The South African Futures Exchange FINANCIAL MARKETS CONTROL ACT, 1989

Transcription

1 The South African Futures Exchange FINANCIAL MARKETS CONTROL ACT, 1989 October 1999

2 FINANCIAL MARKETS CONTROL ACT (Act No. 55 of 1989) which came into operation on 10 August 1990 (except Sections 2, 3 and 18 : 7 August 1989) (English text signed by the State President) As Amended by Financial Services Board Act, No. 97 of 1990 Financial Institutions Amendment Act, No. 54 of 1991 Financial Services Board Amendment Act, No. 41 of 1992 Financial Institutions Amendment Act, No. 83 of 1992 Financial Institutions Amendment Act, No. 7 of 1993 Financial Institutions Second Amendment Act, No. 104 of 1993 Financial Markets Control Amendment Act, No. 55 of 1995 Financial Markets Control Amendment Act, No. 73 of 1996 Financial Institutions Amendment Act, No. 22 of 1997 Financial Markets Control Amendment Act, No. 13 of 1998 Financial Markets Control Amendment Act, No. 40 of 1999 To provide for the regulation and control of financial markets and for matters connected therewith

3 CONTENTS 1. DEFINITIONS 6 2. REGISTRAR AND DEPUTY REGISTRAR OF FINANCIAL MARKETS 9 3. FINANCIAL MARKETS ADVISORY BOARD RESTRICTION ON CARRYING ON OF BUSINESS OF FINANCIAL MARKET OR OF BUYING AND SELLING LISTED FINANCIAL INSTRUMENTS RESTRICTIONS ON MANAGING INVESTMENTS RESTRICTIONS ON USE OF NAME OR DESCRIPTION IMPLYING CONNECTION WITH FINANCIAL EXCHANGE APPLICATION FOR ISSUE OR RENEWAL OF FINANCIAL MARKET LICENCE15 8. ISSUE OF FINANCIAL MARKET LICENCE FINANCIAL MARKET LICENCE REFUSAL OF RENEWAL OF FINANCIAL MARKET LICENCE CANCELLATION OR SUSPENSION OF FINANCIAL MARKET LICENCE JURISTIC PERSONALITY OF ASSOCIATION 18 12A. FUNDS OF FINANCIAL EXCHANGE DELEGATION OF FUNCTIONS OF EXECUTIVE COMMITTEE LIST OF FINANCIAL INSTRUMENTS REMOVAL OR SUSPENSION OF LISTED FINANCIAL INSTRUMENTS, AND OMISSION OF PRICES OF FINANCIAL INSTRUMENTS FROM LIST OF QUOTATIONS OF PRICES APPLICATION OF NEW OR AMENDED CONDITIONS TO EXISTING LISTED FINANCIAL INSTRUMENTS 20 Financial Markets Control Act, 1989: October

4 17. RULES OF FINANCIAL EXCHANGE 21 17A. STATUS OF ASSETS GIVEN TO OR RECEIVED BY CLEARING HOUSE IN TRUST 29 17B. SEPARATION OF FUNDS OF MEMBERS AND OTHER PERSONS 29 17C. RECOGNITION OF INTERDEALER BROKERS BOARD FOR HEARING APPEALS RIGHT OF APPEAL AGAINST ACTS OF EXECUTIVE COMMITTEE FALSE TRADING AND MARKET MANIPULATION FALSE OR MISLEADING STATEMENTS 34 21A. UNDESIRABLE ADVERTISING OR CANVASSING IN RELATION TO FINANCIAL INSTRUMENTS FRAUDULENTLY INDUCING PERSON TO DEAL IN FINANCIAL INSTRUMENTS ACTION FOR DAMAGES CERTAIN WRITTEN MATTER TO BEAR NAMES OF CERTAIN PERSONS UNSOLICITED CALLS INSPECTIONS ATTENDANCE OF CERTAIN MEETINGS BY REGISTRAR AND FURNISHING OF CERTAIN DOCUMENTS TO HIM FURNISHING OF INFORMATION TO REGISTRAR 39 28A. DISCLOSURE OF INFORMATION BY FINANCIAL EXCHANGE UNDESIRABLE PRACTICES EVIDENCE 41 4 Financial Markets Control Act, 1989: October 1999

5 31. POWER OF COURT TO DECLARE MEMBER OR OFFICER OR EMPLOYEE OF MEMBER OR PERSON APPROVED IN TERMS OF SECTION 5 DISQUALIFIED VOLUNTARY DISSOLUTION OF FINANCIAL EXCHANGE WINDING-UP BY COURT JUDICIAL MANAGEMENT APPOINTMENT OF JUDICIAL MANAGER AND LIQUIDATOR PENALTIES REGULATIONS 45 37A. LIMITATION OF LIABILITY AMENDMENT OF LAWS SAVINGS AND TRANSITIONAL PROVISIONS APPLICATION OF ACT SHORT TITLE AND COMMENCEMENT 48 Financial Markets Control Act, 1989: October

