JSE Brokerage Operations cheat sheet

The JSE operates as a licensed exchange under the Financial Markets Act; its rulebook binds members, and the JSE Rules and Directives sit alongside FSCA conduct standards and the Companies Act.

Equities trading on the JSE Main Board runs on a continuous order-driven book from 09:00 to 17:00, with opening and closing auction phases; the closing auction price is the reference price for settlement obligations.

Brokers must hold a JSE membership licence and, where they hold client assets, FSP licensing under FAIS; the exchange can suspend or expel members for rule breaches independently of FSCA action.

Insider trading is a statutory offence under the Financial Markets Act; the JSE's Surveillance Division refers suspicious trading to the FSCA and the NPA for prosecution.

Market abuse covers insider trading, market manipulation, and false or misleading statements; the JSE's Surveillance Division monitors order book activity and refers cases to the FSCA.

Listed companies must publish price-sensitive announcements through SENS before trading opens; a trading halt can be imposed where information is leaked before publication.

Short selling of JSE-listed equities is permitted only under the Securities Lending Regulations; naked short selling is prohibited and covered positions must be reported.

A JSE member's compliance officer must report rule breaches to the JSE within prescribed timeframes, and the JSE can impose fines, censure, or suspension.

Order priority on the JSE is price first, then time; at the same price, the earlier-entered order executes first.

Market orders execute at the best available price and may sweep multiple price levels; limit orders execute only at the specified price or better.

A stop-loss order becomes a market order once the trigger price is hit; a stop-limit order becomes a limit order at the trigger, so it may not fill in a fast market.

Best execution requires the member to take reasonable steps to obtain the best result for the client, considering price, cost, speed, and likelihood of execution.

Client orders must be time-stamped and sequenced; front-running a client order or trading ahead of a known client order is prohibited market conduct.

An order may be cancelled or amended only before execution; once matched on the JSE book, the trade is binding and must be confirmed to the client.

Odd-lot trades are executed outside the central order book at negotiated prices and reported to the JSE; they do not set the official closing price.

Trade confirmations must be issued to clients promptly, showing the security, quantity, price, fees, settlement date, and capacity in which the member acted.

JSE equities settle on a T+3 rolling cycle; the settlement date is the third business day after trade date, excluding weekends and public holidays.

Strate is the central securities depository and clearing house for JSE equities; it guarantees settlement through its clearing member and settlement guarantee arrangements.

Settlement occurs by delivery-versus-payment in the Strate environment, so securities and cash transfer simultaneously against the clearing member's obligations.

A failed trade triggers buy-in procedures: the buying clearing member can buy in the position and claim the price difference plus costs from the defaulting member.

Settlement instructions must be matched and confirmed by the cut-off time on the business day before settlement; late matching risks a failed trade.

Corporate actions affect settlement obligations: a trade cum-dividend entitles the buyer to the dividend, while an ex-dividend trade does not.

Scrip lending supports settlement of short positions; borrowed securities must be returned on the agreed date, and the lender retains economic exposure during the loan.

Records of settlement instructions and failed trades must be retained for at least five years under JSE and FIC record-keeping requirements.

FICA requires identification and verification of every client before an account is opened; no transacting is permitted until KYC is complete.

Natural persons require a valid identity document and proof of residence; legal entities require registration documents, beneficial ownership disclosure, and authorised signatory mandates.

Beneficial ownership must be identified for entities with 25% or more ownership or control; a senior managing official is recorded where no beneficial owner can be identified.

Enhanced due diligence applies to politically exposed persons, high-risk jurisdictions, and complex structures; the source of funds and source of wealth must be established.

Suspicious transaction reports go to the Financial Intelligence Centre without tipping off the client; the FIC reference number is retained in the client file.

Client accounts must be categorised correctly as own account, nominee, or trust; nominee accounts require disclosure of the underlying beneficial owners on request.

Risk ratings must be reviewed periodically: high-risk clients at least annually, and any change in circumstances triggers a review.

Account closure requires settlement of all obligations, return of client assets, and retention of records for the statutory period.

The last day to trade cum-dividend is followed by the ex-dividend date; buying on or after the ex-date means the buyer does not receive the declared dividend.

