Settlement Of Bonds ETP Securities PDF

Settlement of Bond ETP Securities --------------------------------- - The Bonds Clearing and Settlement team performs the role of the Settlement Authority as required by the JSE Rules and Directives. - The Settlement Authority ensures that trades dealt in Cash Bond Securities listed on...

Settlement of Bond ETP Securities --------------------------------- - The Bonds Clearing and Settlement team performs the role of the Settlement Authority as required by the JSE Rules and Directives. - The Settlement Authority ensures that trades dealt in Cash Bond Securities listed on the JSE are settled accordingly. ### Functions of the JSE Clearing and Settlement division - Cash Bonds Market and ETP - Ensure Settlement Assurance for trades executed in the ETP Market - Monitoring Bond settlement - Performs lender of last resort between SARB and Primary Dealer - Lender of last resort for IRC members. - Balancing of the daily margin and maintenance levels of the Primary Dealers - Assist market regulation with cancellation of ETP trades when required to do so - Monitor settlements of all ETP trades - Monitoring Cash Bond settlements - Advising members of all uncommitted positions and potential issues. - Managing the same same-day window and extension thereof in the Cash Bonds Market - Issuing of fines for transgressions of the Rules and Directives in the Cash Bonds Market - Inward listing for bonds reporting ### Section 8 of the Bond ETP Rules and Directives Settlement principles for ETP securities The settlement of Bond ETP securities shall be effected in accordance with the following principles -- - trade by trade; - between the buyer and the seller; and - on a rolling and contractual basis, whereby transactions become contractually due to be settled a - prescribed number of days after the trade date. Settlement Authority The Settlement Authority will manage -- - the settlement of transactions in Bond ETP securities executed on the Bond ETP trading system and the ETP fails management trading system; and - the risks associated with the settlement of transactions in Bond ETP securities. In order to perform its functions, the Settlement Authority may take action when the settlement of a transaction in a Bond ETP security will not take place or is unlikely to take place on settlement date by -- - facilitating the settlement of Bond ETP securities in terms of the rolling of settlement procedures set out in the Bond ETP Rules and Directives, if the relevant circumstances merit such action; - facilitating the settlement of Bond ETP securities in terms of the default procedures as a result of the default of an ETP member; - deferring the settlement of Bond ETP securities transactions that in its view could cause - systemic risk if they were not to settle, by way of a notification to the CSD of the deferral - and the extension of the timeframes referred to Bond ETP Rules and Directives. Settlement of Bond ETP securities All transactions in Bond ETP securities shall be settled electronically through the CSD, in accordance with the principles. A trade in Bond ETP securities by a member shall -- - be committed to by the member's CSDP by no later than 18h00 on the business day preceding the settlement date; and - be settled on the third business day after the trade date. Member settlement obligations A member shall ensure that the settlement of a transaction in Bond ETP securities that has been effected by such member takes place. - A member must immediately inform the Settlement Authority of any transaction in Bond ETP securities that in its view is unlikely to settle on the settlement date. - No member may, on the settlement date, stop payment in respect of a CSD settlement. - If a member's CSDP has committed to settling a transaction in Bond ETP securities on behalf of the - member, the member may not instruct the CSDP to revoke its commitment to settle the transaction, unless the member receives an instruction to do so from the Settlement Authority. - By no later than 17h30 on the business day preceding the settlement date, a member must make the necessary arrangements to ensure that the CSDP of that member is in a position, by no later than 18h00 on the business day preceding the settlement date, to commit to settle the transactions in Bond ETP securities on the settlement date. - A commitment by a CSDP to settle a transaction in Bond ETP securities in respect of a member shall become unconditional as at 8h30 on the settlement date, If a member is unable to ensure that the member's CSDP commits to settling a transaction in Bond ETP securities by 18h00 on the business day preceding the settlement date, the member shall immediately notify the Settlement Authority. - If the Settlement Authority receives notification, the Settlement Authority will determine whether settlement of the relevant transaction will be rolled to a later date and, if so, the member must act in accordance with the instructions received from the Settlement Authority. - Despite a member's CSDP having committed to settle a sale transaction in Bond ETP securities prior to the settlement date, a member may be unable to settle the transaction on the settlement date due to a dependency on the settlement of another transaction in the same bond in respect of which the CSDP of the counterparty to that transaction has not yet committed to settling. Under these circumstances the member's CSDP may be required to retract their commitment to settle the sale transaction pending further action by the member or the resolution of the transaction on which there is a dependency. - If by 13h15 on the settlement date the member's CSDP has not committed to settle a sale transaction in Bond ETP securities, the member must take all necessary steps to ensure that the member's CSDP is in a position to recommit to settle the transaction as soon as possible but by no later than 15h00. - To ensure that the member's CSDP is in a position to commit to settle a Bond ETP