The Regulatory Regime from a South African Perspective

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The Regulatory Regime from a South African
Perspective
Presentation for the United Nations Economic
Commission for Africa 28 October 2003
Gordon Rennie
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Gordon Rennie Financial Market Specialists 27
(0) 82 442 4923 gordonr_at_fsb.co.za gordonr_at_fmspecia
lists.co.za
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Agenda
Brief background to FSB
Basic functions of the FSB
Regulatory Objectives
Regulatory Framework
Developments
Securities Services Bill
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Introduction to the FSB

• Financial Services Board Act of 1990

• The fundamental objectives
• 1. Fair treatment of investors
• 2. Fair, efficient transparent markets
• 3. Reduce Systemic risk and financial crime

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The FSBs main functions are
Maintaining a regulatory framework
Administering the Act, regs and cons
Enforcing compliance
Supervising the financial institutions
Investigating
Advising interested parties
Promoting understanding of regulatory system
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Business Philosophy of the FSB
Efficient regulatory framework - sound balance
between statutory control and self regulation
(SA has SROs)
Renders a timely and cost effective service in an
impartial and consistent manner
Believes in consultative decision making
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Scope of supervision by the FSB

• Regulation and supervision of all non-banking
  financial services in South Africa
• Securities and capital markets
• Short and long-term insurance industry
• Retirement fund industry and
• Other allied services (i.e. Collective Investment
  Schemes).
• The FSB administers 12 Parliamentary Acts 20
  000 institutions supervised, most of which are
  pension funds

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The FSB Capital Markets
ito Stock Exchanges Control Act, No.1 of 1985
JSE Securities Exchange South Africa (JSE)
ito Financial Markets Control Act, No.55 of 1989
JSE Securities Exchange South Africa (JSE) Bond
Exchange of South Africa (BESA)
ito Custody and Admin. of Securities Act STRATE
ito Insider Trading Act
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New legislation to replace the previous 4 Acts
Financial Advisors and Intermediaries Services
Act (FAISA)

Securities Services Bill (SSB)
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Scope of supervision by the FSB cont

• Both of these exchanges are responsible for the
  regulation of their respective members, and as
  such are self regulatory organisations (SROs).
• In terms of the capital adequacy requirements
  for members of these exchanges, the concept of a
  lead exchange has been introduced to facilitate
  efficiency.

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The FSB in Relation to the Regulatory
Structure for the South African Exchanges

• Minister of Finance

FSB
SARB - BSD
Stock Exchanges Control Act
Financial Markets Control Act
JSE - Deriv.
JSE Eq.
BESA
EXCHANGES MEMBERSHIP
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Securities Services Bill
The Why, What will it achieve, and What is its
scope
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Securities Services Bill
The SSB consolidates, repeals and adds new
provisions to Stock Exchanges Control
Act Financial Markets Control Act Custody and
Administration of Securities Act Insider Trading
Act And it further amends certain provisions of
the Companies Act (e.g. Public sales of unlisted
shares and prospectus approval by FSB)
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Objectives of the SSB

• Increase Market confidence
• Fair, efficient and transparent services
• Promote protection
• Encourage international competitiveness
• Reduce Systemic Risk

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SROs
BESA, JSE, and STRATE Expected to regulate
their activities and those of authorised users /
participants (Passing and enforcing Rules)
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Exchange type flexibility
New Principles
FSB assuming SRO roles
Securities listings req.
Off-market trades
Unlisted Market action
CSD Licencing
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Clearing House Licence
New Principles cont
Nominee approval
Dematerialisation
SRO Demutualisation etc
SRO Controlling Body
15 SRO control
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Code of Conduct
New Principles cont
Direc. for Market Abuse
Enforcement Committee