Previously the Act stipulated that stockbrokers could only act as agents on behalf of clients, except under certain limited circumstances. This is referred to as single trading capacity. The amended Act does not prescribe the capacity in which stockbrokers trade but allows the exchange, through its rules, to specify in which capacity a member may trade.

The JSE's rules (effective early 1996) will allow members the choice of dealing in single or dual trading capacity. Dual trading capacity is where a member acts as either an agent on behalf of, or as a principal with a client. The member may therefore sell a client shares from its own holding of shares. The member must inform the client in which capacity it is acting prior to the transaction being effected. If no information is provided it will be assumed that the member is dealing as an agent and thus owes a fiduciary duty to the client and remains responsible to the client for performance by the counterparty to the trade.

The introduction of dual trading capacity and fully negotiable commissions will be made simultaneously with the automation of trading. Surveillance mechanisms will be in place to address appropriate investor protection.

Whilst every care has been taken in the preparation of this article, the JSE is not responsible for any errors or omissions contained therein. Readers should therefore study the original Act, rules and other documents referred to or consult with the JSE before acting on any information supplied.

For further information kindly contact: JSE Public Relations Department, PO Box 1174, Johannesburg 2000. Tel: 377 2200; Fax: 834 7402; or do a text search "Johannesburg Stock Exchange" and "Business Monitor".