in price or yield and then time priority by the trading member and be submitted to the JSE trading system in such order. Orders from clients will always be given time priority over such trading member's own account orders except where that trading member had already entered own account orders into the JSE trading system at the time that a client order was received by that trading member. - Orders received by a trading member after hours will have the time priority of entry of the order into the JSE trading system. - Orders entered individually will carry their own time priority. - A trading member must keep a record of an order received for a period of not less than six months after the order was received, whether the order was entered into the central order book of the JSE trading system or resulted in a transaction reported to the JSE trading system. **Trading Capacity** - A trading member may trade on behalf of a client as an agent or may trade with a client as a principal. - A trading member may only deal as principal with a client if the trading member has, prior to trading, obtained the consent of its client. - A trading member may not make a profit in respect of an agency transaction executed on behalf of a client other than fees or brokerage. - All fees must be separately charged and may not be included in the price of the transaction. - A trading member may trade with a client as principal by- - entering the client's order directly in the JSE trading system for the client's account and where such order matches with an opposite order entered in the JSE trading system for the trading member's own account; or - executing a principal trade with a client off the central order book and reporting such trade to the JSE trading system, provided such trade qualifies as an off-book transaction. - A trading member may trade for a client as agent by -- - Entering the client's order directly in the JSE trading system for the client's account and where such order matches with an opposite order of another trading member or another client; or - Entering the client's order in the JSE trading system for the trading member's agency suspense account and allocating the resultant trade or trades to the client, after aggregating and/or dividing such trades; or - Executing an agency trade between two clients or between a client and another trading member off the central order book and reporting such trade to the JSE trading system, provided such trade qualifies as an off-book transaction. **Trading with or on behalf of Clients** ***Client agreement*** A trading member may not trade with or on behalf of a client in IRC securities unless the trading member has entered into a client agreement with the client. The terms and conditions of the client agreement must have substantially the same effect in law as the terms and conditions contained in the pro forma agreement in Directive DC. ***Client acceptance and maintenance procedures*** - A trading member must ensure that it obtains and maintains sufficient information on each client account so as to be able to identify the beneficiary of the account and the person or persons responsible for placing instructions on the account at all times, in accordance with the directives. - Before undertaking to execute any transaction for a new client, a trading member must, as a minimum, authenticate the identity of such client and maintain a record of the means of such authentication. - A trading member may not trade with or on behalf of a client in IRC securities until the trading member has loaded the client on the JSE trading system by recording the client's particulars that are required by the JSE trading system. - The JSE will maintain a record of the clients which are loaded as clients of trading members and will keep a record of the particulars associated with each client as required under rule 7.80.2.3. - A trading member must ensure that the particulars relating to its clients are correct and up to date at all times. - The trading member must ensure that clients which have ceased trading with the trading member are removed from the record of clients of the trading member on the JSE trading system. - The client\'s particulars will be retained by the JSE for as long as it deems necessary after the client has ceased trading. ***Best execution*** - When acting for a client in the buying or selling of IRC securities, a trading member must at all times adhere to the best execution principle taking reasonable care to obtain the result which is the best available in the market for the client, provided that the trading member must at all times act in accordance with the terms and conditions of the client agreement or mandate. - In support of the best execution principle, all transactions in IRC securities by trading members must be conducted through the central order book, unless the negotiation of the terms of a transaction between the parties to the transaction and the reporting of the transaction to the JSE trading system is in the best interests of the client, provided the transaction qualifies to be reported. **Notification of transactions** A trading member must ensure that clients are notified of all transactions executed on or reported to the JSE trading system, for or on behalf of such clients, in the manner and within the time period as set out in the directives. The transaction notification must set out -- - the terms of the transaction; - the capacity in which the trading member acted; and - if the transaction is executed by the trading member in an agency capacity, the details of any fees charged by the trading member. **Employees and Trading Members Trading as Clients** - An employee of a trading member may be a client of that trading member or another trading member; provided that such client fulfils all his obligations in terms of these rules. - A trading member must establish and