Regulations and Ethics of the South African Financial Markets 2

In general, regulation should comply with which ONE of the following requirements to fulfil its objectives? 

What is the main objective for the issuing of Codes of Conducts in terms of the Financial Advisor and Intermediary Services Act? 

Which of the following statements with regard to regulation in South Africa is correct?

i)The Financial Intelligence Centre Act regulates money laundering activities in South Africa.

ii)The Financial Services Board is responsible for the administration of the various ombudsmen.

iii)Banks are regulated by the Financial Services Board which is accountable to the Department of Finance.

iv)Regulation is split horizontally since some functions are delegated to associations or self-regulatory organisations.

Which of the following institutions are regarded as self-regulatory organisations (SRO’s)?

i)The Johannesburg Stock Exchange

ii)The Financial Services Board

iii)STRATE Ltd

iv)The Financial Planning Institute

Which ONE of the following statements with regard to the different departments of the Financial Services Board are correct?

Collective Investment Schemes (CIS’s) are regulated in which of the following manners?

i)The prior approval of the Registrar is required for each new CIS portfolio.

ii)Investors must receive annual reports containing prescribed information.

iii)Managers of CISs must comply with the fit and proper requirements under the FAIS Act.

iv)Managers of CISs must comply with annual reporting requirement

Which of the following are measures instituted to protects members of retirement funds?

i)Members are legally entitled to be represented on the board of trustees of a retirement fund.

ii)Compulsory annual benefit statements setting out a members’ entitlement must be sent to each member.

iii)Members have access to the pension fund adjudicator if they have not been treated fairly.

iv)Members are by law allowed to share in pension fund surpluses that may have accumulated.

Which of the following ombudsman schemes are voluntary?

i)Ombudsman for long-term insurance

ii)Banking Ombudsman

iii)Pensions Funds Adjudicator

iv)FAIS Ombudsman

A credit rating agency must make which of the following disclosures to subscribers and the public? 

A person that holds in custody and administers securities or an interest in securities and has been accepted as a member of a central securities depository is known as a/an– 

Which of the following are deemed securities in terms of the Financial Markets Act?

i)Derivative instruments

ii)Money market instruments

iii)Instruments based on an index

iv)Debentures

Which of the following are considered securities services in terms of the Financial Markets Act

i)Custody and administration of securities.

ii)Underwriting the performance of a securities transaction.

iii)Management of securities by an authorised user.

iv)Clearing of transactions in listed securities.

Which of the following statements with regard to the licensing and operations of an exchange are correct?

i)Only an association of persons can apply for an exchange license.

ii)The license of an exchange expires on 31 December of every year.

iii)An exchange may require users to contribute towards the exchange.

iv)An exchange must provide for the settlement and clearing of transactions.

Which of the following statements with regard to the listing and suspension of securities are correct?

i)The exchange may list its own securities subject to the approval of the Registrar.

ii)A listed security may be immediately suspended for a period not exceeding 30 days.

iii)An exchange refusing the listing of a security must inform other exchanges of such refusal.

iv)New listing requirements will take effect not early than 1 month after notice was issued.

Which of the following aspects must be included in the rules of an exchange?

i)A requirement that prudent requirements may not differ amongst different categories of authorised users.

ii)The conditions on which an authorised user may undertake the management of investments.

iii)The approval of nominees holding securities in a securities or central securities depository.

iv)Requirement that no authorised user may accept business from unapproved financial services providers.

Which ONE of the following statements with regard to the segregation of fund and assets of an authorised user is correct? 

Which ONE of the following statements with regard to borrowing, re-pledging and alienation is correct?

Complete the sentence. Authorised users must reconcile securities under their control with the accounting record relating to securities held by the authorised user ____________ and correcting entries must be done __________.

In which of the following circumstances does an authorised user not have to make a deposit into the trust account?

i)A payment is preceded by the instruction of the client to invest in an identified security

ii)A payment is made by the buyer against such securities being marked or recorded as the property of the buyer.

iii)A payment is preceded by a payment made by the authorised user to a seller against delivery of the securities to the authorised user.

iv)A payment is made by the buyer against delivery of the securities.

