JSE Brokerage Operations flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- T+3 settlement cycle
- JSE equities settle three business days after trade date. Weekends and public holidays are excluded, so the settlement date shifts forward when a holiday falls in the cycle.
- Strate
- The central securities depository and clearing house for JSE equities. It holds securities in electronic form and guarantees settlement through its clearing and settlement arrangements.
- Delivery versus payment
- A settlement mechanism where securities are delivered only when cash is paid, so the two legs transfer simultaneously and neither party is exposed to the other's default.
- Ex-dividend date
- The date from which a buyer of shares no longer receives the declared dividend. Buying on or after this date means the seller retains the entitlement.
- Record date
- The date on which the register is closed and the holder of record is identified for a corporate action entitlement. It determines who receives the dividend or rights.
- Rights issue
- An offer to existing shareholders to subscribe for new shares, usually at a discount to market price, pro rata to their holdings. The rights may be exercised, sold, or lapsed.
- Bonus issue
- Free shares issued to existing holders in proportion to their holdings. Total value is unchanged, but share count rises and price per share falls proportionally.
- Beneficial ownership threshold
- Under FICA, beneficial owners are natural persons holding 25% or more ownership or control of an entity. A senior managing official is recorded where none can be identified.
- Politically exposed person
- A person entrusted with a prominent public function, plus family members and close associates. Enhanced due diligence and senior approval are required for the relationship.
- Suspicious transaction report
- A report to the Financial Intelligence Centre about activity suspected of being linked to crime. The client must not be tipped off, and the report reference is retained.
- Enhanced due diligence
- Additional checks applied to higher-risk clients such as PEPs or complex structures. It includes establishing source of funds and source of wealth and obtaining senior approval.
- FICA
- The Financial Intelligence Centre Act, South Africa's anti-money-laundering statute. It requires client identification, verification, record-keeping, and reporting of suspicious transactions.
- Client money segregation
- Client funds must be held in a designated trust or separate account, not mixed with the firm's own money, so they remain protected if the firm becomes insolvent.
- Three-way reconciliation
- A control comparing the firm's internal records, the bank or CSD statement, and the client ledger. Differences must be investigated and cleared within set tolerances.
- Segregation of duties
- A control that separates functions so no single person controls an entire process. The person executing a trade should not settle or reconcile it.
- Best execution
- The duty to take reasonable steps to obtain the best result for a client, weighing price, cost, speed, likelihood of execution and settlement, size, and order nature.
- Limit order
- An order to buy or sell only at a specified price or better. It may remain unexecuted if the market does not reach the limit price.
- Stop-loss order
- An order that becomes a market order once a trigger price is reached. In a fast market, the executed price may be worse than the trigger.
- Front-running
- Trading ahead of a known client order to profit from its expected market impact. It is prohibited market conduct and a breach of client duty.
- Price-time priority
- The JSE order matching rule: orders at a better price execute first, and at the same price the earlier-entered order executes first.
- Closing auction
- A call auction at the end of the trading day that determines the official closing price. Orders are matched at a single price that maximises executable volume.
- SENS announcement
- A price-sensitive announcement published through the Stock Exchange News Service. It must be released before trading opens to keep the market informed.
- Insider trading
- Dealing in securities while in possession of non-public price-sensitive information. It is a statutory offence under the Financial Markets Act.
- JSE Directive
- A binding instruction issued by the JSE that supplements the rulebook. It takes effect on the date stated and members must comply.
- Market abuse
- Conduct that undermines market integrity, including insider trading, market manipulation, and false or misleading statements. It is monitored and referred to the FSCA.
- Wash trading
- Buying and selling the same security to create the appearance of trading activity without a genuine change in ownership. It is a form of market manipulation.
- Chinese wall
- An information barrier separating advisory or corporate finance functions from trading and research. It prevents the misuse of inside information within the firm.
- Conflict of interest register
- A record of identified conflicts and the controls applied to manage them. It must be reviewed regularly and disclosed to clients where material.
- Pre-clearance
- Approval required before staff deal in securities for their own account. It prevents personal trading during blackout periods and around client orders.
- Trade confirmation
- A notice to the client showing security, quantity, price, fees, settlement date, and the capacity in which the member acted. It is issued promptly after execution.
- Buy-in procedure
- A remedy for a failed settlement: the buying clearing member purchases the securities in the market and claims the price difference and costs from the defaulting member.
- Dividends tax
- Tax withheld on cash dividends paid to shareholders. A reduced rate or exemption applies only where a valid declaration and undertaking are in place.