Financial Markets Control Amendment Act

1. Section 1 of the Financial Markets Control Act, 1989 (Act No. 55 of 1989) 5 (hereinafter referred to as the principal Act), is hereby amended- ·;_, (a) by the 'substitution for-the definition of "futures contract" of the ··. :following definition: · ' · ·' · ' · · · ' ' · · · ' '· " 'futures ·contract' means a standardized contract the effect of which is that- . . (a) a person agrees to deliver to or receive from another person a . .. . . . . .· 10 4 No. 16722 GOVERNMENT GAZE1TE, 4 OCTOBER 1995 Act No. 55, 1995 FINANCIAL MARKETS CONTROL AMENDMENT ACT, 1995 certain quantity of corporeal or incorporeal thing [before or] on a future date at a pre-arranged price; or . (b) a person will pay to or receive from another person an amount of money [before or] on a future date according to whether the pre-arranged value or price of an asset, index as referred.~o 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;"; and 5 (b) by the insertion after the definition of "option contract", of the following 10 definition: " 'person' includes a partnership;". Substitution of section 5 of Act 55 of1989, as amendedby section 15 of Act 7 of1993 and section 64.of Act 104 of1993 . . 2. The f~llowing section is hereby substituted for section 5 of the principal Act: 15 "Restrictions on managing investments . ! : 5. 1 No· erson shall as a re ular feature of his busiu"ess · mana e investments on behalf of another person, and for such management receive any remuneration in whatever form, other than fees charged by a member for the buying and selling of financial instruments, unless 20 h~ (a) is . a member authorised in terms of the rules to manage investments on behalf of another person; is a person who has · . been approved by the Registrar or is a person who falls within a ' ·0 . , . . ' ' category of persons approved by the Registrar; 25 (b) has a written mandate to do so from the other person; and .(c) complies with such conditions as the Registrar may from time to time determine by notice in the Gazette . . (2) The provisions of section 17B shall apply mutatis mutandis to any person approved in terms of subsection (1). . 30 .. . (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 contem- (b) plated in subsection (1)if- (a) t~e applicant is of good character and integrity, or in the case of a corporate body, !s 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 40 standards of training and experience and the other qualifications required by the Registrar by notice in the Gazette; · the applicant complies with the capital adequacy requirements determined by the Registrar by notice in the Gazette; · ~ · · 35 (c) .. (d) the ·applicant has made adequate· arrangements for the sate 45 ' . custody of financial instruments; and the applicant undertakes to paythe prescribed annual levy. . . (e) (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) (a) For the purposes of subsection (1) it shall be deemed that the ·managing of investinentsis not a regular feature of the business of any person if such investments form part of the assets- 6 No. 16722 GOVERNMENT GAZETTE, 4 OCfOBER 1995 Act No. 55, 1995 FINANCIAL MARKETS CONTROL AMENDMENT ACf, 1995 (i) 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; · (ii) of any person under curatorship, and he is the curator · 5 concerned or is administering such estate on behalf of that curator; (iii) 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 10 liquidator or judicial manager; (iv) of a trust inter vivos, and he is the trustee concerned or a person administering such trust on behalf of that trustee; or (v) of a minor, and he is the guardian concerned or a person administering such investments on behalf of that guardian. (b) If in any instance contemplated in paragraph (a) 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- ( a) (b) 'investments' means financial instruments or any other instru ments declared to. be such by the Registrar by notice in the Gazette, or funds intended for the purchase of such financial or other instruments; 'management of investments'- (i) in the case of a member, means the buying and selling of financial instruments on behalf of another person in terms of an unlimited mandate to act on behalf of such other person; or . . 15 20 25 30 (ii) in the case of a person who is not a member, means the buying and selling of financial instruments on behalf of . another person in terms of any mandate, whether limited or unlimited, to act on behalf of the other person; and (c) 'unlimited mandate' means a mandate to act on behalf of another 35 person without it being necessary to obtain further authority or consent from such other person to effect any transaction in financial instruments under such mandate.". Substitution of section 6 of Act 55 of 1989

3. The following section is hereby substituted for section 6 of the principal Act: 40 "Restriction 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 undertak- 45 · ing and a financial exchange in the Republic when in fact no such connection exists [unless such person is a member of such an exchange or has obtained the prior written approval of the Registrar in the prescribed manner and on payment of the prescribed fee].''. Substitution ofsection 7 of Act 55 of1989, as amended by section 16 of Act 7 of1993 50

4. The following section is hereby substituted for section 7 of the principal Act: ., . 8 No. 16722 GOVERNMENT GAZETIE, 4 OCTOBER 1995 Act No. 55, 1995 FINANCIAL MARKETS CONTROL AMENDMENT ACT, 1995 "Application for issue or renewal of financial market licence 7. (1) Notwithstanding the provisions of section 30 of the Compa nies Act, 1973 (Act No. 61 of 1973), [two] ten or more persons [or more] may form an association to carry on the business of a financial market, and the association may apply to· the Registrar [for a 5 certificate authorizing a receiver of revenue] to issue to the association . a financial market licence or to renew any such licence[: Provided that for the purposes of this subsection a partnership shall be deemed to be one person]. (2) Every application relating to the issue or renewal of a financial 10 market licence shaii- {El. be made in the prescribed manner; and @ {£)_ [shall] be accompanied by the prescribed application fee; and in the case of an application in respect of the issue of any such licence, [shall] also be accompanied by [not fewer than] five 15 copies of the proposed rules.

