Based on the JSE Fidelity fund rules attached
1. If you are a stock broker working with client funds and securities. In terms of the fidelity fund rules how you would need to take care of these assets. Include discussions on separate identity and ownership and management of fidelity fund assets.
2.If your client Freda would like to lodge a claim against you as she feels you did not properly manage her funds. What would be the procedure she needs to follow as well as how the claims will be settled.
Microsoft Word - JSE Fidelity Fund Rules 5 Jun 2006.doc JSE FIDELITY FUND RULES 5 June 2006 Page 1 of 5 JSE Fidelity Fund Rules Scope of Rules 1. Name 2. Separate identity and ownership 3. Administration 4. Definitions 5. Management of the Fidelity Fund 6. Fidelity Fund assets 7. Contributions to the Fidelity Fund 8. Claims against the Fidelity Fund 9. Settlement of claims 10. Cession of claim against member 11. Reserved 12. General 13. Winding Up As amended by: Effective Date Notice Number Amendment 17 January 2005 A528 of 19 January 2005 F618 of 19 January 2005 Y002 of 18 January 2005 New Fidelity Fund Rules issued 1 July 2005 A571 of 13 May 2005 F679 of 13 May 2005 Y006 of 13 May 2005 Demutualisation rule changes 1 August 2005 A603 of 2 August 2005 F742 of 2 August 2005 Y020 of 1 August 2005 Incorporating requirements of the Securities Services Act, 2004 5 June 2006 A691 of 22 June 2006 F941 of 22 June 2006 Y057 of 22 June 2006 Provision for the use of derivative instruments for hedging purposes. JSE FIDELITY FUND RULES 5 June 2006 Page 2 of 5 1. Name The name of the fund shall be the JSE Fidelity Fund hereinafter referred to as “the Fidelity Fund”. 2. Separate identity and ownership 2.1 The Fidelity Fund shall consist of assets acquired and liabilities incurred by the trustees of the JSE Derivatives Fidelity Fund Trust, with Master's reference number IT 9149/2003 ("the Trust"), which vest in the trustees of the Trust. 2.2 The trustees will acquire, hold and administer the assets of the Fidelity Fund subject to, and in accordance with these Rules. 3. Administration 3.1 The trustees of the Fidelity Fund shall be the controlling body of the JSE who have those powers in respect of the administration of the Fidelity Fund as are set out in the trust deed of the Trust on the basis of which the Fidelity Fund is established. 3.2 The JSE shall act as the secretary of the Fidelity Fund. 3.3 The affairs of the Fidelity Fund shall be administered by the trustees at meetings convened for this purpose. 4. Definitions For the purpose of these Rules – "Act" shall mean the Securities Services Act, 2004 (Act No. 36 of 2004) and any measures prescribed thereunder by the Minister of Finance or the Registrar; “authorised user” shall have the same meaning as that contained in section 1 of the Act; “bank” shall have the same meaning as that contained in section 1 of the Act; "client" shall have the same meaning as that contained in section 1 of the Act; “derivative instrument” shall have the same meaning as that contained in section 1 of the Act; "derivatives member" shall mean a category of authorised user admitted to membership of the JSE under the derivatives rules; "derivatives rules" shall mean the rules and the directives of the JSE applicable to derivative securities, excluding the equities and Yield-X rules; "derivative securities" shall mean those JSE listed securities traded on the JSE derivatives trading system; "derivatives trading member" shall mean a sub-category of authorised user of the JSE, registered to trade in the equity derivatives market or the agricultural products market or both under the derivatives rules; "equities rules" shall mean the rules and the directives of the JSE applicable to equity securities, excluding the derivatives and Yield-X rules; "equity securities" shall mean those JSE listed securities traded on the JSE equities trading system; “financial services provider” shall have the same meaning as that contained in section 1 of the Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002); "interest rate member" shall mean a category of authorised user admitted to membership of the JSE under the Yield-X rules; "interest rate securities" shall mean those JSE listed securities traded on the Yield-X trading system; "interest rate trading member" shall mean a sub-category of authorised user of the JSE, registered to trade interest rate securities under the Yield-X rules; "JSE" shall mean JSE Limited, a company duly registered and incorporated with limited liability under the company laws of the Republic, licensed to operate an exchange under the Act; 2.2 amended with effect from 5 June 2006 “authorised user” introduced with effect from 5 June 2006 “bank” introduced with effect from 5 