Capital Markets. What you need to know as a young investor?

Transcription

1 Capital Markets What you need to know as a young investor?

2 What are the main functions of the Capital Markets Department of the Financial Services Board ( FSB )? The FSB s Capital Markets Department is responsible for the supervision of the icensed securities exchange in terms of the Securities Services Act, 2004 ( SSA ), i.e. the JSE Limited, the central securities depository (Strate Limited) and the clearing houses, namely Strate Limited and Safex Clearing Company (Pty) Ltd ( SAFCOM ). Reference is made to the exchange and central securities depository as selfregulatory organisations ( SROs ) as they are responsible under the SSA to supervise their authorised users/participants ( members ) and to ensure their members comply with their rules and the provisions of the SSA. Strate clears equities and bonds while SAFCOM clears derivative instruments. The FSB annually renews the licenses of these entities. How should one go about investing in the shares listed on the Securities Exchange? The JSE s website contains a list of member firms that investors can approach to assist them in the selection of a share(s). A member can act as the investor s investment manager and can buy and sell shares on the investor s behalf on a discretionary basis or the investor can instruct his broker to trade in the shares of his choice. Investors should study the prospective shares carefully before they make an investment decision, i.e. they should look at the financial history of the company, management of the company, whether the company in fact is listed on the JSE, etc. Unlisted companies are currently not regulated to the same extent than listed companies and investors of unlisted shares therefore do not enjoy the same legislative protection. How will an investor know that the person/company he is dealing with is licensed to conduct securities business? In respect of member firms of the JSE, investors can contact the JSE s company secretary to establis whether the firm is an approved member of the JSE or they can check the JSE s website. In respect of financial services providers, investors can contact the FSB s FAIS Department to check whether the FSP is licensed or not by the FSB. 1

3 What does it mean to be an SRO and what is the relationship between the FSB and the SRO s, i.e. the exchange and the central securities depository? The FMA provides for market infrastructures such as an exchange, central securities depository and independent clearing house to be licensed as a SRO. The FMA clearly outlines the responsibilities of an SRO. An SRO is responsible under the FMA to supervise its members and to ensure its members comply with their rules and the provisions of the FMA. An exchange, a central securities depository or independent clearing house therefore must fulfil the role of an SRO before it can be licensed by the FSB. The SRO is responsible for the approval of its members. Lodging a complaint What is the procedure to lodge investor complaints against the exchange & central securities depository or its members or the officers and employees of members? OTC means Over-the-Counter SAFCOM means Safex Clearing Company (Pty) Ltd SRO means Self Regulatory Organisation SAA means Securities Services Act No. 36 of 2004 FAIS Act means Financial Advisory and Intermediary Services Act No.37 of 2002 What is an investor complaint? An investor complaint is defined as any grievance in relation to the provision of regulated services (those services being regulated by the exchange, central securities depository or independent clearing house) in which the investor alleges that he has suffered, or is likely to suffer, financial prejudice as a result of the member or an officer or employee of a member: Contravening or failing to comply with any instruction given by the investor, or any agreement or mandate entered into with the member; Contravening or failing to comply with the SSA, rules and the directives of the SRO; Acting dishonestly, negligently or recklessly; or Treating the investor unreasonably or unfairly. 2

4 Apart from the above complaints against members or their officers or employees, investors may also have complaints against: a SRO for not fulfilling its regulatory responsibilities, acting in such a manner which will not further the objects of the FMA as listed in section 2 of the FMA or for contravening a provision of the FMA. Investors are referred to the rules of the exchange on the requirement and procedures for the lodging of complaints and disputes, a copy of which is available on the website of the exchange. STEP 1: Lodge the complaint with the member An investor complaint against a member must first be lodged and discussed with the relevant member in terms of the internal complaint handling procedures of the member. A member s internal complaint handling procedure provides for the receipt of investor complaints, the appropriate investigation of such complaints, an appropriate decision-making process in relation to the response to an investor complaint, the notification of the decision to the investor and the recording of complaints. STEP 2: Lodge the complaint with the SRO If an investor is not satisfied with the resolution offered by the member, or if it remains unresolved, the investor must submit the complaint in writing to the SRO concerned giving full particulars of the matter concerned. The SRO will endeavour to facilitate a resolution of the complaint between the member and the investor. STEP 3: Lodge the dispute with an ombud appointed by the exchange If the SRO is unable to facilitate a resolution of the complaint, the SRO (only applicable to the exchange) may declare the complaint a dispute and will deal with the unresolved complaint in terms of its dispute resolution rules, if the investor elects to follow the dispute resolution process and if the criteria as outlined in the rules of the exchange are met.the dispute will then be referred to an ombud for consideration, duly appointed under the client resolution scheme of the exchange, recognised 3