3 The Re istrar shall advertise ever a lication 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. 20 (4) The advertisement shall state- the name of the applicant; ( a) (b) the place where the rules of the applicant will be available for (c) inspection by any member of the public; and the period within which any objections to the issue of the licence 25 may be lodged with the Registrar.". Substitution of section 8 of Act 55 of1989, as amended by section 17 of Act 7 of1993 ' 5. The following section is hereby substituted for section 8 of the principal Act: "Issue of rmancial market licence 8. (1) On expiry of the period contemplated in section 7(4)(c), the 30 Registrar may [grant],· 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 certificate authorizing a receiver of revenue to issue to the association] a financial market licence, if [the Registrar is · satisfied that]- (a) 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; (b) the proposed rules comply with the requirements of this Act; (c) the interests of the public would be served by the issue of the 40 licence; and 35 (d) 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) [Such certificate] 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, arid that business shall not .be carried on at any other place or in any other manner · without the prior approval of the Registrar. [(3) A certificate for the issue or renewal of a financial market licence shall be granted on payment of the prescribed fee.]". :. 45 50 10 No. 16722 GOVERNMENT GAZETIE, 4 OCfOBER 1995 Act No. 55, 1995 FINANCIAL MARKETS CONTROL AMENDMENT ACf, 1995 Substitution of section 9 of Act 55 of 1989

6. The following section is hereby substituted for section 9 of the principal Act: "Financial market licence 9. ( 1) [A financial market licence shall, subject to subsections (3) and (4), be issued by the receiver of revenue of the district in which the head 5 office of the financial exchange concerned is situated. (2) Any such] A financial market licence shall expire on 31 December of the year for which it is issued, but may[, subject to subsections (3) and (4),] be renewed from year to year. [(3) No such licence shall be issued or renewed except in pursuance 10 of a certificate by the Registrar authorizing its issue or renewal, as the case may be. (4)] ill [A] The prescribed licence fee [as prescribed] 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 such 15 .licence arises after 30 June in any year, one-half of that [amount] fee shall be payable for [its] such issue.". Substitution of section 10 of Act 55 of 1989

7. The following section is hereby substituted for section 10 of the principal Act: "Refusal of renewal of financial market licence 20 10. (1) The Registrar may refuse to [grant a certificate authorizing the renewal ot] renew a financial market licence if- (a) [he is satisfied that] during the year preceding the year for which . the licence is to be renewed- (i) the rules of the financial exchange concerned were not 25 · properly enforced; · (ii) the [financial exchange did not comply with any of the requirements referred to in] provisions of section 8(1 )(a), (c) or (d) no longer applied to the financial market concerned; (iii) the financial exchange concerned did not comply with any 30 other provision of this Act; or . . (iv) 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 [any provisions of this Act] section 35 19(2) and upheld by the board referred to in section 18; or (b) 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) [No refusal of a certificate under subsection (1) shall be of force] 40 The Registrar shall not refuse to renew a stock exchange licence on any grounds unless [the Registrar] he has [previously by notice in writing given the financial exchange] furnished the association concern.ed [an] with the reasons for his proposed refusal and the association has had the opportunity to show cause within a period 45 specified in [the]~ notice by the Registrar to the association why such [certificate] renewal should not be refused.". Insertion of section 12A in Act 55 of 1989 . 8. The following section is hereby inserted aftersection l2of th~ principal Act: . 12 No. 16722 GOVERNMENT GAZElTE, 4 OCTOBER 1995 Act No. 55, 1995 FINANCIAL MARKETS CONTROL AMENDMENT ACT, 1995 "Funds of financial exchange ·12A. 1 The executive committee rna re uire members to contribute towards the funds of the financial exchange as a contribu tion towards carrying on the business of such financial exchange. (2) Notwithstanding the provisions of any law or the common law 5 and without affecting its status as a non-proprietary financial exchange, the executive committee may...:.... (a) if such financial exchange has assets which are surplus to its requirements; (b) after making appropriate and proper provision for any liabilities 10 of such financial exchange; (c) with the approval of its members in terms of the constitution of such financial exchange; and · (d) with the written consent of the Registrar, resolve to distribute such surplus assets to members or past members, 15 whether upon a restructuring of such financial exchange or otherwise. (3) A financial exchange which ceases to be licensed, shall be dissolved in terms of its rules.". Substitution of section 13 of Act 55 of 1989

9. The following section is hereby substituted for section 13 of the principal Act: 20 "Delegation of functions of executive committee· 13. [An] The executive committee [of a f'mancial exchange] may- fEl. 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, [excluding the punishment of a member under the rules 25 of the financial exchange in question and the powers conferred by -· section 15,] 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_,_· .::o=::-r -:;----;--,-,---,-..,-,.;--,---,.,.-,-----::,..,-;---. (b) delegate to a disciplinary tribunal to be established in terms of the 30 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.". Substitution of section 14 of Act 55 of 1989 35 IO. The following section is hereby substituted for section 14 of the principal ~: • · "List of financial instruments