6 BE IT ENACTED by the State President and the Parliament of the Republic of South Africa, as follows:- Definitions 1. In this Act, unless the context otherwise indicates:- "clearing house" in relation to a financial exchange, means a body corporate or unincorporated association providing services or facilities in respect of the buying and selling of financial instruments on the financial market in question; "court" in relation to the winding-up or judicial management of a financial exchange, means any division of the Supreme Court of South Africa within whose area of jurisdiction the head office or principal place of business of such exchange is situated; [Definition of "court" substituted by s. 36 of Act 83 of 1992] "executive committee" in relation to a financial exchange, means the executive authority established in terms of the rules of that exchange to manage the affairs of the exchange; "executive officer" in relation to a financial exchange, means the person appointed by an executive committee in terms of the rules in question as chief executive officer of that exchange or, in his absence, his deputy or, if there is no such chief executive officer or deputy, such other person as may be appointed by such committee in terms of the rules to perform all the functions which shall or may be performed by the executive officer; "financial exchange" means an association contemplated in section 7 to which a financial market licence has been issued; "financial instrument" means:- (c) (d) a futures contract; an option contract; loan stock; or any other instrument declared by the Registrar by notice in the Government Gazette to be a financial instrument; 6 Financial Markets Control Act, 1989: October 1999

7 "financial instrument principal" means any person who is a member of a financial exchange, but not a financial instrument trader, and who is authorised in terms of the rules thereof to carry on the business of buying and selling listed financial instruments on his own account; "financial instrument trader" means any person who is a member of a financial exchange and is authorised in terms of the rules thereof to carry on the business of buying and selling listed financial instruments on behalf of other persons or on his own account; "financial market" means a market for the carrying on of the business of buying and selling financial instruments, taking place:- on an exchange or at any other place; or by means of any system or facility; [Definition of financial market amended by s. 1 of Act 73 of 1996] "financial market licence" means a licence issued in terms of section 9 to carry on the business of a financial market; "futures contract" means a standardised contract the effect of which is that:- a person agrees to deliver to or receive from another person a certain quantity of corporeal or incorporeal things on a future date at a prearranged price; or a person will pay to or receive from another person an amount of money on a future date according to whether the pre-arranged value or price of an asset, index as referred to in the definition of "securities" in section 1 of the Stock Exchanges Control Act, 1985 (Act No.1 of 1985), currency, rate of interest or any other factor is higher or lower on that future date than the pre-arranged value or price; [Definition of "futures contract" substituted by s. 23 of Act 54 of 1991 and by s. 1 of Act 55 of 1995] interdealer broker means a participant in a financial market who facilitates transactions in listed financial instruments between members; [Definition of interdealer broker inserted by s. 1 of Act 73 of 1996] "listed financial instruments" means financial instruments included in the list of financial instruments kept by an executive committee in terms of section 14; Financial Markets Control Act, 1989: October

8 "loan stock" means an instrument creating or acknowledging indebtedness, issued by:- (c) (d) (e) (f) (g) the Government of the Republic of South Africa; a local government body contemplated in the Local Government Transition Act, 1993 (Act No. 209 of 1993), or a provincial government; Eskom; the Rand Water Board; the Land and Agricultural Bank of South Africa; the Industrial Development Corporation of South Africa, Limited; or any other institution designated by the Registrar by notice in the Gazette, but excluding any such instrument specified from time to time by the Registrar by notice in the Gazette; [Definition of loan stock amended by s. 1(c) of Act 73 of 1996] "member" in relation to a financial exchange, means any person who is a financial instrument trader or financial instrument principal; "Minister" means the Minister of Finance; "option contract" means a standardised contract the effect of which is that a person acquires the option to buy from or sell to another person a certain quantity of corporeal or incorporeal things before or on a future date at a pre-arranged price; or that an amount of money will be paid to or received from another person before or on a future date according to whether the pre-arranged value or price of an asset, index as referred to in the definition of "securities" in section 1 of the Stock Exchanges Control Act, 1985 (Act No.1 of 1985), currency, rate of interest or any other factor is higher or lower before or on that future date than the pre-arranged value or price; "person" includes a partnership; [Definition of "option contract" substituted by s. 23 of Act 54 of 1991] "prescribed" means prescribed by regulation; [Definition of "person" inserted by s. 1 of Act 55 of 1995] 8 Financial Markets Control Act, 1989: October 1999

9 "recognised clearing house" in relation to a financial exchange, means a clearing house recognised for the purposes of this Act by the Registrar; "record" includes any register, recording of information, account, accounting record, tape-recording or computer print-out as defined in section 1 of the Computer Evidence Act, 1983 (Act No. 57 of 1983); "Registrar" means the Registrar or the Deputy Registrar of Financial Markets mentioned in section 2; [Definition of "Registrar" substituted by s. 29 of Act 97 of 1990] "regulation" means a regulation made under section 37; "rules" in relation to a financial exchange, means rules of that exchange referred to in section 17; "standardised contract" means a contract that complies with the formal requirements applying on a financial market to a contract of the kind in question and in respect of which dealings take place on that market; "stock exchange" means a stock exchange as defined in section 1 of the Stock Exchanges Control Act, 1985 (Act No. 1 of 1985); "this Act" includes the regulations; and "unsolicited call" in relation to entering into an agreement in respect of listed financial instruments, means a personal visit made to someone or an oral communication made to someone without an express or tacit invitation from such person, but excluding any personal visit or oral communication made to someone on whose behalf the business of buying and selling of listed financial instruments has previously been carried on by the person who made that personal visit or oral communication, a stock-broker as defined in section 1 of the Stock Exchanges Control Act, 1985 (Act No. 1 of 1985), a member of a financial exchange, or a financial institution referred to in paragraph,, (c), (d), (e), (f) or (h) of the definition of "financial institution" in section 1 of the Financial Institutions (Investment of Funds) Act, 1984 (Act No. 39 of 1984). [Definition of "unsolicited call" substituted by s.23(c) of Act 54 of 1991 and by s. 4 of Act 22 of 1997] Registrar and Deputy Registrar of Financial Markets 2. The executive officer and the deputy executive officer mentioned in section 1 of the Financial Services Board Act, 1990 (Act No. 97 of 1990), shall also be the Registrar and the Deputy Registrar of Financial Markets, respectively. [Section 2 substituted by s. 29 of Act 97 of 1990 and by s. 9 of Act 41 of 1992] Financial Markets Control Act, 1989: October