maintain controls and procedures in relation to transactions executed for the direct or indirect benefit of employees of the trading member, in order to avoid such transactions conflicting with the interests of the trading member's clients, whether such transactions are executed by the trading member or by another trading member. - The controls and procedures in relation to the transactions, should as a minimum, make provision for the review by the trading member of those transactions, in order to identify any transactions which are in conflict with the interests of that trading member's clients. **Deal management** - When bulking or aggregating agency client orders and trades, trading members are required to use designated agency suspense accounts, as specified in the directives, for the order entry, trading, consolidation, division or allocation of such orders and trades. - Trading members are precluded from trading on the designated agency suspense accounts for their own account or for any accounts in which employees have a direct or indirect beneficial interest. - A trading member may aggregate a number of trades that were executed on the JSE trading system for an agency suspense account and allocate such aggregated trades to a client at a price equal to the average price of the original trades. - A trading member may divide a trade that was executed on the JSE trading system for an agency suspense account: Provided the trading member allocates such subdivided trades to two or more clients at the price of the original trade. - Trading members are responsible for the time priority of allocations of the trades in respect of which orders have been bulked. - All trades in the designated agency suspense accounts must be allocated to the relevant clients on the day of the trading and no positions must remain in such suspense accounts overnight. - If a trading member uses an agency suspense account dedicated to a particular client for the allocation of trades to underlying accounts under the control of that client, the allocation of a trade to the dedicated suspense account is deemed to be an allocation to the client. - A trading member may allocate a trade in futures or option contracts executed on the JSE trading system for an agency suspense account to another trading member, provided that the trade is pursuant to a tripartite agreement, as set out in the directives, and that the trade is allocated to the other trading member at the price of the original trade. **Off Book Trading** - Subject to trading members complying with the best execution principle when trading with or on behalf of clients, the transactions listed the IRC Rules, do not have to be executed through the central order book and may be validly reported to the JSE trading system as off book trades. - In the case of an off-book trade between two trading members, the trading members must agree on which trading member will initiate the submission of the trade to the JSE trading system. - Off book trades negotiated after trading hours must be submitted to the JSE trading system by no later than 08h30 on the following business day. - The table below lists the off-book trade types and indicates -- - whether the transaction may be conducted by one trading member or two trading members; and - whether the transaction is published by the JSE. Trade description Trade type code Single trading member Two trading members Published ------------------- ----------------- ----------------------- --------------------- ----------- Roll Trade RT Yes Yes Yes Strategy Trade SR Yes Yes Yes **Off Book Trading Criteria** The following transactions may be validly reported to the JSE trading system: - value eligible off book transactions, where the nominal or contract value of the transaction is equal to, or greater than the value determined by the JSE, as set out in the directives; - trades in currency derivatives concluded by a market maker with a professional client and where the market maker, having entered the client order into the central order book- - has been unable to satisfy that order through the central order book on an agency basis; and - in order to satisfy that client order, reports a principal transaction with the client to the JSE trading system at the same price at which the client order was entered into the central order book; - late trades concluded by a trading member after trading hours and where the trading member: - - is trading in currency derivatives or interest rate derivatives with or on behalf of a client in fulfilment of an order that was received during trading hours and where, despite the best efforts of the trading member to fill that order during trading hours, the order remained unfilled at the market closing time; or - is a market maker trading in currency derivatives for its own account with another trading member; or - is trading in bonds for its own account with another trading member or with or on behalf of a professional client; Roll Trade Strategy Trade --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Roll trades which give effect to the closing out of positions in futures contracts for one expiry date and the opening of positions in the same number of futures contracts on the same underlying for a later expiry date, and where the trading member is able to achieve a better average price for all of its clients whose positions are being rolled than the average price at which it could give effect to the rolling of the positions through the central order book; A strategy trade that is comprised of two or more transactions in options or futures in respect of one or more underlying instruments, which are linked in the JSE trading system to give effect to the strategy of the trading member or client; and the expiry of physically settled futures contracts, as instructed by the Market Controller. - Prior to reporting a currency derivatives