14. An executive committee [of a f'mancial exchange] shall keep a list, approved by the Registrar, of the financial instruments which may 40 be dealt in on the financial [market] exchange in question and shall, subject to section 15(3),not permit dealings on the [market] financial exchange in financial instruments not included in the list.". . . . - Amendment of section 15 of Act 55 of 1989, as amended by section 24 of Act 54 of 1991 and section 37 of Act 83 of 1992 · 45

11. Section 15 of the principal Act. is hereby amended by the deletion of subsection (4). • 14 No. 16722 GOVERNMENT GAZEITE, 4 OCfOBER 1995 Act No. 55, 1995 FINANCIAL MARKETS CONTROL AMENDMENT ACf, 1995 Amendment of section 17 of Act 55 of 1989, as amended by section 25 of Act 54 of 1991, section 18 of Act 7 of 1993 and section 65 of Act 104 of 1993

12. Section 17 of the principal Act is hereby amended-· (a) by the substitution for paragraph (a) of subsection (1) of the following paragraph: ·. :. (b) 5 10 "(a) (i) that its affairs are managed by a committee and shall make provision for the establishment, composition and func tions of an executive committee of the financial exchange; that ade uate rovision is made for the im lementation of . section 12A; (iii) that no person is admitted as a member or allowed to continue as a member unless he- · ( 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 brokers required in terms of 20 15 the rules;"; · by the substitution for paragraph (b) of subsection (1) of the following paragraph: · · "(b) for- · ' · · · ill the manner in which and the terms imd conditions under 25 which members are to deal in [listed] financial instruments; and (ii) the adequate disclosure of information, relating to members' dealings with buyers and sellers of financial instruments to such buyers and sellers, 30 so as to ensure efficiency, honesty and fair practice in relation to ·such [dealing] dealings;"; · (c) by the insertion after paragraph (b) of subsection (1) of the following paragraphs: · · " bA for the deliver and for settlement and for an cilia matters· 35 (bB) for the circumstances under which and the. conditions on which a member may grant credit to any person;"; (d) by the insertion after paragraph (d) of subsection (1) of the following paragraphs: "dA that no officer or em Io ee of a in ember rna advise on 40 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; '· (ii) that no member may employ any person unless such 45 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 con- cerned; : 50 that members are oblige'd 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; that no member may carry on the business referred to in section 5 of this Act unless such member is authorised to do 55 so in terms of the rules and complies with the provisions of that section."; (dB) (dC) 16 No. 16722 GOVERNMENT GAZETIE, 4 OCfOBER 1995 Act No. 55, 1995 FINANCIAL MARKETS CONTROL AMENDMENT ACf, 1995 (e) by the substitution for paragraph (g) of subsection (1) of the following paragraph: .. · employee of a member are adequately investigated; (ii) 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; (iii) that a member shall not be directed to terminate the 5 employment of an officer or employee on any grounds 10 in respect of which that officer or employee has not had an opportunity of making representations to the com mittee or disciplinary tribunal contemplated in section 13(b) which made the decision; (iv) that any officer or employee who has made represen- 15 tations as contemplated in subparagraph (iii) and paragraph (i)(ii), 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 20 (v) that the committee or the disciplinary tribunal contem plated in section 13(b), 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 25 in modifying or varying such sentence, the committee or such tribunal shall under no circumstances increase such sentence;"; (f) by the substitution for paragraph (i) of subsection (1) of the following paragraph: 30 "(i) for the effective monitoring of compliance with, and enforce ment of, the rules and any. arrangements made by the financial exchange with a recognized 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 35 for the clearing, netting or settlement of transactions."; (g) by the substitution for subparagraph (i) of paragraph (I) of subsection (1) of the following subparagraph: "(i) for [an appropriate mechanism] a procedure whereby a person who has been punished by an executive committee, or the 40 disciplinary tribunal contemplated in section 13(b), otherwise than by way of termination of his membership of the financial exchange, may appeal against the decision in question;"; (h) by the insertion after paragraph (I) of subsection (1) of the following paragraphs: 45 " lA i that ade uate ca ita! or uarantees be re uired from members for all their activities; (ii) 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 50 complies with the capital or guarantee requirements in terms of the rules; (iii) 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 (iv) for different capital or guarantee requirements for differ- ent categories of members or for the different activities of a member's business; 55 (ffi) that no member may effect a transaction in financial instru ments with a person who such member reasonably believes 60 requires approval in terms of section 5, without having taken 18 No. 16722 