10 Financial Markets Advisory Board 3. (1) The Minister may appoint a Financial Markets Advisory Board (in this section referred to as the advisory board), consisting of a chairman and such other members as the Minister may from time to time determine. A member of the advisory board shall hold office for such period as the Minister may determine and shall be eligible for reappointment upon the expiration of his period of office. (2) The advisory board may from time to time conduct any investigation, and advise the Registrar, or make recommendations to the Minister, regarding any matter relating to financial markets and stock exchanges, and shall advise the Minister on any such matter referred to the advisory board by the Minister. (3) The advisory board shall in relation to witnesses and their evidence have the powers of a commission duly appointed under the Commissions Act, 1947 (Act No. 8 of 1947). (4) The Registrar may submit to the advisory board any information which is in his possession, or which he may obtain, and which is relevant to any matter which the advisory board is investigating or considering. (5) The advisory board may appoint one or more subcommittees for the purposes of considering, and advising on, such matters relating to financial markets and stock exchanges as may be referred to such a subcommittee by the advisory board. The advisory board shall appoint as members of a subcommittee one or more of its members and, if it deems it necessary, one or more other persons for such periods of office as the advisory board may from time to time determine. (6) The advisory board may call to its assistance such person or persons as it may deem necessary to assist it, or to investigate matters relating to financial markets and stock exchanges. (7) The Registrar shall be responsible for the administrative work incidental to the performance of the functions of the advisory board and any subcommittee. 10 Financial Markets Control Act, 1989: October 1999

11 Restriction on carrying on of business of financial market or of buying and selling listed financial instruments 4. (1) No person shall carry on or hold himself out as carrying on the business of a financial market, except under a financial market licence. (2) No person shall carry on the business of buying and selling - unlisted financial instruments on a financial market on behalf of other persons or on his own account; or listed financial instruments on behalf of other persons or on his own account, unless - (i) in the case of such buying and selling on behalf of other persons, he is a financial instrument trader; in the case of such buying and selling on his own account, he is a financial instrument trader or financial instrument principal, or he is a person other than a financial instrument trader or financial instrument principal and the buying and selling is effected through a financial instrument trader. (3) A person shall for the purposes of this Act be deemed to be carrying on the business of buying and selling financial instruments if in the opinion of the Registrar - it is a regular feature of his business to buy and sell financial instruments on behalf of other persons or on his own account; or he holds himself out as a person who carries on the business of buying and selling financial instruments. Restrictions on managing investments 5. (1) No person may, as a regular feature of his or her business, undertake the management of investments on behalf of another person, and for such management receive any remuneration in whatever form, unless he or she - (c) is a person who has been approved by the Registrar or is a person who falls within a category of persons approved by the Registrar; has a written mandate to do so from the other person; and complies with such conditions as the Registrar may from time to time determine by notice in the Gazette, which conditions may- Financial Markets Control Act, 1989: October

12 (i) prohibit the management of investments referred to in subparagraphs and (iv) of the definition of investments in subsection (7), if such investments are not subject to a regulatory regime deemed adequate by the Registrar for the protection of investors; and differ in respect of different groups or types of investment managers. [Subsection (1) amended by s. 3 of Act 73 of 1996 and by s. 1 of Act 13 of 1998] (1A) Subsection (1) does not apply to a member authorised in terms of the rules to manage investments on behalf of another person or a company which is registered as a management company in terms of the Unit Trusts Control Act, 1981 (Act No. 54 of 1981). [Subsection (1A) inserted by s. 1 of Act 13 of 1998] (2) The provision of section 17B shall apply mutatis mutandis to any person approved in terms of subsection (1). (3) Every application for approval referred to in subsection (1) shall be made in the prescribed manner and shall be accompanied by the prescribed application fee. (4) The Registrar may grant an applicant the approval contemplated in subsection (1) if - (c) (d) (e) the applicant is of good character and integrity, or in the case of a corporate body, is managed and controlled by persons who are of good character and integrity; the applicant complies, or in the case of a corporate body is managed by persons or employs persons who comply, with the standards of training and experience and the other qualifications required by the Registrar by notice in the Gazette; the applicant complies with the prudential requirements determined by the Registrar by notice in the Gazette; [Paragraph (c) amended by s. 3 of Act 73 of 1996] the applicant has made adequate arrangements for the safe custody of financial instruments; and the applicant undertakes to pay the annual levy prescribed under section 15A of the Financial Services Board Act, 1990 (Act No. 97 of 1990). [Paragraph (e) amended by s. 3(c) of Act 73 of 1996] 12 Financial Markets Control Act, 1989: October 1999