June 2006 “derivative instrument” introduced with effect from 5 June 2006 “financial services provider” introduced with effect from 5 June 2006 JSE FIDELITY FUND RULES 5 June 2006 Page 3 of 5 "JSE listed securities" shall mean those listed securities included in the list of securities kept by the JSE; "listed securities" shall have the same meaning as that contained in section 1 of the Act; “participant” shall have the same meaning as that contained in section 1 of the Act; "Registrar" shall have the same meaning as that contained in section 1 of the Act; "SAFCOM" shall mean Safex Clearing Company (Proprietary) Limited, licensed by the Registrar as a clearing house in terms of the Act; "securities" shall have the same meaning as that contained in section 1 of the Act; and "Yield-X rules" shall mean the rules and the directives of the JSE applicable to interest rate securities, excluding the derivatives and equities rules. 5. Management of the Fidelity Fund 5.1 The trustees shall open a banking account with a bank in the name of the Fidelity Fund and shall have the power to draw and endorse cheques and other negotiable instruments connected with the business of the Fidelity Fund. All monies accruing to the Fidelity Fund shall, pending the investment or application thereof, in accordance with these Rules, be paid into the said banking account. The trustees shall have power to close the banking account and open an account with another bank. 5.2 Subject to these Rules, the trustees shall have exclusive administration and control of all assets of the Fidelity Fund and of the income arising therefrom. Such assets or income shall be applied or invested by the trustees in the manner hereafter provided and in no other manner, that is to say – 5.2.1 if necessary, all the assets of the Fidelity Fund shall be used to meet claims on the Fidelity Fund in terms of these Rules; 5.2.2 the assets of the Fidelity Fund shall be invested – 5.2.2.1 in cash or cash equivalents ; 5.2.2.2 in bills, bonds, debentures or stock issued or guaranteed by the government of the Republic; 5.2.2.3 in stock of any local authority in the Republic authorised by law to levy rates upon immovable property; 5.2.2.4 in debentures or stock of the Reserve Bank, the Rand Water Board, Eskom or such other similar body constituted or established by or under law; 5.2.2.5 in equity securities; 5.2.2.6 in derivative instruments for hedging purposes only; and 5.2.2.7 in any other listed security as determined by the trustees. 5.3 All contributions levied in terms of these Rules together with the income arising from the Fidelity Fund shall be invested in the manner set forth in Rule 5.2 until the net value of the assets of the Fidelity Fund has reached the amount determined by the Registrar in Rule 6.3 after which such income may be applied for the purposes set forth in Rule 6.4. 5.4 In investing the assets of the Fidelity Fund, the trustees shall follow an investment policy, which shall be aimed at the enhancement of the assets of the Fidelity Fund in the medium term. 5.5 Such assets shall be held in the name of the Fund or in the name of a nominee company and shall be held and administered on behalf of the trustees by a bank, a participant, an authorised user or a financial services provider who is authorised by law to hold and administer such assets. “participant” introduced with effect from 5 June 2006 5.1 amended with effect from 5 June 2006 5.2.2 amended with effect from 5 June 2006 5.2.2.1 amended with effect from 5 June 2006 5.2.2.3 amended with effect from 5 June 2006 5.2.2.5 to 5.2.2.7 introduced with effect from 5 June 2006 5.2.3 deleted with effect from 5 June 2006 5.4 amended with effect from 5 June 2006 5.5 and 5.6 renumbered 5.6 and 5.7 respectively and new 5.5 introduced with effect from 5 June 2006 JSE FIDELITY FUND RULES 5 June 2006 Page 4 of 5 5.6 Notwithstanding anything contained in these Rules, the trustees shall be empowered to sell, exchange, or redeem any investment. The trustees may determine what proportion of the monies in the Fidelity Fund may be retained for the immediate requirements of the Fidelity Fund and what proportion may be invested. 5.7 Save as may otherwise be determined by the trustees all contracts, deeds and instruments of a like nature and all drafts, cheques or orders drawn on banks against any account of the Fidelity Fund in any bank shall be signed by two of the trustees. 6. Fidelity Fund assets 6.1 The trustees shall apply the assets of the Fidelity Fund solely for the purposes set forth in these Rules. No withdrawal or appropriation of any part of the assets of the Fidelity Fund shall be made without special authorisation by the trustees. 6.2 For the purposes of these Rules the expression “the net