GOVERNMENT GAZETTE, 4 OCTOBER 1995 Act No. 55, 1995 FINANCIAL MARKETS CONTROL AMENDMENT ACT; 1995 reasonable measures to ascertain that such person has the necessary approval; · (/C) 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;"; (i) by the substitution for paragraph (m) of subsection (1) of the following 5 paragraph: . "(m) that a member shall provide sureties or security to the satisfaction of the executive committee, for the discharge [after he has been excused,] of his liabilities arising out of 10 dealings in [listed] financial instruments;"; (j) by the substitution for paragraph (n) of subsection (1) of the following paragraph: " n that a fund shall be established and maintained whether b (k) . levies on transactions or otherwise for the discharge, up to a 15 maximum amount as provided for in the rules, of outstand- ing liabilities of a member arising out of dealings in financial . instruments;"; by the addition after paragraph (x) of subsection (1) of the following paragraphs: " xA that ade uate revision is made for the o eration 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; 20 (xB) that provision is made for the manner in which a financial 25 exchange shall be dissolved or restructured; and (xC) generally, that the business of the member and the financial exchange is carried on with: due regard to the public . interest.''; . · . , '. . (l) by the substitution for subsection (3) of the following subsection: "(3) a The Re istrar shall as soon as ossible after rantin 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 atthe expense ·of the financial exchange con cerned ... · . (b) No addition to, amendment or rescission (other than a suspension) of the rules shall be valid, unless:-:- : (i) the prescribed fee has been paid; (ii) it has been approved by the Registrar in writing; and ·(iii) a date has been stipulated in the Registrar's approval for the coming into . operation of such additio!J, amendment or . . rescission. 30 35 .40 . , .; '', •' (c) The Registrar. shall, after considering any objection as contemplated in paragraph (f), approve or disapprove an addition, amendment or rescission referred to in· paragraph (b) within a 45 period of two months after expiry of the period referred to in paragraph (f). · . . . . . (d) If· the Registrar does not disapprove of an addition, . amendment or rescission· referred to in paragraph (b) within a period of two. months after expiry of the period referred to in 50 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. (e) Upon receipt of:an application for approval in terms of ·55 paragraph (b), 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. · , (f) The said notice shall call upon all interested persons (other 60 . than members of the fin~ncial exchange concerned) who have any · objection to the proposed addition, amendment or rescission to 20 No. 16722 GOVERNMENT GAZETTE, 4 OCTOBER 1995 Act No. SS, 1995 FINANCIAL MARKETS CONTROL AMENDMENT ACT, 1995 lodge their objection with the Registrar within a period of 30 days from the date of publication of the notice in the Gazette. (m) by. the substitution for subsection ( 4) of the following subsection: "(4) Whenever [the Registrar deems it desirable, he] it is in the public interest, the Registrar may, after consultation with the 5 executive committee [concerned] .and with the consent of the Minister, [in the prescribed manner] by notice in the Gazette [amend,] add to, amend or rescind the rules of the financial exchange concerned with effect from the date immediately follow- ing upon the date of publication of the notice or such later date as 10 may be specified therein."; (n) by the substitution for subsection (5) of the following subsection: "(5) (a) Subject to the prior approval of the Registrar, [an] the executive committee may suspend any of the rules of the financial exchange concerned for a period not exceeding 30 days at a time 15 after notice of such proposed suspension has been advertised in the Gazette. [and] (b) The Registrar may [during] for the period of such suspension [by resolution] issue [a directive] an interim rule in terms of subsection (4) to regulate the matter in question until such time as 20 an appropriate amendment to the rules can be made in terms of this section. · · [(b)] {£)_ Any contravention of or non-compliance with [a directive] an interim rule shall mutatis mutandis have the same legal effect as a contravention of or non-compliance with a rule."; and 25 (o) by the insertion after subsection (5) of the following subsections: " 6 The rovisions of an 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 30 · member's business. (7) (a) 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) A reprimand; .. · (ii) censure; (iii) a fine not exceeding R1 000 000, which amount shall be payable to the fund referred to in paragraph (n) of subsection (1); (iv) suspension; · · (v) (vi) a direction to a member to terminate the· employment of an termination of membership; or· . 35 40 officer or employee. (b) The rule contemplated in paragraph (a) may also prescribe that full particulars regarding the imposition of a penalty shall be • published and that any person convicted under that paragraph may AS be ordered to pay the costs incurred in the investigation or hearing in question.". • Substitution of section 17A of Act 55 of 1989, as inserted by section 26 of Act 54 of 1991 :!