securities sale transaction by no later than 15h00 on the settlement date if the circumstances arise, a member must take the necessary steps by 14h00 to cover the uncommitted sale transaction, failing which the Settlement Authority will instruct the member to borrow the relevant securities from National Treasury through the South African Reserve Bank to cover the transaction. The member must comply with the instructions given by the Settlement Authority and must ensure that the member's CSDP has recommitted to settling the sale transaction by no later than 15h00. Rolling of settlement In the event that the Settlement Authority receives notification from a member that the member is unable to settle a transaction in Bond ETP securities on the settlement date, the Settlement Authority will assess, based on all information available to it at the time, whether exceptional circumstances exist that warrant settlement of the transaction being rolled to a later date and whether the member will be able to settle the transaction on a later date. If the Settlement Authority determines that the circumstances warrant the settlement of the transaction being rolled to a later date and that the member will be able to settle the transaction on a later date, the Settlement Authority may roll the settlement of the transaction. The rolling of settlement of a Bond ETP securities transaction will be carried out in the following manner: - The Settlement Authority will obtain a list of Bond ETP settlements from the CSD which are not going to be effected on the due settlement date, following notification by the failing member and a determination by the Settlement Authority. This list will include the failed trade leg as well as the opposite trade leg; - The Settlement Authority will advise the failing and non-failing members that the transaction will be rolled to a revised settlement date determined by the Settlement Authority; - The failing and non-failing members will be instructed to re-book the original transaction at the original yield for settlement on the revised settlement date; and - The transaction will be reported by the failing and non-failing members to - the ETP fails management trading system. If settlement does not take place on the revised settlement date, the Settlement Authority will, under exceptional circumstances, roll the settlement to another revised settlement date. However, if the Settlement Authority determines that settlement will not be able to take place on the further revised settlement date, the JSE will consider whether the member is in default and, if this is the case, deal with the transaction in terms of those default rules. Mark-to-market of Bond ETP securities The JSE may, in terms of the calculation method set out in the directives, on any business day and at any time, mark-to-market the unsettled transactions in Bond ETP securities, if the JSE in its sole discretion determines: - that such is necessary in respect of a particular member, or the unsettled transactions of all members of the Bond ETP market; or - that the market conditions in respect of Bond ETP securities warrant such calculation. Margin on Bond ETP securities transactions **Initial margin** Initial margin shall be paid by a member into the member's CPD margin account in an amount calculated by the JSE based on calculation methods agreed with the Market Committee. The initial margin shall be commensurate with the loss that could arise as a result of the default of the member in terms of its settlement obligations that relate to transactions in Bond ETP securities. **Mark-to-market adjustments to initial margin** - The JSE shall, in its sole discretion, determine, as a result of the marking-to-market of transactions, when mark-to-market adjustments to initial margin shall be paid to or by a member in respect of a transaction in Bond ETP securities. Under normal circumstances the JSE will calculate mark-to-market adjustments to initial margin on a daily basis. - An amount due by a member shall be paid by no later than 12h00 on the business day following the day on which such payment was calculated, or at such other time as specifically agreed upon between the member and the JSE. - Failure by a member to pay initial margin and any adjustments thereto in contravention of these rules may, in the discretion of the JSE, be deemed to be an act of default. - A member may establish a margin deposit in the member's CPD margin account in order to meet the member's margin obligation from time to time. Any amount held in a member's CPD margin account which is in excess of the member's margin obligation on a particular day may be withdrawn by the member with the approval of the Settlement Authority. Fees - The Settlement Authority, in consultation with the Market Committee, may charge any member the fees associated with settlement of Bond ETP securities as prescribed by directive. - Payment of the fees charged shall be made to the Settlement Authority within five business days of notification. Conduct of Business =================== Conduct of business ------------------- ### General Provisions #### Trading and position limits JSE Clear may, in terms of the JSE Clear rules, limit the aggregate exposure arising from the proprietary positions of a clearing member, the positions of the clients of the clearing member, the positions of trading members with which the clearing member has entered into clearing agreements and the positions of the clients of such trading members in a manner determined by JSE Clear. The clearing member may, in terms of the JSE Clear rules, limit the aggregate exposure arising from the proprietary positions of a trading member and the positions of the clients of such trading member. A clearing member may stipulate a limit to the number of futures and option contracts or a nominal value of bonds that may constitute a transaction by a particular trading member at any one time. #### Trading and Position Records A trading member shall at all times