5 A decision made by the ombud must be complied with by the party against whom the decision is made within one week of the decision having been made by the ombud. If the SRO does not have a recognised complaints resolution scheme, such as in the case of the central securities depository, the complainant may submit the complaint to the Financial Services Ombudsman. The complaint must relate to financial prejudice or damage due to a contravention or failure to comply with the provisions of the FMA. The complainant will need to provide the Ombudsman with proof that the complainant tried to resolve the complaint. This can be done by providing a copy of the SRO or FSB s final response, together with the complainant s reasons for disagreeing with the response. The complaint must be submitted in writing to the Ombudsman together with any supporting documentation. Procedures for the handling of investor complaints against SROs or the officers and employees of SROs. STEP 1: Lodge the complaint with the SRO An investor complaint against an SRO must first be lodged in writing and discussed with the relevant SRO. Full details of the complaint must be provided to the SRO. STEP 2: Lodge the complaint with the FSB If the complaint cannot be resolved by the SRO, the investor may lodge the complaint with the Capital Markets Department of the FSB. The complaint will be discussed with the relevant SRO with the aim of ensuring that the SRO has exhausted all avenues to resolving the complaint to the satisfaction of all the parties involved. Requirements for submitting investor complaints to the FSB How should investor complaints be submitted? Investor complaints must be submitted in writing. The reason for this is to obtain the background and exact reasons for the complaint and to enable the FSB to discuss the investor s complaint with the relevant SRO. 4

6 Complaints can be submitted by any one of the following means: Complete the on-line complaint form on the FSB s website, i.e. If investors are unable to download the FSB complaint form, they can contact the FSB Customer Service on / to obtain a copy; or Send an to the Legal Manager: Capital Markets Department, info@fsb.co.za or Write a letter to: the Legal Manager: Capital Markets Department, PO Box 35655, Menlo Park, Pretoria, 0102; or Sending the complaint by facsimile to the Legal Manager: Capital Markets Department, What information is required? Complainants should provide the FSB with at least the following information: Name and surname of the complainant. Contact details (including postal address, telephone number, fax number and address whichever is applicable. Full details of the complaint or grievance. Copies of any relevant documentation which support the complaint. Name of the SRO complained against. Details of the steps the complainant has already taken to resolve the complaint or grievance. The outcome the complainant would like to receive. Outcome of the investigation to resolve the complaint. The FSB will advise the complainant in writing of the outcome of the investigation to resolve the complaint, accompanied with reasons. For the convenience of investors, the contact details of the FSB, SROs and the Financial Services Ombudsman are given in the table below. 5

7 Contact details Financial Services Board PO Box 35655, Menlo Park, 0102 Riverwalk Office Park, Block B, 41 Matroosberg Road, Ashlea Gardens, Extension 6, Pretoria, 0181 Tel: Fax: Visit the FSB s first consumer education website; for guidance on how to make the most of your finances. Ombud for Financial Services Providers P O Box 74571, Lynwood Ridge, 0040 Eastwood Office Park, Baobab House, Ground Floor, Lynnwood Ridge, 0081 Tel: , 0860FAISOM / ( ) Fax: info@faisombud.co.za 6 JSE Limited Private Bag X991174, Sandton, 2146 One Exchange Square, Gwen Lane, Sandown Tel: Fax: info@jse.co.za Strate Limited P.O Box 78608, Sandton, st Floor, 9 Flicker Road, Illovo Boulevard, Illovo, Sandton, 2146 Tel: Fax: info@strate.co.za

8 Disclaimer This booklet is the property of the FSB. Permission for replication or use must be obtained from the author in writing; Consumer Education Department of the Financial Services Board, Permission to use resource material request, PO Box 35655, Menlo Park, 0102, or Call