13. The following section is hereby substituted for section 17 A of the principal 50 Act:. · ·. · "Status of assets given to or received by clearing house in trust . 17A. For the purposes of a· claim against a clearing house [or member of a financial exchange] with regard to dealings in financial · instruments there shall be excluded from the assets of the clearing 55 house [or member] concerned- (a) money; · 22 No. 16722 GOVERNMENT GAZETrE, 4 OCTOBER 1995 Act No. 55, 1995 FINANCIAL MARKETS CONTROL AMENDMENT ACT, 1995 · (b) financial instruments; and (c) other corporeal or incorporeal things distinguishable from the ,! assets of that clearing house [or member],, . given by.any person in trust to thatdearing house [or member], or received by that clearing house [or member on behalf of any person] - 5 in trust.". · · · ' " ' Insertion of section 17B in Act 55 of 1989 ..

14. The foilowing section is hereby inserted after section 17 A ofthe principal Act: · "Separation of funds of members and other persons - · . 17B. 1 Eve member shall o en and maintain a se arate trust 10 .. account at a bank and shall on the date of receipt ofany payment from . or. on behalf of a person deposit in such account either the cheque, . draft or instrument by means of .which such payment is made or alternativelyaeposit for same day value in such account funds equal to the amount of such payment: Provided that a deposit shall not be 15 necessary if such payment- · (a) is made to a member by a buyer of listed financial instruments : (i) against delivery of such financial instruments to the buyer; or (ii) against such financial instruments being marked or recorded , . , (b). is preceded by a payment made by such member to a seller of listed financial. instruments against delivery of such financial · instruments to such member; or is made by a person to pay a debt due to the member: Provided . that a debt arising from the purchase. of listed financial instru- 25 . ments which has not been marked or recorded as the property of .a buyer oflistedfimmcialinstr:uments shall not be regarded as a debt due for this purpose; or as the property of the buyer; or .. ·,. (c) 20 .. , . . . (d) . is made in t~rms of any other law or the rules which specifically provide for such payment. to be deposited, into some other 30 account. .... . . . (2) Funds held in the'trust account and any such funds which have not been deposited into the trust accmint'as envisaged in subsection . (1) but which are identifiable as b.elonging to a specific person, shall be deemed to be .'trust property', as defined in the Financial Institutions 35 (Investment of Funds) Act, 1984 (Act No. 39 of 1984), and the provisions of the said Act shall, unless otherwise provided for in this . . section, apply to such funds. . . . __ . .-', .··· , r (3) Funds deposited into the trust account of a member may only be 40 to the person or member entitled to such payment; or withdrawn by such member for_the purposes of making payment ( a) (b) in terms of any other law ort~e rules: .. · Provided thatif after such .withdrawal any deposited cheque, draft or : other instrument against which such withdrawal was made is not subsequently honoured, the member shall pay the shortfall arising 45 from such default into the trust account immediately . .. (4) All bank charges accruing in respect of a trust account shall.be for the account of the member concerned except. for· thost;. bank charges specifically related to a deposit or withdrawal of the funds of any person which shall, in st;ch case, be forsuch person's own account. 50 (5) Any interest accruing on the funds in a trust account shall accrue to and shall be payable to the person entitled to such funds after the ... ' ,;_. _,. , ~- r ; . ,..· • ' I ' 24 No. 16722 GOVERNMENT GAZETfE, 4 OCTOBER 1995 Act No. SS, 1995 FINANCIAL MARKETS CONTROL AMENDMENT· ACT, 1995 amount of any administration fee or charge to which the member may be entitled in terms of the rules or any other law, has been deducted. (6)(a) Notwithstanding any other law or the common law, an amount deposited or to be deposited in a trust account shall not under any circumstances form part of the assets of the member. (b) Any excess remaining in the account after payment of or provision for all claims of persons whose funds have, or should have been deposited in such trust account, shall not be trust property as referred to in subsection (2). 5 (7) The division of the Supreme Court of South Africa having 10 jurisdiction over a member may, on application by the executive committee, the Registrar or by any other person having a financial ·interest in or claim against a trust account referred to in subsection ( 1), on good cause shown, prohibit such member from operating such account in any way and. may appoint a curator to control and 15 administer such trust account with such rights, duties and powers in relation thereto as the court may deem fit.". · Amendment of section 18 of Act 55 of 1989; as amended by section 66 of Act 104 of ' 1993 . . ' '

15. Section 18 of the principal Act is hereby amended by the substitution for 20 • subsection (2) of the following subsection: · "(2) The board shall consist of a judge who has been discharged from active service· in terms of section 3 of the Judges' Remuneration and Conditions of Employment Act, 1989 (Act No. 88 of 1989), or an advocate of senior counsel status of one of the divisions of the Supreme 25 Court of the Republic of not less than 10 years standing, who shall be the [chairman] chairperson of the board, an accountant in public practice registered as an accountant and auditor, under the Public Accountants' and Auditors' Act, 1991 (Act No. 80 of 1991), of not less than 10 years' standing; and a person appointed by virtue of his knowledge of financial 30 markets in the Republic.". .· - . : . · Substitution of section 19 of Act 55 of 1989, as amended by section 27 of Act 54 of 1991 and section 38 of Act 83 of 1992 . 16; The following ~ection is hereby -substituted for section 19 of the principal Act:·· · · · ' · · - · 35 "Right of appeal against acts of executive committee- . . .• . . .•· .. · ·19.(1)(a) If [an] the executive committee- rejects an application for membership by any person; . (i) (ii) or the disciplinary tribunal contemplated in section 13(b) . •.· ·. · · terminates the membership of any person as a member [of the 40 ' · financial exchange concerned] or directs an member to ternii- . ·nate the employment of an officer or employee; (iii) ' or ' the . disciplinary tribunal contemplated 'in section 13(b) · imposes any penalty on any member, officer or employee of a · member; · · · 45 . · [(ii)](iv) ·. under section 15(l)(a) removes financial instruments from, or · suspends for a period which together with any suspension in -· ·· _· .. ~- · terms of se.ction 15(1) (b) exceeds 30 days, the inclusion oflisted · , · finanCial instruments ' in the list ·referred to in section 14, or omits the price of financial instruments from a list of quotations 50 · of prices ref~rred to 'in section 15(1)(a)(ii); or . - -· . . . rants an a lication in terms of section 14 for the inclusion of financial instruments in the list where the listing requirements of the financial exchange were not complied with in respect of those financial instruments or where the inclusion of the 55 financial instruments in such list is ·not in the public interest, . . . . . 26 No. 16722 GOVERNMENT GAZETIE, 4 OCTOBER 1995 Act No. 55, 1995 FINANCIAL' MARKETS CONTROL AMENDMENT ACT, 1995 [such] an aggrieved person, member, officer or employee of a member or the person who issued the financial instrument or the Registrar, as the case may be, shall be entitled to be furnished with the [reason] reasons for the decision [in question] and may appeal against such decision to the board referred to in section 18, but, in the case of · 5 a person referred to in subparagraph (iii) only with the leave of the executive committee or the disciplinary tribunal contemplated in section l3(b), and the board may confirm, vary or set aside the decision and, whether or not the appeal is withdrawn, make such award as to costs as the board may deem fit : 10 (b)(i) The board shall deal with an appeal on- : (aa) the circumstances which were considered in [coming to] making ·the decision appealed against in terms of paragraph (a); : ; (bb) the grounds of the appeal; ' · (cc) the documentary or oral evidence submitted or given by any 15 person [(with or without legal representation)] at the request of or · . with the permission of the board; and · ' · (dd) any other information at the disposal of the board. (ii) The appellant shall, except if the appellant is the Registrar, within the period prescribed, lodge with the secretary of the board 20 such sum of money as · the . chairman. of the board may have determined, as security for the payment of any costs that may be awarded by the board against the appellant.