maintain records of -- - its proprietary transactions and transactions for or on behalf of other trading members and clients; - margin and other payments to and from JSE Clear, other trading members and their clients. A trading member shall confirm to a client at least once a month -- - the transactions done with or on behalf of the client during the period; - the futures and option contract positions of the client at the time of reporting; - the bonds positions of the client at the time of reporting, where a trading member has custody and control over such instruments; - the balances of additional and retained margin held for the client at the time of reporting; and - all payments to and from the client made or accrued during the period, including payments of margin, fees, and interest. The records shall be kept for a period of at least five years. #### Telephone Recordings - The JSE and trading members may tape-record all telephone calls. - A trading member must tape-record all telephonic orders received from or made to clients. - With respect to such telephone calls, the tape-recording shall be admissible as evidence in any disciplinary or dispute resolution proceedings contemplated in these rules: Provided that the person who intends to rely on such tape recordings in evidence shall bear the onus of proving the authenticity thereof. - All parties to the prescribed agreements shall in such agreement acknowledge and confirm that they are aware that telephone calls may be recorded, and they shall be deemed to have irrevocably consented thereto. - No trading member shall tamper with any tape-recording of any telephone call. - Tape-recordings shall be retained by the trading member for a period of at least 14 days. ### Management of trading members' and clients' accounts #### Separation of funds and IRC securities A trading member -- - shall at all times separate a client\'s or other trading member\'s assets, including funds, the IRC securities and other corporeal and incorporeal things of the client or other trading member, from its own assets; - may not co-mingle the funds or IRC securities of any client or another trading member with its own; - may not allow the use of funds or IRC securities or corporeal or incorporeal things belonging to any client or other trading member to finance its own transactions or the transactions of any other person; - may not allow the use of funds or IRC securities or corporeal or incorporeal things of any client or other trading member to operate its own business; and - in respect of the transactions or positions of a trading member or client, may not retain any funds, IRC securities or other corporeal or incorporeal things given by such trading member or client or received by the trading member on behalf of any person other than additional margin or retained margin, or IRC securities. #### Management of funds by JSE Clear JSE Clear shall separate the margins and other monies, IRC securities and other corporeal and incorporeal things of any clearing member, trading member or client from its own assets and will manage and invest such margins and other monies in a manner and subject to such terms and conditions as the controlling body of JSE Clear may decide. - A clearing member may deposit any additional margin kept by the JSE Clear. - A trading member may deposit any additional margin kept by it in respect of its resident clients with JSE Clear. JSE Clear will monthly in arrears, retain an interest consideration as determined and published in a notice by JSE Clear on any margins held by it in respect of any position registered in the name of any person during the month. #### Trading members\' bank accounts - The provisions of this rule apply in respect of additional margin and retained margin not deposited by a trading member with JSE Clear, and in respect of any other client funds held by a trading member. - A trading member shall, at all times, keep a separate bank account into which it must deposit, or in which it must hold, any additional margin kept by, any retained margin held on behalf of a client, or any other client funds held by the trading member. - A trading member shall, at all times, ensure that the correct amount of additional margin as required by the client agreement with the client is held in respect of each client with which it has entered into a client agreement. - A trading member's records shall, at all times, reflect the amount of additional margin, retained margin or other client funds held in respect of each client. #### Trading members\' accounts at CSDPs for bonds A trading member which has control over and custody of the bonds holdings of one or more of its clients shall operate separate accounts at its CSDP for the purpose of segregating the custody positions of its clients from its proprietary positions. #### Trading members' control of client holdings in bonds - Where a trading member has control over the bond's holdings of its clients, the details of such client bonds holdings shall be recorded in its accounting records in a manner that will render it possible at any time to establish readily the identity of the persons entitled to the ownership of such bonds. - A trading member that controls bonds holdings on behalf of its clients must balance and reconcile, on at least a weekly basis, its own client holdings records with the custody balances as reflected by its CSDP. Any reconciling differences identified between the respective records must be rectified within one day, unless there are circumstances beyond the control of the trading member that prevent a difference from being resolved within one day, in which case the difference must be rectified as soon as is reasonably possible. - At the request of the JSE, the trading member shall provide the JSE with a copy of the reconciliations performed in terms of rule the above, together with full details and explanations of reconciling items. - Any arrangements entered into between a client and a trading member