The record date determines who is registered as holder for entitlement; the pay date is when cash dividends or scrip are actually delivered.

A cash dividend is subject to dividends tax at the prevailing rate unless a valid exemption is in place; the net amount is credited to the client account.

A rights issue gives existing holders the right to subscribe for new shares, usually at a discount; rights may be exercised, sold, or allowed to lapse.

A capitalisation or bonus issue issues free shares to existing holders, increasing share count and reducing price per share without changing total value.

A share consolidation or subdivision changes the number of shares and the price proportionally; entitlements must be reconciled against the register.

A mandatory offer triggered by a change of control requires the offeror to extend the same terms to all remaining shareholders.

Corporate action entitlements must be reconciled between the CSD record, the broker's holdings, and client accounts before payment or delivery.

Client money must be held in a segregated trust or designated account, separate from the firm's own funds, and reconciled daily.

A three-way reconciliation compares the firm's records, the bank or CSD statement, and the client ledger; unexplained differences must be investigated and cleared promptly.

Client money cannot be used to fund firm expenses; any shortfall must be made good immediately from the firm's own resources.

Reconciliation breaks must be documented with an explanation and a resolution date, and escalated where they exceed tolerance thresholds.

Segregation of duties requires that the person executing a trade is not the same person who settles it or reconciles the account.

Access controls, dual authorisation for payments, and audit trails are core internal controls; passwords must not be shared and access must be reviewed.

Records must be retained for at least five years under FICA and JSE rules; records relating to client identification are kept for the duration of the relationship plus five years.

Internal audit and compliance monitoring must test the effectiveness of controls, not merely confirm that policies exist.

A member must act in the client's best interest, disclose conflicts of interest, and obtain informed consent where a conflict cannot be avoided.

Client confidentiality applies to all personal and financial information; disclosure is permitted only with consent or where required by law or a regulator.

Churning, excessive trading to generate commission, and unauthorised trading are breaches of conduct and grounds for disciplinary action.

Insider information must not be used or passed on; a member must maintain a restricted list and a wall between advisory and trading functions.

Gifts and entertainment must be recorded in a register and kept within set limits; inducements that compromise independence are prohibited.

Complaints must be logged, acknowledged, and investigated within set timeframes, with escalation to the compliance function and the client informed of the outcome.

Market manipulation includes wash trading, spoofing, and marking the close; the Surveillance Division monitors for these patterns and refers them to the FSCA.

A conflict of interest register must be maintained and reviewed, and personal account dealing by staff requires pre-clearance and is subject to blackout periods.

The JSE's equity market includes the Main Board and AltX; AltX has lighter listing requirements but the same trading and settlement infrastructure.

Directives issued by the JSE CEO supplement the rulebook and are binding on members from the date stated in the directive.

Members must report prescribed transactions and positions to the JSE; failure to report is itself a rule breach subject to penalty.

The JSE's market operations function handles trade corrections and cancellations; a trade may be cancelled only on agreed grounds such as error or system failure.

The FSCA licenses financial services providers and market infrastructures; the JSE and Strate are separately licensed market infrastructures.

A member's external auditor must report material breaches of the JSE Rules to the JSE; the auditor's report accompanies the annual membership review.

Disciplinary proceedings before the JSE are conducted under the rulebook, with appeal rights to the appeal committee and then to the courts.

Record-keeping must enable reconstruction of every order and trade; records must be stored securely and be retrievable within a reasonable time.

Best execution factors include price, cost, speed, likelihood of execution and settlement, size, and the nature of the order; the weighting depends on the client and the order.

A client instruction that specifies a particular venue or price may override best execution for that element, but the member must still act in the client's interest.

Order handling must prevent misuse of information: client orders cannot be front-run, and staff personal trades require pre-clearance.

Aggregated orders must be allocated fairly and promptly; the allocation method must be disclosed to clients before the order is placed.

A limit order left on the book may execute at a better price; the client receives the improved price, not the limit price.

Trade errors must be corrected through the JSE's error trade process within the prescribed window; the member bears the cost of its own errors.

A client's instruction to trade at market may execute at a price materially different from the last traded price in a volatile or illiquid security.

Records of client instructions, including telephone recordings where applicable, must be retained and be retrievable for compliance review.