13 (5) The Registrar may withdraw approval granted in terms of subsection (4) if the approved person fails to comply with the requirements contemplated in subsections (1) and (4). (6) For the purposes of subsection (1) it shall be deemed that the management of investments is not a regular feature of the business of any person if such investments form part of the assets - (i) (iii) (iv) (v) in any deceased or insolvent estate, and he is the executor, administrator or trustee concerned or is a person administering or winding up such estate on behalf of that executor, administrator or trustee; of any person under curatorship, and he is the curator concerned or is administering such estate on behalf of that curator; of a company in liquidation or under judicial management, and he is the liquidator or judicial manager concerned or is liquidating or managing such company on behalf of that liquidator or judicial manager; of a trust as defined in section 1 of the Trust Property Control Act, 1988 (Act No. 57 of 1988), created inter vivos, but not a business trust and he or she is the trustee concerned or a person administering such trust on behalf of that trustee; or [Subsection (6)(iv) amended by s. 1(c) of Act 13 of 1998] of a minor, and he is the guardian concerned or a person administering such investments on behalf of that guardian. [Paragraph amended by s. 3(d) of Act 73 of 1996] If in any instance contemplated in paragraph it is a regular feature of the business of a person acting on behalf of such executor, administrator, trustee, curator, liquidator, judicial manager or guardian to manage investments, such person shall obtain approval from the Registrar in terms of subsection (1). (7) For the purposes of this section - "investments" means - (i) financial instruments listed on a financial exchange; financial instruments listed on a foreign exchange; Financial Markets Control Act, 1989: October

14 (iii) (iv) (v) (vi) units in a unit portfolio as defined in section 1 of the Unit Trusts Control Act, 1981 (Act No. 54 of 1981), or units or any other form of participation in a collective investment scheme approved by the Registrar of Unit Trust Companies in terms of that Act; units or any other form of participation in a collective investment scheme licensed or registered in a foreign country; any other instruments declared to be investments for the purposes of this section by the Registrar by notice in the Gazette; or funds intended for the purchase of such financial instruments, units, participation or other instruments; "management of investments" means - (i) the buying, selling or otherwise dealing with investments on behalf of another person; an offer or agreement regarding such buying, selling or dealing, irrespective of whether an investment manager is required to exercise his, her or its discretion; or (iii) the implementation on behalf of another person of a decision to buy, sell or deal with investments, but not (aa) (bb ) the giving of advice on the merits of such transactions without receiving funds or assets from a client; or the performance of the functions of a company or institution which is registered as a trustee under the Unit Trusts Control Act, 1981 (Act No. 54 of 1981); and (c) business trust means a trust inter vivos created for the purpose of carrying on a business for profit-making, which purpose is achieved through the combination of capital contributed by the beneficiaries themselves and through the administration or management of the capital by trustees on behalf of and for the benefit of the beneficiaries. [Subsection (7) substituted by s. 1(d) of Act 13 of 1998] [Section 5 amended by s. 15 of Act 7 of 1993 and by s. 64 of Act 104 of 1993 and substituted by s. 2 of Act 55 of 1995] 14 Financial Markets Control Act, 1989: October 1999

15 Restrictions on use of name or description implying connection with financial exchange 6. No person shall apply to any company, body, firm, business or undertaking a name or description signifying or implying some connection between the company, body, firm, business or undertaking and a financial exchange in the Republic when in fact no such connection exists. [Section 6 substituted by s. 3 of Act 55 of 1995] Application for issue or renewal of financial market licence 7. (1) Notwithstanding the provisions of section 30 of the Companies Act, 1973 (Act No. 61 of 1973), ten or more persons may form an association to carry on the business of a financial market, and the association may apply to the Registrar to issue to the association a financial market licence or to renew any such licence. (2) Every application relating to the issue or renewal of a financial market licence shall - (c) be made in the prescribed manner; and be accompanied by the prescribed application fee; and in the case of an application in respect of the issue of any such licence, also be accompanied by five copies of the proposed rules. (3) The Registrar shall advertise every application for the issue of a financial market licence in two national newspapers in any two official languages (one of which shall be English), at the expense of the applicant. (4) The advertisement shall state - the name of the applicant; the place where the rules of the applicant will be available for inspection by any member of the public; and (c) the period within which any objections to the issue of the licence may be lodged with the Registrar. [Section 7 amended by s. 16 of Act 7 of 1993 and substituted by s. 4 of Act 55 of 1995] Financial Markets Control Act, 1989: October

16 Issue of financial market licence 8. (1) On expiry of the period contemplated in section 7(4)(c), the Registrar may, after consideration of any objection lodged with him in terms of the said section, issue to the association referred to in section 7(1) a financial market licence, if - (c) (d) the association has sufficient financial resources for the proper exercise or carrying out of the powers and duties conferred upon or assigned to a financial exchange by or under this Act; the proposed rules comply with the requirements of this Act; the interests of the public would be served by the issue of the licence; and the association comprises at least ten members who will carry on business as buyers and sellers of listed financial instruments, independently of one another and in competition with one another. (2) The financial market licence shall specify the place at which or the trading method or facility by means of which the business of the financial market may be carried on, and that business shall not be carried on at any other place or in any other manner without the prior approval of the Registrar. [Subsection (3) amended by s. 17 of Act 7 of 1993 and substituted by s. 5 of Act 55 of 1995] Financial market licence 9. (1) A financial market licence shall expire on 31 December of the year for which it is issued, but may be renewed from year to year. (2) The prescribed licence fee shall be payable in respect of the issue or renewal of any such financial market licence: Provided that if the liability in respect of the issue of the licence arises after 30 June in any year, onehalf of that fee shall be payable for such issue. [Section 9 substituted by s. 6 of Act 55 of 1995] Refusal of renewal of financial market licence 10. (1) The Registrar may refuse to renew a financial market licence if - during the year preceding the year for which the licence is to be renewed - 16 Financial Markets Control Act, 1989: October 1999