whereby the trading member exercises control over the client's bonds holdings, shall be provided for in the client agreement that shall contain the minimum requirements as set out in Directive DD. - A trading member shall ensure that only suitably authorised persons are able to withdraw or transfer a trading member settled client's bonds from a client custody account held with the CSDP of the trading member. - A trading member shall be precluded from controlling or having custody over the holdings of its non- resident clients in bonds unless it is an authorised bank. #### #### IRC securities held as collateral In accordance with section 39 of the Financial Markets Act, a pledge or cession in securitatem debiti of uncertificated bonds held by a trading member on behalf of a client must be effected by means of an entry by the trading member in the pledgor or cedent's account in the trading member's accounting records specifying -- - the name of the pledgee or cessionary (either the trading member or a third party); - the quantity of uncertificated bonds pledged or ceded; and - the date of the entry. A pledge or cession referred to in rule 10.95.1 should not be effected without a written agreement between the parties to the pledge or cession and the trading member should keep a record of such agreements. #### Relaxation or indulgence given by a trading member A trading member who gives any relaxation or indulgence to a client regarding the payment of margin, whether initial margin, settlement margin, variation margin, top-up margin or additional margin, shall be deemed to have granted the client a loan repayable on demand in the amount of the shortfall for the period of the relaxation or indulgence at a rate of interest specified in the client agreement between them. If no rate is specified, the trading member's customary rate shall apply or if there is no customary rate, the rate determined in terms of the Prescribed Rate of Interest Act No. 55 of 1975 shall apply. The trading member shall, if such loan is for a period exceeding two business days, immediately inform the client thereof in writing. #### Acceptance of cash deposits No trading member shall knowingly receive or accept a deposit of cash from any person exceeding an amount of R5 000. For the purpose of this rule \"cash\" shall mean coin and paper money of the Republic or any other country. A trading member shall not receive or accept two or more cash amounts exceeding R5 000 in total with the purpose of avoiding compliance with this rule. ### Non-Resident and Emigrant Clients #### Bank accounts Before a trading member trades with a non-resident client, the non-resident client shall open a non-resident account at an authorised bank to be used for the purposes of trading in IRC securities. #### #### Margins payable The initial margin payable with respect to the open futures and option contract positions of a non-resident client shall be the initial margin that would otherwise have been payable by or to a trading member or a resident client in relation to equivalent positions, adjusted by the margin category assigned by the trading member in question to the non-resident client, and a trading member may not hold any retained or additional margins in relation to the positions of any non-resident client. #### Settlements With respect to his open futures and option contract positions, a non-resident client shall pay from his non-resident account to, or receive into his non-resident account from the client trust account of the trading member with whom he traded to open such positions, the net amount of the initial margin and variation margin provided that -- - the initial margin to be paid shall be the initial margin that would otherwise be required to be paid to JSE Clear in respect of equivalent positions of a trading member or a resident client adjusted by the margin category assigned by the trading member to the non-resident client in question; - a trading member must comply with any applicable Exchange Control Regulations as determined by the South African Reserve Bank regarding the payment of any interest and fees respectively in respect of a non- resident client; and - a trading member may not hold any retained or additional margin with respect to the positions of a non-resident client.97 The confirmation contained in the SWIFT non-resident account notification to the authorised bank shall confirm the net settlement amounts to be paid or received and shall require the authorised bank to release or accept this amount to or from the trading member concerned. The clearing member or JSE Clear, as the case may be, may off-set amount due to it against amounts due by it to or from a trading member: Provided that it can be ascertained from the statements passing between them that no margins or other monies of a non-resident client are being held by either JSE Clear or the clearing member. A trading member may not off-set the amounts due to a non-resident client against any amount due from any other non-resident client. A trading member shall not retain any interest paid to it by JSE Clear or its clearing member with respect to the open futures and option contract positions or unsettled bonds positions of a non-resident client, and on the second business day following the end of each month during which a non-resident client had a position registered in his name, the trading member shall pay to the authorised bank concerned for the credit of that non-resident client\'s non-resident account an amount equal to the amount received by it from its clearing member or JSE Clear, as the case may be, in respect of interest on margins provided that a clearing member who has a clearing agreement with the trading member concerned shall pay to the trading member an amount equal to that which it received in respect of the non-resident client\'s position from JSE Clear. A trading member may not off-set amounts due to be paid from a non-resident client's non-resident account against amounts to be