Clearing members post collateral to Strate to cover settlement obligations; collateral is marked to market and topped up when the value falls below the required margin.

A defaulting clearing member's positions may be closed out and the collateral applied to the shortfall; the member remains liable for any residual loss.

Strate's settlement guarantee protects the market against a member default, but it does not protect a client against their own broker's insolvency.

Securities held in a client's name or in a segregated nominee account are protected from the broker's creditors on insolvency.

Rehypothecation of client securities requires client consent and must be disclosed; the client must be told the risks of losing the securities.

Cash collateral must be held in a segregated account and reconciled, with interest allocated to the client where the terms provide for it.

Settlement fails attract penalties and can lead to suspension of the member's clearing privileges; repeated fails are escalated to the JSE.

Corporate action entitlements arising during a settlement fail must still be passed to the entitled party once the trade settles.

Sanctions screening must be run against the client and beneficial owners at onboarding and on an ongoing basis as lists change.

Transaction monitoring flags unusual patterns such as large cash deposits, rapid movement of funds, and trading inconsistent with the client's profile.

A client's source of funds and source of wealth must be documented and kept up to date; unexplained wealth is a red flag requiring escalation.

Politically exposed persons include domestic and foreign PEPs and their family members and close associates; enhanced due diligence applies to all.

Third-party reliance on another institution's KYC is permitted only where that institution is regulated and the member obtains the required records.

Non-face-to-face onboarding requires additional verification, such as electronic identity verification and verification of the client's bank account.

A client's tax residency must be established for FATCA and CRS reporting; reportable accounts are disclosed to SARS for exchange with partner jurisdictions.

Account mandates must be in writing, and changes to signatories or bank details require verification through an independent channel.

A dividend withholding tax exemption requires a valid declaration and undertaking from the holder; without it, the default rate is withheld.

Shareholders may elect to receive a scrip dividend instead of cash where the company offers it; the election must be made by the stated deadline.

A rights issue entitlement is calculated pro rata to existing holdings; the rights have a value and can be renounced or sold on the market.

A scheme of arrangement requires shareholder approval and court sanction; consideration may be cash, shares, or a mix.

A takeover offer must be accepted or rejected by the stated closing date; acceptances are irrevocable once made unless the offer lapses.

A share buy-back reduces the number of shares in issue and may affect the company's earnings per share and the holder's percentage interest.

Fractional entitlements arising from a bonus issue or consolidation are usually rounded down and the fractions aggregated and sold.

Corporate action tax treatment depends on the nature of the action; a return of capital is treated differently from a dividend for tax purposes.

A member must appoint an external auditor and submit audited financial statements to the JSE within the prescribed period after year end.

The auditor's report must include confirmation of compliance with client money and segregation requirements, and any qualification must be reported.

Monthly or quarterly returns to the JSE must be accurate; a false or late return is a rule breach subject to penalty.

Reconciliation tolerances must be set, documented, and approved by senior management; breaches must be escalated and resolved within a defined timeframe.

Business continuity plans must be tested; a disruption to trading or settlement systems must be reported to the JSE and clients informed.

Outsourcing arrangements do not transfer regulatory responsibility; the member remains accountable for the outsourced function's compliance.

Staff training on AML and conduct must be documented, and attendance records retained as evidence of the control.

Whistleblowing channels must be available to staff, and retaliation against a whistleblower is prohibited.

A material conflict of interest must be disclosed to the client before the transaction, and the client's consent obtained where the conflict cannot be managed.

Research and corporate finance must be separated by information barriers; analysts cannot be influenced by investment banking relationships.

Personal account dealing by staff requires pre-clearance, is subject to blackout periods around research publication, and must be reported.

Inducements must not impair the member's duty to act in the client's best interest; commissions and soft-dollar arrangements must be disclosed.

Client complaints and disputes must be recorded and reported; unresolved complaints may be escalated to the FAIS Ombud.

Confidential information must be protected, and a restricted list must be maintained for securities where the firm holds inside information.

Market integrity requires that orders entered reflect genuine trading intent; spoofing and layering are prohibited practices.

A member must cooperate with JSE and FSCA investigations and produce records on request within the required timeframe.