Which ONE of the following statement with regard to accounting records and auditing as prescribed by the Code of Conduct issued in terms of the Financial Markets Act is correct? 

In which of the following events are it permitted to transact in securities without the intermediation of an authorised user?

i)A banking institute acting on behalf of a client.

ii)A company buy shares to take over another company.

iii)A friendly society transacting in securities on a principal basis.

iv)A financial services provider trading in securities for own account.

Which of the following actions would be considered insider trading in terms of the Financial Markets Act?

i)Leigh overhears a conversation in a restaurant that the shares of ABC is expected to perform poorly, and informs her broker to sell.

ii)Bethany instructs her broker to sell her shares of ABC before she learns from the broker that ABC is to merge with another company.

iii)Michael learns from the accountant of ABC that the company performed poorly before the release of the financial statements and instruct his broker to sell his ABC shares.

iv)A broker discourage his clients to sell their shares in ABC as he overheard the director of the company say that the company is about to merge.

Which of the following constitute sufficient proof of ownership (title )of securities? 

Which of the following statements with regard to the duties and functions of a central securities depository (CSD) are correct?

i)A CSD may hold all securities of the same kind deposited by a participant collectively in a separate central securities repository.

ii)A CSD must notify a participant in writing of all entries made in the participants’ central securities account.

iii)A CSD may have access to the records of uncertificated securities administered and maintained by its participants.

iv)The aggregate of the central securities accounts must be reconciled and balanced in respect of each kind of certificated security at least every six months.

Which ONE of the following statements with regard to participants, nominees and issuers of uncertificated securities is correct? 

When been ordered to inspect an authorised user, the inspector may- 

Which of the following actions may the Registrar take after an inspection as ordered in terms of the Financial Markets Act?

i)Apply for the appointment of a curator in terms of the Financial Institutions (Protection of Funds) Act.

ii)Hand the matter over to the National Director of Public Prosecutions in the case of an offence having been committed.

iii)Direct the regulated person to prohibit or restrict specified activities of a director, executive, officer or employee.

iv)Refer the matter to the enforcement Committee of the Financial Service Board.

Which ONE of the following statements with regard to the enforcement committee is correct? 

Which ONE of the following actions is considered as an advisory service?

Which ONE of the following statements is correct with regard to the role players in the financial services industry? 

Which ONE of the following persons will be deemed NOT to comply with the honesty and integrity requirements under the FAIS Act? 

Which of the following financial soundness requirements are applicable to Category IV Financial Services Providers (FSP)

i)Current assets must exceed currents liabilities.

ii)Current assets must exceed currents liabilities by at least 3 million.

iii)Liquid assets must be equal to 8 weeks of annual expenditure.

iv)Liquid assets must be equal to 13 weeks of annual expenditure.

Who takes responsibility for the actions and omissions of the representative? 

Which of the following of the statements with regard to application procedure of an FSP are correct?

i)An FSP licensing application must be accompanied by a key individual application.

ii)Representatives of a financial services provider applies for recognition via an authorised body.

iii)A sole proprietor without any representatives is not required to appoint a compliance officer.

iv)An auditor of an FSP may be appointed as compliance officer without having to comply with the compliance officer competency requirements.

The General Code of Conduct prescribes that financial services providers must keep records relating to a transaction for minimum– 

Which of the following actions are allowable under the amended Code of Conduct?

i)Product provider A pays representatives of FSP B a bonus of R1 200 per annum if they reach their sales target in relation to their products.

ii)Product provider A pays representatives contracted to them a bonus of R800 per annum if they reach their sales & compliance targets.

iii)Client A agrees in writing to pay representative C a fee for advise rendered during the course of the business relationship.

iv)Product provider A makes customer services training available to the value of R200 if representatives of FSP B if they reach their sales target in relation to their products.