paid into that non-resident client's non-resident account. The amount of interest shall be paid by the trading member to the authorised bank concerned by midday on the next business day after the business day on which the SWIFT non- resident account notification was received by the authorised bank concerned. #### Trading, clearing and settlement fees The trading member shall be entitled to claim payment for trading, clearing and settlement fees in respect of transactions with a non-resident client from the authorised bank concerned out of that non- resident client\'s non-resident account: Provided that-- - a trading member shall not be entitled to offset such fees against margin due by it to a non-resident client or against any balance due to the non-resident client; and - the authorised bank concerned shall compare the transactions referred to in the non-resident account clearance certificate against the transactions referred to in the trading member\'s statement claiming such fees in respect of such transactions and may inform the JSE of any discrepancy. ### 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. Annexure A: Definitions ======================= +-----------------------------------+-----------------------------------+ | Word/Abbreviation | Definitions | +===================================+===================================+ | Act | means the Financial Markets Act | | | (Act No. 19 of 2012) and any | | | measure prescribed thereunder by | | | the Minister of Finance or the | | | Registrar; | +-----------------------------------+-----------------------------------+ | Additional margin | means - | | | | | | \(a) the margin, in addition to | | | initial margin, deposited by a | | | trading member with its | | | clearing member as agreed upon | | | between the parties in terms of | | | the clearing agreement; or | | | | | | \(b) the margin, in addition to | | | initial margin, deposited by a | | | client with its trading member | | | as agreed upon between the | | | parties in terms of the client | | | agreement; | +-----------------------------------+-----------------------------------+ | Advice | means any written, printed, | | | electronic or oral communication, | | | including a communication by | | | means of a public radio service, | | | television broadcast or any other | | | media by a trading member, which | | | communication is directed to the | | | general public, or any section | | | thereof, or to any client, and is | | | intended to call attention to, or | | | to market or promote, the | | | services offered by a trading | | | member, and which does not | | | purport to provide detailed | | | information about such services; | | | and "advertising" has a | | | corresponding meaning; | +-----------------------------------+-----------------------------------+ | Aggregate position | means collectively all the | | | proprietary positions in IRC | | | securities registered in the name | | | of a trading member or, | | | collectively, all the positions | | | in IRC securities registered in | | | the name of a client; | +-----------------------------------+-----------------------------------+ | Aggressive order | means an order that matches with | | | an existing order in the central | | | order book when it is entered; | +-----------------------------------+-----------------------------------+ | Allocation | means a transfer of a trade or | | | divided trade, or a transfer of | | | aggregated trades, executed on | | | the central order book of the JSE | | | trading system or negotiated off | | | book and reported to the JSE | | | trading system in an agency | | | capacity, from a trading member's | | | suspense account to a client at | | | the price or the average price of | | | the original trade or trades; | +-----------------------------------+-----------------------------------+ | Authorised bank | means a branch of an Authorised | | | Dealer which, in terms of | | | Exchange Control Regulation 14, | | | has been appointed to administer | | | securities control; | +-----------------------------------+-----------------------------------+ | Authorised dealer | means, in relation to any | | | transaction in respect of gold, a | | | person | | | | | | authorised by the Treasury to | | | deal in gold and, in relation to | | | any | | | | | | transactions in respect of | | | foreign exchange, a person | | | authorised | | | | | | by the Treasury to deal in | | | foreign exchange; | +-----------------------------------+-----------------------------------+ | *AML/CFT/PF* | A*nti-Money Laundering/Counter | | | Terrorist Financing/Proliferation | | | Financing* | +-----------------------------------+-----------------------------------+ | Authorised user | has the same meaning as that | | | contained in section 1 of the | | | Act; means a person authorised by | | | a licensed exchange to perform. | | | one or more securities services | | | in terms of the exchange rules, | | | and includes an external | | | authorised user, where | | | applicable; | +-----------------------------------+-----------------------------------+ | Authorised dealer | means, in relation to any | | | transaction in respect of gold, a | | | person | | | | | | authorised by the Treasury to | | | deal in gold and, in relation to | | | any | | | | | | transactions in respect of | | | foreign exchange, a person | | | authorised | | | | | | by the Treasury to deal in | | | foreign exchange; | +-----------------------------------+-----------------------------------+ | Bonds | means those JSE listed securities | | | that create or acknowledge the | | | indebtedness of an issuer, and | | | \"bond\" has a corresponding | | | meaning; | +-----------------------------------+-----------------------------------+ | Bond ETP securities | means the bonds listed on the JSE | | | and which may be traded on the | | | Bond ETP trading system; | +-----------------------------------+-----------------------------------+ | Bond ETP market | means the market operated