2 The Re istrar rna after he· has re uested ·the . executive committee, in writing, either to review a decision which it has made or 25 to make a decision which it has omitted to make or to take any action . ·or to· refrain from taking any particular action. within a reasonable ·· period, appeal to the board referred to in section 18 against any decision or action of the executive commit!ee or any lack of decision or action by the executive committee and the provisions of subsection 30 (1)(b)(ii) of this section shall apply mutatis mutandis. · (3) A decision of the board on an appeal shall for all purposes be deemed to be a decision of the executive committee.". Insertion of section 21A in Act 55 of 1989

17. The following section is hereby inserted after section 21 of the principal Act: 35 "Undesirable advertising or canvassing in relation to financial instruments .; ·_: . 21A. 1 No erson other than a member or an officer or em lo ee of a member who is so permitted in terms of the rules shall in any matter or by any means, eitherfor himself or for any other person, 40 directly or indirectly advertise or canvass for any business relating to the buying and selling of financial ins!ruments. · : , : (2) No person other than a person approved by the Registrar in . ... ··· terms of section 5(1) shall in any matter or by any means either for himself or for any other person,. directly·or indirectly advertise or 45 canvass for business referred to in section 5(1). (3) Notwithstanding anything to the contrary contained in any law, ... the Registrar may, if an advertisement, brochure or other document .. relating . to financial instruments is misleading or for any reason objectionable, direct such · person not to publish or to cease the 50 publication of the advertisement, brochure or document concerned or to effect such amendments as he may deem fit.". I :. ' • ' 28 No. 16722 GOVERNMENT GAZETfE, 4 OCTOBER 1995 Act No. SS, 1995 FINANCIAL MARKETS CONTROL AMENDMENT ACT, 1995 Amendment of section 26 of Act 55 of 1989 . -18. Section 26 of the principal act is hereby amended- . (a) by the substitution for subsection (1) of the following subsection: " 1 The rovisions of the Ins ection of Financial Institutions Act, 1984 (Act No. 38 of 1984), shall apply mutatis mutandis to- (i) a financial exchange or the clearing house of such an · exchange; · (a) (ii) a member or an officer or employee of a member; (iii) a person approved in terms of section 5 or an officer or employee of such a person; or (b) (i) any person not licensed to carry on the business of a financial exchange;:. · . 5 10 (ii) a person who is not a member; or (iii) a person not approved in terms of section 5 of this Act, but who is carrying on the business of a financial exchange, a 15 member or person requiring approval in terms of section 5."; .. " . (b) · by the substitution for paragraph (b) of subsection (2) of the following paragraph: . ~ "(b) section 8(1) thereof shall be construed as ifthe following further proviso were added at the end thereof: '(e) the· registrar shall [may in his or her discretion] communicate to the executive committee [of] or to the official responsible for surveillance of the business carried on by a financial exchange any relevant infor mation pertaining to the affairs of a member or past 25 20 ·· .member of that financial exchange obtained by him in the course of an inspection under this Act, or from a report by an inspector on such an inspection, [of the affairs of a . person who. is or was a member of that financial exchange].' "; · 30 (c) by the insertion after paragraph (b) of subsection (2) of the-following ·' · paragraph: "c such financial exchan e member or other erson referred to in subsection (1)(a) and (b) shall be deemed to be a financial institution, and the Registrar as defined 35 in section 1 shall be the registrar in respect of such. financial exchange, member or person."; and· (d) by the substitution for subsection (3) of the following subsection: "(3) [An] The executive committee or the disciplinary ·tribunal contemplated in section 13(b) may in any disciplinary proceedings in 40 terms of the rules [concerned against any member of the financial exchange in question,] take into consideration any relevant informa- . ·. tion furnished to the executive committee by virtue of the provisions of subsection (2)(b).". · Amendment of section 27 of Act 55 of 1989 · 45