17 (i) (iii) (iv) the rules of the financial exchange concerned were not properly enforced; the provisions of section 8(1), (c) or (d) no longer applied to the financial exchange concerned; [Subparagraph substituted by s. 4 of Act 73 of 1996] the financial exchange concerned did not comply with any other provision of this Act; or the financial exchange concerned did not comply with any written direction, request, condition or requirement of the Registrar in respect of which an appeal had been noted by the Registrar in terms of section 19(2) and upheld by the board referred to in section 18; or during the year preceding the year for which the licence is to be renewed the financial exchange failed to give effect to a decision of the board referred to in section 18. (2) The Registrar shall not refuse to renew a financial market licence on any grounds unless he or she has furnished the association concerned with the reasons for his or her proposed refusal and the association has had the opportunity to show cause within a period specified in a notice by the Registrar to the association why such renewal should not be refused. [Subsection (2) substituted by s. 4 of Act 73 of 1996] [Section 10 substituted by s. 7 of Act 55 of 1995] Cancellation or suspension of financial market licence 11. (1) The Registrar may cancel or suspend on such conditions as he may think fit a financial market licence if - he is satisfied that the financial exchange has failed to comply with any of the requirements referred to in section 8 (1) or (d) or 10 (1) (i), or with any other provision of this Act, or with any direction, request, condition or requirement of the Registrar in terms of any provision of this Act, and that such failure has resulted or will probably result in prejudice to the interests of the public; he is satisfied, after an inspection in terms of section 26, that the manner in which the business of the financial exchange is carried on is unsatisfactory or not calculated to serve the best interests of the public; Financial Markets Control Act, 1989: October

18 (c) (d) he is satisfied that the financial exchange has ceased to carry on the business of a financial market or has within a reasonable period after licensing failed to carry on such business; or it appears that the licence was obtained through fraud. (2) No cancellation or suspension of any licence under subsection (1) shall be of force unless the Registrar has previously by notice in writing given the financial exchange concerned an opportunity to show cause within a period specified in the notice why its licence should not be cancelled or suspended. Juristic personality of association 12. An association referred to in section 7 shall as from the date on which it is for the first time issued with a financial market licence be a juristic person capable of suing or being sued in the name in which it is licensed, and of acquiring, owning, burdening, hiring, letting and alienating property, and, subject to the provisions of this Act, of doing such things as may be necessary for or incidental to the exercise of its powers or the carrying out of its duties in terms of the rules. [Section 12 substituted by s. 5 of Act 73 of 1996] Funds of financial exchange 12A. (1) The executive committee may require members to contribute towards the funds of the financial exchange as a contribution towards carrying on the business of such financial exchange. (2) Notwithstanding the provisions of any law or the common law and without affecting its status as a non-proprietary financial exchange, the executive committee may - (c) (d) if such financial exchange has assets which are surplus to its requirements; after making appropriate and proper provision for any liabilities of such financial exchange; with the approval of its members in terms of the constitution of such financial exchange; and with the written consent of the Registrar, resolve to distribute such surplus assets to members or past members, whether upon a restructuring of such financial exchange or otherwise. 18 Financial Markets Control Act, 1989: October 1999

19 (3) A financial exchange which ceases to be licensed, shall be dissolved in terms of its rules. [Section 12A inserted by s. 8 of Act 55 of 1995] Delegation of functions of executive committee 13. The executive committee may - subject to such conditions as it may determine, delegate or assign any power or duty conferred upon or assigned to it by or under this Act, to a subcommittee or such person as it deems fit, but shall not thereby be divested or relieved of a power or duty so delegated or assigned; or delegate to a disciplinary tribunal to be established in terms of the rules the power to hear and adjudicate any complaint or charge against a member or an officer or employee of a member and, where such tribunal deems it appropriate, to impose any penalty. [Section 13 substituted by s. 9 of Act 55 of 1995] List of financial instruments 14. An executive committee shall keep a list, approved by the Registrar, of the financial instruments which may be dealt in on the financial exchange in question and shall, subject to section 15 (3), not permit dealings on the financial exchange in financial instruments not included in the list. [Section 14 substituted by s. 10 of Act 55 of 1995] Removal or suspension of listed financial instruments, and omission of prices of financial instruments from list of quotations of prices 15. (1) Subject to the other provisions of this section and notwithstanding any arrangement entered into under which financial instruments may be dealt in on a financial market - an executive committee may in accordance with the rules in question (i) remove from the list referred to in section 14 any listed financial instruments or suspend the inclusion in the list of those financial instruments; or omit from a list of quotations of prices of financial instruments issued for publication on the authority of the executive committee, the prices of any financial instruments previously quoted in this list; or Financial Markets Control Act, 1989: October