by the | | | JSE for the trading of Bond ETP | | | securities; | +-----------------------------------+-----------------------------------+ | Bond ETP trading system | means the computer system or | | | systems and associated network or | | | networks operated or used by the | | | JSE for the purpose of providing | | | a market for the trading of Bond | | | ETP securities; | +-----------------------------------+-----------------------------------+ | Buy | means, in relation to IRC | | | securities, to enter into either | | | -- | | | | | | - a purchase of a futures | | | contract in terms of which | | | the buyer is obliged to take | | | delivery of the underlying | | | instrument at the agreed | | | price on the future date or | | | to pay an amount of money if, | | | on the future date, the price | | | or value of the underlying | | | instrument is less than the | | | agreed price; or | | | | | | - a purchase of an option | | | contract in terms of which | | | the buyer obtains the right | | | to buy or sell the underlying | | | instrument of the option | | | contract at the agreed price | | | before or on the future date; | | | or | | | | | | - a purchase of bonds in terms | | | of which the buyer is obliged | | | to make payment for the bonds | | | and receive delivery of such | | | bonds at the agreed price on | | | the settlement date; | +-----------------------------------+-----------------------------------+ | Call option contract | means a contract, in terms of | | | which the holder of a long | | | position in the call option | | | contract has obtained the right | | | to buy, and the holder of a short | | | position shall, if the option is | | | exercised, be obliged to sell, | | | the underlying instrument of the | | | option contract from or to JSE | | | Clear on or before the future | | | date at the strike price in | | | accordance with these rules and | | | the contract specification of the | | | option contract; | +-----------------------------------+-----------------------------------+ | Carry transaction | means a buy/sell back transaction | | | between two parties in terms of | | | which one party agrees to buy | | | bonds from the other party while | | | simultaneously agreeing to sell | | | the bonds back on an agreed | | | future date at an agreed price; | +-----------------------------------+-----------------------------------+ | Cash root | means the source of the funds due | | | by the ultimate buyer of the | | | bonds; | +-----------------------------------+-----------------------------------+ | Clearing | means the process in terms of | | | which JSE Clear acts as central | | | counterparty by becoming the | | | buyer to the seller and the | | | seller to the buyer in every | | | trade in derivative securities, | | | whereupon the clearing member | | | acting for the buyer and/or | | | seller guarantees to JSE Clear | | | all obligations arising out of | | | any position resulting from such | | | trade in terms of the JSE Clear | | | rules; | +-----------------------------------+-----------------------------------+ | Clearing member | means a person authorised by JSE | | | Clear to perform clearing | | | services in terms of JSE Clear | | | Rules and who has entered into a | | | clearing house agreement with JSE | | | Clear; | +-----------------------------------+-----------------------------------+ | Closeout | means the cancellation of a | | | position in one direction by an | | | equal and opposite position | | | (e.g., a long position in an IRC | | | security is cancelled by a short | | | position in the same IRC | | | security); | +-----------------------------------+-----------------------------------+ | Controlling body | means the board of directors of | | | the JSE which is the governing | | | body managing the affairs of the | | | JSE or the board of directors of | | | JSE Clear which is the governing | | | body managing the affairs of JSE | | | Clear; | +-----------------------------------+-----------------------------------+ | Corporate action | means any economic right or | | | benefit flowing from ownership of | | | bonds; | +-----------------------------------+-----------------------------------+ | CSDP | means a central securities | | | depository participant that has | | | been accepted by the central | | | securities depository as a | | | participant in that central | | | securities depository, and who is | | | appointed to settle transactions | | | in bonds on behalf of a trading | | | member or a client of a trading | | | member; | +-----------------------------------+-----------------------------------+ | Currency derivatives | means those derivative | | | securities, the financial terms | | | of which are determined by a rate | | | of exchange; | +-----------------------------------+-----------------------------------+ | Derivative securities | means those derivative | | | instruments that are JSE listed | | | securities and traded on the JSE | | | trading system in terms of these | | | IRC rules; | +-----------------------------------+-----------------------------------+ | Equivalent bonds | means uncertificated securities | | | of an identical type, nominal | | | value, description, and amount to | | | the loaned bonds duly adjusted | | | for any corporate action; | +-----------------------------------+-----------------------------------+ | Exchange control regulations | means the Exchange Control | | | Regulations, 1961, as promulgated | | | by Government Notice R1111 of 1 | | | December 1961, made in terms of | | | Section 9 of the Currency and | | | Exchanges Act, 1933 (Act No. 9 of | | | 1933); | +-----------------------------------+-----------------------------------+ | Exercise | means, in relation to the | | | registered holder of a long | | | position in an option contract, | | | to exercise its right to buy or | | | sell the underlying instrument of | | | the option contract at the strike | | | price on or before the future | | | date; | +-----------------------------------+-----------------------------------+ | Expire | means the closing out of a | | | position in an IRC security by | | | way of a transaction generated by | | | JSE Clear between the registered | | | holder of a position and JSE | | | Clear in terms of these rules; | +-----------------------------------+-----------------------------------+ | External company | means an external company as | | | defined in Section 1 of the | | | Companies Act, registered in | | | terms of Section 23 of the | | | Companies Act; | +-----------------------------------+-----------------------------------+ | FAIS Act | means the Financial Advisory and | | | Intermediary Services Act, 2002 | | | (Act No. 37 of 2002); | +-----------------------------------+-----------------------------------+ | Futures contract | means a contract, the effect of | | | which is that - | | | | | | - a person agrees to deliver | | | the underlying instrument to | | | or receive it from another | | | person at an agreed price on | | | a future date; or | | | | | | - a person will pay to or | | | receive from another person | | | an amount of money according | | | to whether, on the future | | | date, the price or value of | | | the underlying instrument is | | | higher or lower than the | | | agreed price on that future | | | date, in accordance with | | | these rules and the contract | | | specification of the futures | | | contract and which is | | | included in the list of IRC | | | securities kept by the JSE in | | | terms of the Act; | +-----------------------------------+-----------------------------------+ | "inter-dealer broker" or "IDB" | means a sub-category of trading | | | member authorised to act as an | | | intermediary between two other | | | trading members or between a | | | trading member and another person | | | in relation to the purchase and | | | sale of IRC securities; | +-----------------------------------+-----------------------------------+ | Investment manager | means a trading member who is | | | authorised in terms of section 10 | | | of these rules to undertake the | | | management of investments on a | | | discretionary basis; | +-----------------------------------+-----------------------------------+ | IRC securities | means the bonds, interest rate | | | derivatives and currency | | | derivatives that are JSE listed | | | securities and traded on the JSE | | | trading system; | +-----------------------------------+-----------------------------------+ | JSE | means JSE Limited, a company duly | | | registered and incorporated | | | | | | with limited liability under the | | | company laws of the Republic, | | | | | | licensed to operate an exchange | | | under the Act; | +-----------------------------------+-----------------------------------+ | JSE authorised investments | means -- | | | | | | - derivative securities; | | | | | | - JSE listed securities traded | | | on the JSE interest rate and | | | currency derivatives market | | | or equities market; | | | | | | - securities listed on an | | | exchange in the Republic | | | other than the JSE; | | | | | | - securities listed on an | | | external exchange; | | | | | | - participatory interests in a | | | collective investment scheme | | | as defined in the Collective | | | Investment Schemes Control | | | Act, 2002 (Act No. 45 of | | | 2002), and units or any other | | | form of participation in a | | | foreign collective investment | | | scheme approved by the | | | Registrar of Collective | | | Investment Schemes in terms | | | of section 65 of that Act; | | | | | | - units or any other form of | | | participation in a collective | | | investment scheme licensed or | | | registered in a foreign | | | country; and funds intended | | | for the purchase of such | | | securities, units, or | | | participation; | | | | | | - \"JSE Clear\" means JSE Clear | | | Limited, a company duly | | | registered and incorporated | | | with limited liability under | | | the company laws of the | | | Republic, licensed to operate | | | as an independent clearing | | | house and central | | | counterparty under the Act; | +-----------------------------------+-----------------------------------+ | JSE clear | JSE Clear (Pty) Ltd | +-----------------------------------+-----------------------------------+ | JSE listed securities | means those securities included | | | in the list of securities kept by | | | the JSE; | +-----------------------------------+-----------------------------------+ | JSE systems | means any system, device or | | | network which is operated by or | | | on behalf of the JSE for the | | | purpose of providing a market; | +-----------------------------------+-----------------------------------+ | Margin | means either initial margin, | | | settlement margin, variation | | | margin, top- up margin, | | | additional margin or retained | | | margin as the context may | | | require; | +-----------------------------------+-----------------------------------+ | Market controller | means the person appointed by the | | | JSE to supervise, administer, and | | | control the daily operations of | | | the JSE trading system; | +-----------------------------------+-----------------------------------+ | Market maker | means a trading member which is | | | an Authorised Dealer, and which | | | has been granted approval by the | | | Exchange Control Department of | | | the Reserve Bank to act as a | | | market maker in currency | | | derivatives; | +-----------------------------------+-----------------------------------+ | Mark-to-market | means the revaluation of a | | | position in an IRC security to | | | its current market value; | +-----------------------------------+-----------------------------------+ | Matched principal | means a transaction in bonds | | | which is facilitated by a trading | | | member (including but not limited | | | to an IDB), in terms of which the | | | facilitating trading member- | | | | | | - trades with or on behalf of | | | two other trading members or | | | on