Which of the following statements with regard to the conflict of interest management policy are correct?

i)The policy must contain the names of any third parties in which the FSP holds an ownership interest.

ii)The policy must explain how qualifying financial interest complies with the amended Code of Conduct.

iii)The FSP must publish its conflict of interest management policy in the Government Gazette.

iv)The policy must be adopted by the Compliance Officer of the Financial Services Provider who must ensure compliance thereof.

Which of the following additional disclosures should be made with regard to a financial product that is marketed as an investment?

i)The nature and terms of any rebate agreements; disclosed in percentage terms.

ii)The actual monetary amount of platform fees payable to an administrative FSP concerned.

iii)Information pertaining to the past performance of the product over certain periods.

iv)The amount of the increased fees for the first ten years and thereafter on a five-year basis.

Which of the following statements with regard to the requirements pertaining to the giving of advice as stipulated in the General Code of conduct are correct?

i)If advice is given to replace an existing long-term insurance policy, the issuer of the existing policy must be notified of such advice.

ii)A representatives is not permitted to provide advice with respect to a financial product if a client opts not to provide all required information.

iii)A representative must only need to maintain the record of advice if a transaction is concluded as a result of advice furnished.

iv)The record of advice must include the income and expense statement of the client as well as a list of assets and liabilities.

Client A pays R10 000 in cash into the trust account of FSP B. Which ONE of the following statements is correct with regard to the liability and rights in respect of this transaction is correct. 

Which of the following statements with regard to requirements pertaining to advertising as set out in the General Code of conduct are correct?

i)Where an FSP advertises by telephone a copy of records must be provided on request within 14 days of the request.

ii)Radio advertisements need only provide the business name of the financial services provider.

iii)If a transaction is concluded as result of telephone advertising, the full details about the FSP and supplier must be provided in writing within 30 days.

iv)A financial services provider is not allowed to advertise instruments of which the return is not guaranteed.

Which ONE of the following statements with regard to the manner in which complaints must be handled by the financial services provider (FSP) is correct? 

Which ONE of the following financial services providers (FSPs) adheres to the requirements for the display of the license as prescribed by the Financial Advisory and Intermediary Services (FAIS) Act? 

Which of the following statements with regard to client mandates as stipulated in the Code of Conduct for Discretionary financial services providers (FSP) are correct?

i)A discretionary FSP must obtain a signed mandate from each client before rendering any advisory service to that client

ii)The client mandate must initially be approved by the Registrar of Financial Services who may grant approval subject to conditions.

iii)When the mandate is terminated, the FSP must return all cash, financial products and documents of title to the clients within 7 days.

iv)The mandate must state the investment objectives of the client and whether there are any investment or jurisdiction restriction applicable.

A discretionary financial services provider must on request by a client, furnish detailed information regarding which of the following matters?

i)Financial products received or delivered to a nominee company during the period.

ii)Original cost of financial products held, as well as the current market value thereof.

iii)Non-cash transactions during the period including, capitalisation issues and scrip dividends.

iv)Income earned and expenditure incurred during the period as well as profits or losses realised.

Which of the following statements is correct with regard to a short position as described in the Code of Conduct for Hedge Fund FSPs?

i)A position where an asset is sold by a seller for delivery at a future date.

ii)A position where an asset is bought by a buyer for delivery at a future date.

iii)A derivatives position where a price increase in the underlying will have a positive impact on the price of the derivatives instrument.

iv)A derivatives position where a price decrease in the underlying will have a positive impact on the price of the derivatives instrument.

Which of the following statements with regard to the requirements under the Code of Conduct for FSPs conducting short-term deposit taking business are correct?

i)Information must be made available in plain language and where appropriate in other official languages.

ii)A financial services provider must bring other deposit-taking services to the client’s attention on a regular basis.

iii)The financial services providers must assist the client in selecting a deposit that meets the client’s needs.

iv)If telephone conversations are recorded, the client must be informed of the recording and reasons provided.

A forex financial services provider is not permitted which ONE of the following? 

Which ONE of the following is the objective of the Financial Institutions Act? 

The philosophy underlying King III is concerned with which of the following principles?

i)Effective leadership

ii)Transparency

iii)Systemic stability

iv)Sustainability