20 an executive officer of a financial exchange may, whenever he is of the opinion that it is desirable, also for the purposes of compliance with and enforcement of the rules and other requirements of the financial exchange in respect of the listing of financial instruments, in accordance with the rules in question, without prior notice to any person and without hearing any person, suspend for a period not exceeding 30 days the inclusion of financial instruments in the list referred to in section 14. [Paragraph substituted by s. 24 of Act 54 of 1991] (2) No removal, suspension or omission referred to in subsection (1) shall be effected by the executive committee on a ground in respect of which the person who issued the financial instruments has not had the opportunity of making representations to the executive committee in support of the continued inclusion of the financial instruments or prices in the relevant list. (3) In the case of - a removal or suspension of listed financial instruments by an executive committee in terms of subsection (1) ; or a suspension of listed financial instruments by an executive officer in terms of subsection (1), (4)..... the executive committee or executive officer, as the case may be, may, notwithstanding section 14, permit members to deal on the financial market in the financial instruments in question for the sole purpose of fulfilling their obligations entered into before the removal or suspension. [Subsection (4) substituted by s. 37 of Act 83 of 1992 and deleted by s. 11 of Act 55 of 1995] Application of new or amended conditions to existing listed financial instruments 16. Notwithstanding any conditions on which an executive committee may have consented to the inclusion of any financial instruments in the list referred to in section 14, any new conditions or any amendment of the existing conditions which may from time to time be imposed or effected by the executive committee, may, in accordance with the rules, be applied by the executive committee also to financial instruments in respect of which consent was granted prior to the imposition or amendment of such conditions, by prior notice in writing to the person who issued the financial instruments in question. 20 Financial Markets Control Act, 1989: October 1999

21 Rules of financial exchange 17. (1) Subject to the provisions of this Act and any exemption or addition that may be deemed appropriate by the Registrar in a particular case, the rules of a financial exchange shall provide to the satisfaction of the Registrar - (i) that its affairs are managed by a committee and shall make provision for the establishment, composition and functions of an executive committee of the financial exchange; (iii) that adequate provision is made for the implementation of section 12A; that no person is admitted as a member or allowed to continue as a member unless that person - (aa) is of good character and integrity, or in the case of a corporate body is managed and controlled by persons who are of good character and integrity; (bb) complies, or in the case of a corporate body is managed by or employs persons who comply, with the standards of training and experience and other qualifications required in terms of the rules; and (cc) employs the number of persons required in terms of the rules and who comply with the standards and other qualifications contemplated in item (bb); [Item (cc) substituted by s. 6 of Act 73 of 1996] [Subparagraph (iii) amended by s. 6 of Act 73 of 1996] [Paragraph substituted by s. 12 of Act 55 of 1995] for - (i) the manner in which and the terms and conditions under which members are to deal in financial instruments; and the adequate disclosure of information, relating to members' dealings with buyers and sellers of financial instruments to such buyers and sellers. so as to ensure efficiency, honesty and fair practice in relation to such dealings; Financial Markets Control Act, 1989: October

22 [Paragraph substituted by s. 12 of Act 55 of 1995] (ba) for the delivery and for settlement and for ancillary matters; [Paragraph (ba) inserted by s. 12(c) of Act 55 of 1995] (bb) for the circumstances under which and the conditions on which a member may grant credit to any person; [Paragraph (bb) inserted by s. 12(c) of Act 55 of 1995] (c) (d) for the exclusion as a member of a person who is not of good character and high business integrity; for the standards of financial requirements, training and experience, and other qualifications, for admission as a member; (da) (i) that no officer or employee of a member may advise on or conclude any transaction on behalf of such member in the course of that member's business in relation to the buying and selling of financial instruments, unless authorised to do so in terms of the rules; that no member may employ any person unless such person has entered into a written agreement with the member in terms of which the person agrees to comply with the provisions of the Act, the rules, the directives and code of conduct of the financial exchange concerned; [Paragraph (da) inserted by s. 12(d) of Act 55 of 1995] (db) that members are obliged to ensure that buyers and sellers of financial instruments are aware of such buyers' and sellers' material obligations in terms of the Act and the rules; [Paragraph (db) inserted by s. 12(d) of Act 55 of 1995] (dc) that no member may carry on the business referred to in section 5 unless such member is authorised to do so in terms of the rules. [Paragraph (dc) inserted by s.12 (d) of Act 55 of 1995 and substituted by s.2 of Act 13 of 1998] (e) for the exclusion of a body corporate as a member where a director of the body corporate, a person concerned in the management of the body corporate or a person who has control of the body corporate, would be excluded as a member by virtue of the provisions of this Act; [Paragraph (e) substituted by s. 65 of Act 104 of 1993] 22 Financial Markets Control Act, 1989: October 1999