19. Section 27 of the principal Act is hereby amended- ( a) .. by the substitutionfor subsection(!) of the following subsection: · "(1) The Registrar or a person nominated by him may attend any :meeting- £!&· of an executive committee or a subcommittee of such a committee, 50 and, except for voting, take part in all the proceedings .at such meeting; or (b) of any d:~is.;:.ct..-. p'"'"'li=-n-a_ry_t_n-:-:-. b-u-n-al::-c-o-n-te_m_p __ l=-a-te--d:-:i,...n-s-ec-t..,..io-n-1""'3:-:(-:-b J~an-d-:--m-a---.y I request an opportunity to be heard by such tribunal.''; and (b) by the addition of the following subsection: 55 "(3) The provisions of subsection (2) shall be applicable mutatis mutandis to the chairperson of the disciplinary tribunal contem plated in section 13(b).". 30 No.16722 GOVERNMENT GAZETIE, 4 OCTOBER 1995 Act No. 55, 1995 FINANCIAL MARKETS CONTROL AMENDMENT ACT; 1995 Substitution of section 28 of Act 55 of 1989

20. The following section is hereby substituted for section 28.of the prinCipal Act: ... .-. "Furnishing of information to Registrar · ·

28. The Registrar may by notice in writing require_:_ 5 (a) a financial exchange or a member thereof; (b)_ a recognized clearing house; (c)· [a] any person [who by virtue] approved in terms of section 5(1) [is entitled, as a regular feature of his business, to administer or hold in safe custody on behalf of any other person any investments 10 in listed fmancial instruments or any investments ·of which listed financial instruments form part]; or · (d) . any other person [in respect of whom the Registrar has reason to believe] who is carrying on business in contravention of section · . , · . . 4(1) or (2) or 5(1), · · to transmit orfurnish to the Registrar,withina period stated in the notice any document or information. at the disposal of that financial exchange, member, clearinghouse or person relating to its or his affairs, and which the Registrar may reasonably. require; and that financial,exchange, member, dearing house or person shall comply 20 .with the relevant requirement of the Registrar to his satisfaction · within the relevant period· or' within· such further period as the Registrar may allow [on application before the lapse of the first- mentioned period]."; . · . ' 15 ' ' · ,, Insertion of section 28A in Act 55 of 1989 0 0 25

21. The following section is hereby inserted after section 28 of the principal Act: ' I • • ' ' , . .J • • ' , • "Disclosure of information by financial exchange

28A. Notwithstandin the.· rovisi~ns of an other law a financial exchange may enter into an agreement with any other. exchange, -whether domestic or foreign, to disclose information relating to a 30 particular transaction, a member, officer or employee of a member or . a buyer and seller of financial instruments if such information will be of importance to the relevant domestic or foreign exchange and that the disclosure will not be against the public interest.". Amendment o( section 29 of Act 55. of 1989 · .. · 35 ·22. Section 29 of the principal Act is herebyamended-: , , (a) by the substitution for paragraph (b) of subsection (1) of the following · paragraph:. .. . .. . _· . . · _ ,. "(b) direct a financial exchange or a member thereof, or a recognized clearing house, or a person_ [~ho .by- virtue] 40 approved in terms of section 5 [is entitled, as a regular feature of his business, to administer. or hold in safe custody on behalf of .· any other person any investments in listed fmancial instruments or any investments of which listed fmancial instruments form part], to take any other steps, or to refrain from performing or , 45 continuing ,any act, in order to terminate_ or obviate any . undesirable practice or state of affairs ~rought to light by the inspection!';·_ . --. . (b) by the substitution for.subsection (2) of the following subsection: "(2) A financial exchange or a member thereof, or a recognized 50 clearing house, or a person [who by virtue] approved in terms of section 5 [is entitled, as a regular feature of his business, to administer or, hold in safe custody on behalf of any other person any investments in listed financial instruments or any investments of which listed financial instruments form part], shall upon receipt of 55 32 No. 16722 GOVERNMENT GAZETTE, 4 OCTOBER 1995 Act No. 55, 1995 FINANCIAL MARKETS CONTROL AMENDMENT ACT, 1995 a request in writing by the Registrar to that effect immediately discontinue the publication or the issue of any advertisement, brochure, prospectus or similar document relating to financial instruments specified in the request which is [in the opinion of the Registrar] not a correct statement of fact or [not in the public 5 interest] is objectionable, or effect such adjustments thereto as the Registrar may deem fit.". Substitution of section 30 of Act 55 of 1989 2~. The following section is hereby substituted for section 30 of the principal i\ct: "Evidence 10

30. A record purporting to ·have been made or kept in the ordinary course of the carrying on of the business of a financial exchange or the business of a member [thereol], or of a recognized clearing house, or the business of a person [who by virtue] approved in terms of section 15 5 [is entitled as a regular feature of his business, to administer or hold in safe custody on behalf of any other person investments in listed financial instruments or any . investments of . which listed financial instruments form part,] or a copy, of or an extract from such record certified to be correct by [an officer. in the service of the State] the 20 public prosecutor, shall on its mere production by the [State] public prosecutor in any criminal proceedings under this Act, any other law or the common law against the person who carries or carried on the business in question or any other person, be admissible in evidence and be prima facie proof of the facts contained in such record, copy or 25 extract.". · Substitution of section 31 of Act 55 of 1989