transaction, a market maker must initially endeavour to satisfy the client's order through the central order book on an agency basis, failing which it must endeavours to satisfy the order through the central order book on a principal basis. However, in endeavoring to satisfy the client's order through the central order book on a principal basis, the market maker shall not be obliged to satisfy any orders in the central order book which are at a better price, or which have time priority over the client's order. - Off book transactions between two trading members must be reported to the JSE trading system, by the trading members who are party to the transaction, within 30 minutes of the transaction being concluded. - Trading members must take reasonable steps to ensure that all off book transactions between two trading members that are concluded within the 30-minute period before the JSE trading system closing time, as stipulated in the directives, are reported to the JSE trading system before the system closing time. If despite taking all reasonable steps, trading members are unable to report transactions concluded during this 30-minute period to the JSE trading system before the system closing time, the transaction must be reported by no later than 08h30 on the following business day. - Off book transactions between a trading member and a client must be reported to the JSE trading system without delay but by no later than the JSE trading system closing time on the trade date. - Trading members must take reasonable steps to ensure that all off book transactions between the trading member and a client that are concluded within the 2-hour period before the JSE trading system closing time, as stipulated in the directives, are reported to the JSE trading system before the system closing time. If despite taking all reasonable steps, JSE trading members are unable to report transactions concluded within this 2-hour period to the JSE trading system before the system closing time, the transaction must be reported by no later than 09h00 on the following business day. - All off-book transactions that are concluded by trading members after the closing time of the JSE trading system, as stipulated in the directives, must be reported to the JSE trading system by no later than 08h30 on the following business day. - A trading member who reports a transaction in bonds or a market maker who reports a currency derivatives transaction must ensure that the date and time at which the transaction was concluded is included when the transaction is reported to the JSE trading system. - If an off-book transaction is reported to the JSE trading system by a person other than a trader, the trading member must retain a record identifying the trader who was responsible for executing the transaction. - Off-book transactions that do not comply with one or more of the criteria specified in this rule may be cancelled by the JSE at the sole discretion of the Director: Market Regulation. **Transactions with Inter-Dealer Brokers** An inter-dealer broker performs an important function in relation to the determination of market prices of bonds listed on the JSE. Therefore, it is important that inter-dealer brokers are subject to these IRC rules in relation to the intermediary services that they provide to trading members and clients. Accordingly, a trading member may not trade in bonds with a person whom the trading member knows or has reason to believe - - would be performing the function of an inter-dealer broker in relation to the relevant transaction; and - is in turn transacting with another trading member or any other resident on the opposite leg of the transaction, - if that person is not authorised as an inter-dealer broker in terms of these IRC rules. **Trade Cancellations** A key component of market integrity is the assurance that once executed, a trade will stand and will not be subject to cancellation. However, if a trade is executed as a result of an error by a trading member or its client, there may be significant adverse consequences for the affected trading member or client and therefore it is appropriate in certain circumstances to correct such errors. Therefore, notwithstanding any other provision of these rules or any directive, the Director: Market Regulation may, where in his opinion a central order book trade has been matched as a result of a clear error grant permission to or instruct the affected trading member or trading members to effect a trade cancellation. A request for an alleged error trade to be cancelled in terms of these rules will be considered provided that the request meets at least the following requirements: - the nature of the error is that the order submitted to the JSE trading system is different to that which the trading member or its client intended to submit at the time that the order was submitted; and - the request is received by the Director: Market Regulation within 20 minutes from the time of the erroneous trade; and - the price or contract value of the trade or trades executed in error is away from the reference price at the time that the error occurred by more than the Rand value, or the percentage used to determine the no cancellation range as set out in the directives; and - the difference between the aggregate consideration or contract value of the trades that qualify and the consideration or contract value that would have resulted had such trades been executed at the futures or the options reference price is R50 000 (fifty thousand Rand) or more; and - a passive order which has been entered into the central order book and which gives rise to an alleged error trade will only be considered for cancellation where it has been matched within 30 minutes of having been entered. In making the determination as to whether an alleged error trade qualifies for cancellation, the Director: Market Regulation