23 (f) for recording the transactions effected on the financial market in question; (g) (i) that complaints against any member or officer or employee of a member are adequately investigated; (iii) (iv) (v) that adequate steps are taken for the investigation and discipline of any member or officer or employee of a member who contravenes or fails to comply with the provisions of this Act or the rules; that a member shall not be directed to terminate the employment of an officer or employee on any grounds in respect of which that officer or employee has not had an opportunity of making representations to the committee or disciplinary tribunal contemplated in section 13 which made the decision; that any officer or employee who has made representations as contemplated in subparagraph (iii) and paragraph (l), shall be entitled to be supplied with a copy of a record of the relevant proceedings of the meeting to which that member, officer or employee made such representations; and that the committee or the disciplinary tribunal contemplated in section 13, as the case may be, may, upon good cause shown and subject to such conditions as it may impose, modify or vary any sentence which it may previously have imposed upon any person provided that in modifying or varying such sentence, the committee or such tribunal shall under no circumstances increase such sentence; [Paragraph (g) substituted by s. 12(e) of Act 55 of 1995] (h) (i) (j) for co-operation with the Registrar by the furnishing of information in respect of dealings in listed financial instruments on the financial market in question; for the effective monitoring of compliance with, and enforcement of, the rules and any arrangements made by the financial exchange with a recognised clearing house for the provision of services and facilities in respect of the buying and selling of financial instruments on the financial market in question and for the clearing, netting or settlement of transactions; [Paragraph (i) substituted by s. 12(f) of Act 55 of 1995] for the equitable and expeditious settlement of disputes between members in respect of dealings in listed financial instruments; Financial Markets Control Act, 1989: October

24 (k) for appropriate mechanisms for the settlement of disputes between financial instrument traders and their clients in respect of dealings in listed financial instruments by the traders on behalf of the clients; (l) (i)..... [Subparagraph (i) substituted by s. 12(g) of Act 55 of 1995 and deleted by s.6(c) of Act 73 of 1996] (la) (i) (iii) (iv) that the membership of a member shall not be suspended or terminated on any ground in respect of which he has not had an opportunity of making representations to the executive committee, and that a person who has so made representations to the executive committee shall be entitled to be supplied with a copy of a record of the meeting at which his representations were considered; that adequate capital or guarantees be required from members for all their activities; that no person be admitted as or allowed to continue to be a member unless at the time of such person's admission and thereafter while such person remains a member he complies with the capital or guarantee requirements in terms of the rules; that the capital or guarantee requirements of members are reviewed regularly in order to ensure that the risk exposures of a member are adequately covered; or for different capital or guarantee requirements for different categories of members or for the different activities of a member's business; [Paragraph (la) inserted by s. 12(h) of Act 55 of 1995] (lb) that no member may effect a transaction in financial instruments with a person who such member reasonably believes requires approval in terms of section 5, without having taken reasonable measures to ascertain that such person has the necessary approval; [Paragraph (lb) inserted by s. 12(h) of Act 55 of 1995] (lc) that trading in any financial instrument may be halted for such period as the executive committee may deem necessary in the public interest or for the purposes of market stability; [Paragraph lc) inserted by s. 12(h) of Act 55 of 1995] (m) that a member shall provide sureties or security to the satisfaction of the executive committee, for the discharge of his liabilities arising out of dealings in financial instruments; [Paragraph (m) substituted by s. 12(i) of Act 55 of 1995] 24 Financial Markets Control Act, 1989: October 1999

25 (n) (o) that a fund shall be established and maintained whether by levies on transactions or otherwise for the discharge, up to a maximum amount as provided for in the rules, of outstanding liabilities of a member arising out of dealings in financial instruments; [Paragraph (n) substituted by s. 12(j) of Act 55 of 1995] for the manner in which and conditions under which financial instrument traders may advertise the services rendered by them in respect of dealings in listed financial instruments; (p) (i) for the manner in which fees shall be charged by financial instrument traders for their services, and the notification thereof to their clients; and for the furnishing by financial instrument traders to their clients of other information in respect of dealings in listed financial instruments by the traders on behalf of the clients; (q) in respect of a financial instrument trader - (i) (iii) (iv) for the separation of a client's funds, financial instruments and other corporeal or incorporeal things from the assets of the financial instrument trader; [Subparagraph (i) substituted by s. 25 of Act 54 of 1991] for a prohibition of the use of funds belonging to one client to finance the dealings of another client; for a prohibition of the use of client's funds in operating the financial instrument trader's own business; and who knowingly buys listed financial instruments from a client or sells listed financial instruments to such a client on his own account, that the financial instrument trader shall notify the client concerned in advance that those financial instruments were bought or sold by the trader on his own account; (r) that, where relevant, any person who issues listed financial instruments shall make available to persons dealing in the financial instruments all information at the person's disposal for determining their current value; (s) (i) for the manner in which and conditions under which financial instruments are to be listed on the financial market in question; Financial Markets Control Act, 1989: October

26 (iii) for the removal or suspension of listed financial instruments from or in the list referred to in section 14 and the omission of financial instruments from a list of quotations of prices referred to in section 15 (1) ; for the application of new or amended conditions imposed upon existing listed financial instruments by an executive committee; (t) (u) (v) for the audit by an auditor registered under the Public Accountants' and Auditors' Act, 1991 (Act No. 80 of 1991), as an accountant and auditor and engaged in public practice as such, of the accounting records to be kept and furnished to the Registrar by a financial exchange and a member thereof under and in accordance with the regulations; [Paragraph (t) substituted by s. 65 of Act 104 of 1993] for ensuring the performance of transactions effected on the financial market in question either by the financial exchange's own arrangements or by means of arrangements made by the exchange with a recognised clearing house; for the appointment and functions of an executive officer, and that the executive officer, or employees appointed by the executive committee (i) may be remunerated by the committee; and may not buy or sell financial instruments on behalf of other persons; (w)..... [Paragraph (w) deleted by s. 6(d) of Act 73 of 1996] (x) for further measures to ensure that the business of the financial market in question is carried on with due regard to the interests of the public. (xa) that adequate provision is made for the operation of the trust account referred to in section 17B and for the circumstances under which funds shall be paid into and withdrawn from such trust account; [Paragraph (xa) added by s. 12(k) of Act 55 of 1995] (xb) that provision is made for the manner in which a financial exchange shall be dissolved or restructured; and [Paragraph (xb) added by s. 12(k) of Act 55 of 1995] 26 Financial Markets Control Act, 1989: October 1999

