Securities And Capital Markets Regulation In South Africa

In Securities and Capital Markets Regulation: A Contemporary View, the author takes a critical look at regulation of the sector in South Africa primarily in view of efforts to accommodate international standards, policy considerations, and the transition to a new regulatory framework (Twin Peaks).

Africa encompasses a wide range of market conditions, from rapidly emerging economies to countries with a long history with financial markets. Produced in partnership with the African Securities Exchanges Association, this collection of essays includes the perspectives of authors in local markets who provide their analysis of the history, current developments, and future outlook for South Africa, Nigeria, Mauritius, Ghana, Zimbabwe, Morocco, Egypt, Botswana, and East Africa. For prospective investors, the book provides valuable insights on how changing regulation, evolving financial technology, and expanding investor access are transforming local markets on the continent.

This book provides a concise comparison of the regulation and enforcement of the anti-market abuse laws (insider trading and market manipulation) in South Africa, the United States of America (USA) and United Kingdom (UK). Bringing together a number of previously published articles, the book provides a novel discussion of the challenges associated with the enforcement of market abuse laws in both developing countries such as South Africa and developed ones such as the USA and the UK. This is primarily done to examine and expose the current strengths and weaknesses of market abuse laws in relation to certain aspects of the corporate, securities and financial markets environments in South Africa, the USA and the UK. Accordingly, chapters two to five of the book unpack the regulation and enforcement of market abuse laws in South Africa and the USA in a comparative perspective. Thereafter, chapters six to eight of the book discuss the regulation and enforcement of market abuse laws (Financial Markets Act 19 of 2012) and other related statutes in South Africa and the UK. The book proposes some measures that could be utilised to enhance the enforcement of anti-market laws in South Africa, USA and the UK. New market abuse-related challenges that occurred during the global financial crisis are also briefly discussed. The book further provides a relatively adequate overview of the comparative analysis of the regulation of market abuse in South Africa versus two key developed and respected jurisdictions, namely, the USA and the UK. Accordingly, it is hoped that the book can aid regulatory authorities, financial market participants, academics, students and other interested readers to understand market abuse offences and possible measures that could be employed to combat such offences.

South Africa has made substantial progress in addressing the recommendations of the Financial Sector Assessment Program and is continuing to build upon these accomplishments. The Financial Services Board and Department of Trade and Industry both are organizations with the legal authority to regulate and supervise these steps. The South African system of financial services regulation is complex, involving multiple government agencies, several advisory or oversight committees, and several self-regulatory organizations. While all areas of responsibility appear to be covered, there may be gaps in the implementation of duties.

This book provides a unique comparative and global analysis of the regulation of disclosure in financial (securities) markets. It is written by two authors who represent both the new world (Australia) and the old world (Germany). The authors present their research in the global business context, with legal and regulatory perspectives including some references from Africa, Asia, the Middle East and South America. After every “boom” and “bust”, legislators pass new disclosure legislation, often in a heated environment fuelled by politics and the media. Little regard is paid to existing regulation or the lessons learned from earlier regulation. The result is the continuing enactment of redundant and overlapping disclosure laws. Since financial markets are often described as markets for information, the failure to ensure disclosure is at the heart of financial services regulation. This book argues that the solution to the failure of disclosure is a brief, easily understood, principles-based, plain English safety-net amendment to statute law such as “you must keep the financial market fully informed”, a measure that would support effective mandatory continuous disclosure of information to financial markets. This book examines the reasons for disclosure regulation, and how the efficient operation of financial markets is dependent on disclosure. It examines the adequacy of common law and civil law concerning broker/client disclosure, and concludes that industry licensing in itself fails to keep the market informed. While recognizing the failures of securities commissions to achieve good disclosure in financial markets, it confirms the effectiveness of coregulation of disclosure by a commission with the support of the financial markets (such as the stock exchange). Coregulation builds on financial market self-regulation, and is best described in the words of one-time SEC Chairman William O. Douglas, who, in the 1930s, described it as a shotgun behind the door.

In South Africa, long-term insurers experienced some strains during the financial crisis, but there were no crisis-related failures. The capital markets suffered sharp declines but no systemic failures. The three standards assessments have found the regulatory system fundamentally sound. The National Treasury has authority to set and oversee national regulatory policy. Banking supervision is effective and has contributed to reducing the impact on the financial sector of the global financial crisis. Insurance regulation is sound and while the assessment identifies areas for development, these are being addressed.

This paper discusses findings of the Detailed Assessment of Implementation on the IOSCO (International Organization of Securities Commissions) Objectives and Principles of Securities Regulation in South Africa. Although South Africa’s level of implementation of the IOSCO principles is complete in several areas, there is room for enhancement. The legal framework is robust and provides the authorities with broad supervisory, investigative, and enforcement powers. There are arrangements for on-site and off-site monitoring of regulated entities. The powers to cooperate with domestic and foreign counterparts are extensive. Accounting and auditing standards are high, as is the disclosure regime that applies to listed companies in practice.

This paper discusses findings of the Detailed Assessment of Implementation on the IOSCO (International Organization of Securities Commissions) Objectives and Principles of Securities Regulation in South Africa. Although South Africa’s level of implementation of the IOSCO principles is complete in several areas, there is room for enhancement. The legal framework is robust and provides the authorities with broad supervisory, investigative, and enforcement powers. There are arrangements for on-site and off-site monitoring of regulated entities. The powers to cooperate with domestic and foreign counterparts are extensive. Accounting and auditing standards are high, as is the disclosure regime that applies to listed companies in practice.