will also consider whether the reference price at the time that the error occurred is a representative fair value price for the relevant contract at that time. In this regard, the Director: Market Regulation will take into account all relevant factors which shall include, but not be limited to - - the market price level in the relevant underlying JSE cash market immediately prior to the error trade, if applicable; - the price movements in other expiry dates of the same contract; - in the case of options, where the volatility of trades which have occurred prior to the alleged error trade on that day, either in the same option contract or in option contracts at different strike prices for the same expiry date and on the same underlying instrument, indicates that market volatility levels have materially changed since the previous day's mark to market; - current market conditions, including volatility and liquidity; and - the release of economic data and other relevant news affecting the relevant security. In exceptional circumstances, and after taking all relevant factors into account, the Director: Market Regulation may make a determination that the futures or the options reference price at the time that the error occurred is not representative of the fair value for the relevant contract at that time and will deem another price, being a fair value price, as being more appropriate for the determination as to whether the alleged error trade qualifies to be cancelled. If the Director: Market Regulation determines that the reference price at the time that the error occurred is the appropriate price to use in determining whether the alleged error trade qualifies to be cancelled, the error trade must meet the criteria in order for it to be cancelled. If the Director: Market Regulation determines that a fair value price is the appropriate price to use in determining whether the alleged error trade qualifies to be cancelled, the error trade must meet the criteria set out in the IRC Rules in order for it to be cancelled except that, the fair value price will be used instead of the reference price. Where the Director: Market Regulation determines that an erroneous trade needs to be cancelled, the trade will be cancelled in terms of the process set out in the directives. Where an off-book transaction has been reported to the JSE trading system in error in that the terms of the transaction differ to those that were agreed to by the counterparties to the trade before the reporting of the trade, the trading member or trading members shall be permitted to- - cancel an erroneous trade in currency derivatives on the JSE trading system; or - report an equal and opposite cancellation trade in bonds or interest rate derivatives to the JSE trading system on the same day that the erroneous trade was reported. If, in the opinion of the Director: Market Regulation, an on-book trade, auction trade or off book transaction materially impacts the integrity of the market, the maintenance of a fair and orderly market or the correctness of the market statistics, the Director: Market Regulation may cancel a trade executed in error, even where there has been no request from a market participant to do so. If the JSE trading system experiences technical problems and matches orders that should not be matched, whether before the JSE is able to halt trading on the JSE trading system or subsequent to the resolution of the technical issue, requests for cancellation of such resultant matched trades may be submitted to the Director: Market Regulation if the trading member was unable to delete or amend their order as a result of the technical problems. Where a request is received from a trading member to cancel a trade resulting from such a match because the trading member did not intend to retain the relevant order in the central order book at the time that it was matched, the Director: Market Regulation may deal with the trade as an error trade and may authorize a trade cancellation. In considering an error trade, the Director: Market Regulation will apply all of the relevant provisions except that instead of applying the criteria in determining whether the trade qualifies for a trade cancellation, the Director: Market Regulation will only consider whether - - the price of the relevant trade was outside of the no cancellation range relative to the reference price at the time that a confirmation of the trade was sent to the trading member; and - the request is received by the Director: Market Regulation within 20 minutes from the time that a confirmation of the trade was sent to the trading member. Where consequential trades have occurred as a direct result of an error trade, such as spread trades, the Director: Market Regulation will consider these on a case-by-case basis and may, after taking into consideration all relevant factors and circumstances, instruct the trading member or trading members to execute a trade cancellation or may make a determination that the consequential trades shall stand. Notwithstanding any provision of the IRC Rules, in considering a request from a trading member in terms of this rule, the Director: Market Regulation may decide that the alleged error trade and any consequential trades shall stand and shall not be cancelled. In arriving at his decision, the Director: Market Regulation will take into account all relevant factors which shall include, but not be limited to - - the complexity and extent of any consequential trades in futures or options or trades in underlying JSE cash markets which have been triggered by the alleged error trade; or - the amount of time remaining in the trading session or before the expiry of the relevant futures or option contracts within which the JSE would be required to investigate, evaluate, and conclude on the merits of an alleged error trade and any consequential trades, as well as give effect