27 (xc) generally, that the business of the member and the financial exchange is carried on with due regard to the public interest; [Paragraph (xc) added by s. 12(k) of Act 55 of 1995] (2) The rules of a financial exchange shall prescribe the conditions under which a financial instrument trader may establish a company the main object of which is to hold financial instruments on behalf of his clients. (3) The Registrar shall as soon as possible after granting a financial market licence, cause the rules of the financial exchange concerned to be published in the Gazette in English and any other official language at the expense of the financial exchange concerned. No addition to, amendment or rescission (other than a suspension) of the rules shall be valid, unless - (i) (iii) the prescribed fee has been paid; it has been approved by the Registrar in writing; and a date has been stipulated in the Registrar's approval for the coming into operation of such addition, amendment or rescission. (c) (d) (e) (f) The Registrar shall, after considering any objection as contemplated in paragraph (f), approve or disapprove an addition, amendment or rescission referred to in paragraph within a period of two months after expiry of the period referred to in paragraph (f). If the Registrar does not disapprove of an addition, amendment or rescission referred to in paragraph within a period of two months after expiry of the period referred to in paragraph (f), the Registrar shall be deemed to have approved thereof and such addition, amendment or rescission shall come into operation on the day immediately following upon the date of expiry of the aforesaid period of two months. Upon receipt of an application for approval in terms of paragraph, the Registrar shall cause to be published at the expense of the financial exchange in English and any other official language in the Gazette a notice setting forth the proposed addition, amendment or rescission. The said notice shall call upon all interested persons (other than members of the financial exchange concerned) who have any objection to the proposed addition, amendment or rescission to Financial Markets Control Act, 1989: October

28 lodge their objection with the Registrar within a period of 30 days from the date of publication of the notice in the Gazette. [Subsection (3) substituted by s. 18 of Act 7 of 1993 and by s. 12(l) of Act 55 of 1995] (4) Whenever it is in the public interest, the Registrar may, after consultation with the executive committee and with the consent of the Minister, by notice in the Gazette add to, amend or rescind the rules of the financial exchange concerned with effect from the date immediately following upon the date of publication of the notice or such later date as may be specified therein. [Subsection (4) substituted by s. 12(m) of Act 55 of 1995] (5) Subject to the prior approval of the Registrar, the executive committee may suspend any of the rules of the financial exchange concerned for a period not exceeding 30 days at a time after notice of such proposed suspension has been advertised in the Gazette. (c) The Registrar may for the period of such suspension issue an interim rule in terms of subsection (4) to regulate the matter in question until such time as an appropriate amendment to the rules can be made in terms of this section. Any contravention of or non-compliance with an interim rule shall mutatis mutandis have the same legal effect as a contravention of or non-compliance with a rule. [Subsection (5) substituted by s. 12(n) of Act 55 of 1995] (6) The provisions of any rule made under this section shall be binding on all members and on all officers or employees of members and on every person utilising the services of a member or who concludes a transaction with a member in the course of that member's business. [Subsection (6) added by s. 12(o) of Act 55 of 1995] (7) A rule may, in respect of each contravention thereof by a member or an officer or employee of a member, prescribe one or more of the following penalties: (i) (iii) (iv) A reprimand; censure; a fine not exceeding R , which amount shall be payable to the fund referred to in paragraph (n) of subsection (1); suspension; 28 Financial Markets Control Act, 1989: October 1999

29 (v) (vi) termination of membership; or a direction to a member to terminate the employment of an officer or employee. The rule contemplated in paragraph may also prescribe that full particulars regarding the imposition of a penalty shall be published and that any person convicted under that paragraph may be ordered to pay the costs incurred in the investigation or hearing in question. [Subsection (7) added by s. 12(o) of Act 55 of 1995] Status of assets given to or received by clearing house in trust 17A. For the purposes of a claim against a clearing house with regard to dealings in financial instruments there shall be excluded from the assets of the clearing house concerned - (c) money; financial instruments; and other corporeal or incorporeal things distinguishable from the assets of that clearing house, given by any person in trust to that clearing house, or received by that clearing house in trust. [Section 17A inserted by s. 26 of Act 54 of 1991 and substituted by s. 13 of Act 55 of 1995] Separation of funds of members and other persons 17B. (1) Every member who has one or more clients shall - open and maintain a separate trust account at a bank; or utilise a separate trust account at a bank, opened and maintained by a stock exchange as defined in the Stock Exchanges Control Act, 1985 (Act No. 1 of 1985), or by a financial exchange, to which the member belongs, and shall on the date of receipt of any payment from or on behalf of a client deposit in the account in question the cheque, draft or instrument by means of which such payment is made or alternatively deposit for same day value in such account funds equal to the amount of such payment: Provided that a deposit shall not be necessary if such payment - Financial Markets Control Act, 1989: October