24. The following section is hereby substituted for section 31 of the principal i\ct:' ··· · · · · "Power of court to declare member or officer or employee of member 30. or' person approved in terms of section 5 disqualified · · 31. (1) If a court- ( a) convicts a member [of a financial exchange] or officer or employee of a member or a person approved in terms of section ~ of an 9ffence under this i\ct or of an offence of which any 35 dishonest act or omission is an element; or · · (b)· finds, in proceedings to which a member [of a financial exchange] or officer or employee of a member or a person approved in terms of section 5 or such person's officer or employee is a party or in which [his] such member's, ·officer's, employee's or person's 40 conduct is called in question, that [he] such member, officer, employee or person has bet:n guilty of dishonest conduct, the court may (in addition, in a case referred to in paragraph (a), to any sentenceit may impose) declare [the] that member, officer or employee of a member or person or such person's officer or employee 45 [concerned] to be disqualified, for an indefinite period or for a period specified by the court, from carrying on the business of a member [of .a. financial. exchange] or from being an officer or employee of a member or from carrying on the business referred to in section 5, as · the case may be. 50 . (2) The court may, on [good] sufficient cause shown, vary [or abrogate] a declaration made under subsection (1). (3) The registrar or clerk of any· court which has made any declaration under subsection (1) or varied any declaration under . subsection (2), shall forthwith notifythe Registrar and the executive 55 34 No. 16722 GOVERNMENT GAZETIE, 4 OCfOBER 1995 Act No. SS, 1995 FINANCIAL MARKETS CONTROL AMENDMENT ACf, 1995 committee [concerned thereof] of the financial exchange at which the member carries on business, or of which the officer or the employee of a member is employed, of that declaration or variation. (4) No declaration. made under subsection (1) [in respect of a member] shall affect any right on the part of the executive committee concerned to take disciplinary action against the member, or the - - officer or employee of a member, concerned.". ·s Amendment of section 36 of Act 55 of 1989, as amended by section 28 of Act 54 of 1991

25. Section 36 of the principal Act is hereby amended by the substitution for 10 subsection (1) of the following subsection: "(1) Any person who- · (a) contravenes a provision of section 4(1), 17B, 20, 21 or 22; (b) contravenes a provision of section 6 or 24; (c) contrav"'nes a provision of section 4(2) or 5(1); (d) . refuses or fails to comply with any direction, request, require- ment or condition of the Registrar in terms of any provision of this Act; (e) carries on the business ofa member [of a financial exchange] at 15 any time when in terms of a declaration under section 31 he is 20 disqualified from doing so, . shall be guilty of an offence and on conviction liable- . (i) in the case of an offence referred to in paragraph (a) or (e), to a fine [not exceeding R50 000] or to imprisonment for a period not exceeding five years, or to both that fine and that 25 imprisonment; (ii) in the case ofan offence referred to in paragraph (b) or (d), to a fine [not exceeding R20 000] or to imprisonment for a period not exceeding two years, or to both that fine and that imprisonment; and (iii) in the case of an offence referred to in paragraph (c), to a fine [not exceeding R10 000] or to imprisonment for a period not . exceeding one year, or to both that fine and that imprison 30 ment.". Amendment of section 37 of Act 55 of 1989, as amended by section 19 of Act 7 of 35 1993

26. Section 37 of the principal Act is hereby amended- ( a) by the deletion of paragraph (/)(iii) of subsection (1); and (b) by the insertion after paragraph (gA) of subsection (1) of the following paragraph: . ''(gB) the minimum capital which a member shall hold, what that capital · may be comprised of and the basis of valuation of such capital;". Insertion of section 37 A in Act 55 of 1989. . .

27. The .principal Act is her~ by amended by the ins~rtion after section 37 of the following section: · · · · 40 45 "Limitation of liability 37A. 1 No executive officer. em lo ee or re resentative of a .financial exchange or of a clearing house, or any member of an executive committee or subcommittee of the executive committee, or of a clearing house, shall be liable for any loss sustained by or damage 50 caused to any person as a result, of anything done or omitted by the officer, employee, representative or member in a bona fide exercise of any power or carrying out of any duty or performance of any function under or in terms of this Act or the rules. 36 No.16722 GOVERNMENT GAZETfE, 4 OCfOBER 1995 Act No. 55, 1995 FINANCIAL MARKETS CONTROL AMENDMENT ACf, 1995 (2) For the purpose of this section, 'bona fide' shall include the I negligent exercise of a power or the carrying out of a duty, but shall exclude gross negligence, wilful misconduct or dishonesty.". Repeal of section 39 of Act 55 of 1989 · 28. Section 39 of the principal Act is hereby repealed. 5 Transitional provisions -

29. Any rule, requirement, directive or decision made, put or issued or other thing done underor in terms of any provision ofthe principal Act as it was in force immediately prior to the commencement of this Act, shall be deemed to have been made, put, issued or done under or in terms of the corresponding provision ofthe 10 principal Act. Extension of application of Act 55 of 1989 30. (1) The principal Act shall apply throughout the Republic. (2) Any law referred to in the principal Act which is not yet applicable in a territory to which the principal Act is extended, shall for the purposes of the 15 principal Act be deemed to be applicablein such territory. Short title and commencement

31. This Act shall be called the Financial Markets Control Amendment Act, 1995,. and shall come into operation on a date fixed by the President by proclamation in the Gazette. 20