Question NW4134 to the Minister of Finance
22 December 2023 - NW4134
Manyi, Mr M to ask the Minister of Finance
What (a) are the relevant details on the specific initiatives underway to rectify the failures in preventing and/or mitigating systemic events within the financial sector and (b) proactive measures is the National Treasury considering, to bolster the regulatory framework that deters banks from manipulating the Rand through illicit practices such as price-fixing and market allocation in the future?
Reply:
The misconduct investigated by the Competition Commission is specifically the type of abuse the National Treasury considered in 2011 when proposing and implementing the Financial Sector Regulation Act (FSRA) as part of the Twin Peaks reform.
This reform established a new dedicated market conduct regulator to ensure that all financial institutions treat their customers fairly and operate with the highest ethical standards, which is the nature of the misconduct Standard Chartered Bank was found to have committed.
Specific reforms have also been undertaken as a result of observing misconduct in other jurisdictions to ensure that these do not occur domestically. For this reason, National Treasury tabled Regulations in Parliament in March 2023 which proposed to designate the “provision of a benchmark” as a financial service in accordance with section 3(3) of the FSRA, and to specify that the Financial Sector Conduct Authority is the responsible authority for the regulation, supervision and oversight of the financial sector. In terms of section 288(1)(b) of the FSRA, which empowers regulations to provide for procedural and administrative matters that are necessary to implement the provisions of this Act, some specific powers and duties are provided to the Financial Sector Conduct Authority in relation to the provision of benchmarks to enable the effective regulation and supervision of the “provision of a benchmark”.
In 2024, National Treasury will introduce further legislation to ensure South African financial markets are fair, transparent and operate with integrity. The Conduct of Financial Institutions (CoFI) Bill proposes that banks and other financial institutions in the Financial Exchange market are carried into the CoFI licensing activities and will be subject to the CoFI Act in addition to the markets regulation. This implies that requirements for good governance, transparency, managing conflicts of interest, among others will continue to apply.