Financial Advisory and Intermediary Services Act 2002 (Act No. 37 of 2002)Codes of ConductCode of Conduct for Authorised Financial Services Providers and their Representatives, involved in Forex Investment Business, 2004Part III : Special Provisions applying to Forex Investment Intermediaries5. Mandate from client |
| (1) | A forex investment intermediary must enter into a written mandate with a client irrespective of whether the client invests in a managed forex account or in a self-directed forex account. The intermediary and the client may agree to enter into an electronic mandate, provided that appropriate controls and personal identification procedures have been put in place. The mandate records the arrangements made between the parties, and must— |
| (a) | stipulate whether the investment concerned is a self-directed forex investment or a managed forex investment; |
| (b) | state the investment objectives of the client and whether in the case of managed forex investments, there are any investment or jurisdiction restrictions that apply to the intermediary services with specific reference to— |
| (i) | the regulatory environment of the foreign forex services provider where the investments are made; |
| (ii) | specific currency pairs; |
| (iii) | any limitations on maximum drawdown; |
| (iv) | any limitations on leverage to be employed; |
| (v) | applicable margin requirements and margin call rules; |
| (c) | contain a general statement pertaining to the risks associated with investing in forex investments, with particular reference to any— |
| (i) | currency risk; |
| (ii) | event risk; |
| (iii) | operational risk; |
| (iv) | leverage risk; |
| (d) | stipulate in whose name the forex investments are to be made, for example, whether they are to be made in the name of— |
| (i) | the client at the foreign forex services provider acting as clearing firm; |
| (ii) | an omnibus account holder under control of a foreign forex services provider, other than the foreign forex services provider acting as clearing firm; |
| (iii) | an omnibus account holder at a foreign forex services provider under direct or indirect control of the forex investment intermediary concerned; |
| (e) | stipulate the name of the bank, name of the account and account number of the bank, and the account number and name of the foreign forex services provider or clearing firm, as the case may be, in which the forex investment must be deposited; |
| (f) | stipulate, where applicable in the case of a managed forex account, the basis on which, the manner in which and the intervals at which any cash accruals which the forex investment intermediary receives on behalf of a client, must be paid to the client and, where applicable, any restrictions on withdrawals of principal amounts or profits by the client, where the account is in the client’s own name; |
| (g) | stipulate the basis on which, the manner in which and the intervals at which the client will remunerate the forex investment intermediary for intermediary services rendered on behalf of the client: Provided that for the purposes of this paragraph it shall be deemed that the basis of the remuneration has not been stipulated if the remuneration must be calculated with reference to a source outside the mandate or if it is placed within the discretion of any person; |
| (h) | state whether the forex investment intermediary receives commission, incentives, fee reductions or rebates from a foreign forex services provider or any other applicable institution for placing a client’s funds with them; |
| (i) | in the case of managed forex investments, provide for the availability to the client of reports and statements compiled by the foreign forex services provider acting as clearing firm within 24 hours of same being made available by that provider to the financial services provider or foreign forex services provider, as the case may be, detailing all transactions; |
| (j) | empower either party to the mandate to terminate the mandate after notice in writing of not more than 60 calendar days; and |
| (k) | must include details of insurance cover sufficient to cover the risk of losses due to fraud, dishonesty and negligence. |
| (2) | The mandate of a forex investment intermediary must be approved by the registrar who may grant approval subject to such conditions as the registrar may determine. The initially approved mandate is hereinafter referred to as the specimen mandate. The registrar may subsequent to approval require that specific amendments be made to the specimen mandate or that any other information be disclosed that is deemed necessary in the interest of the client. |
| (3) | A forex investment intermediary may not amend the specimen mandate substantially, without the prior written approval of the registrar. |
| (4) | When the mandate of a forex investment intermediary with respect to a managed forex account is terminated, such intermediary must at once return all cash, assets and documents of title to the client and must simultaneously provide the client with a detailed final statement of account. If the assets and documents of title are in possession of a bank or another forex investment intermediary the first-mentioned forex investment intermediary must at once issue an instruction to such entity to return such assets or documents of title to the client. |