behalf of a client and | | | another trading member; | | | | | | - does not disclose the | | | identity of the two | | | counterparties to each other; | | | and | | | | | | - reports to the JSE trading | | | system a purchase transaction | | | and a sale transaction with | | | or on behalf of the two | | | counterparties through the | | | trading member's stock | | | account; | +-----------------------------------+-----------------------------------+ | ML/TF/PF | Money Laundering/Terrorist | | | Financing/Proliferation Financing | +-----------------------------------+-----------------------------------+ | Member settled client | means a client who has appointed | | | a trading member to settle | | | transactions in bonds on his | | | behalf via the CSDP of the | | | trading member; | +-----------------------------------+-----------------------------------+ | "Off book" or "off book trade" | means a transaction in IRC | | | securities negotiated off the | | | central order book and reported | | | by a trading member to the JSE | | | trading system; | +-----------------------------------+-----------------------------------+ | Option contract | means a put option contract or a | | | call option contract, as the | | | context may require; | +-----------------------------------+-----------------------------------+ | Proprietary position | means a position registered by | | | JSE Clear in the name of a | | | trading member for the trading | | | member\'s own account; | +-----------------------------------+-----------------------------------+ | Put option contract | means a contract, in terms of | | | which the holder of a long | | | position in the put option | | | contract has obtained the right | | | to sell, and the holder of a | | | short position shall, if the | | | option is exercised, buy, the | | | underlying instrument of the | | | option contract to or from JSE | | | Clear on or before the future | | | date at the strike price in | | | accordance with these rules and | | | the contract specification of the | | | option contract; | +-----------------------------------+-----------------------------------+ | Registered officer | means a compliance officer, | | | settlement officer, alternate | | | settlement officer or a trader | | | registered by the JSE as such in | | | the name of the trading member; | +-----------------------------------+-----------------------------------+ | Retained margin | means the margin paid by a client | | | to a trading member for an | | | intended transaction or margin | | | due to a client which the trading | | | member has retained in | | | anticipation of a transaction as | | | contemplated in rule 8.50.4; | +-----------------------------------+-----------------------------------+ | RMCP | Risk Management Compliance | | | Program | +-----------------------------------+-----------------------------------+ | SRO oversight committee | means the JSE Board sub-committee | | | responsible for overseeing the | | | issuer regulation and market | | | regulation functions of the JSE; | +-----------------------------------+-----------------------------------+ | Strate | means Strate Limited, a public | | | company licensed as a central | | | securities depository in terms of | | | the Act; | +-----------------------------------+-----------------------------------+ | Swift | means the Society for Worldwide | | | Interbank Financial | | | Telecommunication; | +-----------------------------------+-----------------------------------+ | Trade | means to buy or to sell JSE | | | listed securities whether on book | | | or | | | | | | negotiated off book and reported | | | to the JSE trading system; | +-----------------------------------+-----------------------------------+ | Trader | means an employee of a trading | | | member authorised by the JSE and | | | who is registered by such trading | | | member in terms of these | | | derivatives rules to trade either | | | for the trading member's own | | | account or on behalf of clients, | | | or for both; | +-----------------------------------+-----------------------------------+ | Trading member | means an authorised user of the | | | JSE, authorised to trade in the | | | | | | following markets: | | | | | | - JSE Equity Derivatives | | | Market; and/or | | | | | | - JSE Commodity Derivatives | | | Market; | +-----------------------------------+-----------------------------------+ | Top-up margin | means the amount of margin | | | payable as a result of an adverse | | | mark- to-market of unsettled | | | positions in bonds executed on | | | the central order book or | | | negotiated off book and reported | | | to the JSE trading system and | | | accepted by the respective | | | clearing members as an off-book | | | transaction for risk management | | | purposes; | +-----------------------------------+-----------------------------------+ | Underlying instrument | means the corporeal or | | | incorporeal thing, asset, index | | | as referred to in the definition | | | of \"securities\" in section 1 of | | | the Act, currency, rate of | | | interest or any other factor | | | which is the subject matter of a | | | futures contract or an option | | | contract, or the futures contract | | | that is the subject matter of an | | | option contract; | +-----------------------------------+-----------------------------------+ | UNSCR | United Nations Security Council | | | resolution | +-----------------------------------+-----------------------------------+ | Variation margin | means the amount of margin | | | payable as a result of the | | | marking-to- market of positions | | | in futures and option contracts; | +-----------------------------------+-----------------------------------+ | Yield-X | means a market in interest rate | | | and currency securities operated | | | by the JSE prior to the effective | | | date of the integration of the | | | JSE's interest rate and currency | | | markets; | +-----------------------------------+-----------------------------------+