to any consequential trade cancellations or; and - the best interests of the affected market participants. **Emergency Provisions** In order that the business of the JSE be carried out with due regard to the interests of the public in a fair and orderly market, the JSE may, in addition to the powers given in terms of the Act in circumstances of emergency, restrict or suspend trading in any or all of the instruments kept by it in its list of IRC securities for such period as the JSE may deem necessary. Circumstances of emergency shall include but are not limited to the closing of any other exchange, a state of war or threatening hostilities, acts of state affecting the IRC markets or the due performance of transactions or any position, any change in the law affecting the IRC markets or the due performance of transactions or positions and any other situation or circumstances affecting, in the opinion of the JSE Executive, a fair and orderly market for the trading in IRC securities. If the trading in any security or commodity on any exchange or market ceases, the JSE Executive shall consider the cessation of trading in IRC securities for which such security or commodity comprises the underlying instrument of the IRC Security concerned. In the event of any of the circumstances occurring, the Executive Officer shall notify the Registrar of such circumstances and shall co-operate with the Registrar to restore and maintain a fair and orderly market. **Agency Suspense Accounts - Directive CB** For the purpose of this directive, an agency suspense account and an allocation account are synonymous. - Any unallocated purchase or sale which emanates from a firm order from a client must be placed in a suspense account and must be allocated to a client's account by the close of business. - Transactions must not be allocated from an agency suspense account to accounts of interested parties, unless the member can demonstrate that no client is prejudiced as a result thereof. - Adequate controls to prevent the prejudice of clients when utilising agency suspense accounts must include, but not be limited to, the following -- - the use of separate suspense accounts for interested party trades; - the use of separate suspense accounts dedicated to specified clients; - the use of separate suspense accounts where the trading instruction and allocation instruction vests with one person, such as an investment manager; and - an adequate segregation of duties over accounts managed with full discretion on behalf of interested parties to ensure that the interested parties have no influence over either the trading instruction or the allocation instruction. - an interested party trade is a trade in which the member, a director, officer, or employee of the member has a direct or indirect beneficial interest. - Trades not allocated to clients by the close of business on the trade date must be transferred to a misdeals account by the close of business on the following business day. - At no time may a member realise a profit or loss in a suspense account. - If a trading member uses an agency suspense account dedicated to a particular client for the allocation of trades to underlying accounts under the control of that client, the allocation of a trade to the dedicated client suspense account is deemed to be an allocation to the client. **Misdeal Accounts - Directive CD** - A separate misdeals account or accounts must be maintained through which all misdeals in bond transactions must be routed. - All misdeals in bond transactions with clients must be transferred into a misdeals account. Transactions out of misdeals accounts must only be effected through the trading system. - Bond transactions placed into a client's account resulting from a missed deal, must be booked as a reported transaction from a misdeals account. **Reported Transaction - Directive CE** The minimum nominal values, as determined by the JSE, for value eligible reported transactions in respect of bonds are as follows -- - R1 (one Rand) nominal; and - R1 (one Rand) nominal, per leg, in respect of carry transactions. **Client Information - Directive CF** A member must obtain and maintain a record of the following information in respect of each account holder in order to identify the beneficiary of each account in accordance with rule 7.80.2.1- - the full name of the account holder; - identity number or registration number, as the case may be; - physical and postal address; - telephone number; - type of account holder identifying whether they are a - - private individual; - company; - close corporation; - private trust; - partnership; - joint venture; - syndicate; - investment club; - pension or provident fund; - mutual fund or unit trust; - government agency; - public utility; or - religious, educational or welfare organisation. **Client Notification - Directive CH** In respect of a transaction on or reported to the trading system with or on behalf of a client, a trading member must, before 12h00 on the business day following the transaction, issue the client with an advice note or electronic confirmation confirming the transaction. **Transactions in inward listed securities and currency derivatives -- Exchange Control (Directive CI)** For the purpose of this directive, "inward listed securities" means securities issued by foreign issuers, which have been listed on the JSE in terms of the South African Reserve Bank's exchange control regulations. A trading member may not trade in inward listed securities or currency derivatives for a non-resident blocked rand account (emigrant client). In the event that the Settlement Authority identifies a transaction for or on behalf of an emigrant client, the Settlement Authority will instruct the member to transfer the transaction from the client's account to the member's misdeals account and the member will assume responsibility for the transaction.