| Financial System
Regulation, Legislation and Reform
Financial legislation, regulations
and rules. Financial regulation of the
financial system in South Africa - bank
supervision and the regulation of financial markets, insurers,
investment firms, asset managers, financial conglomerates, and
money-lenders (microfinance). Reform and development of the
financial system. The legal and regulatory framework; and regulatory
regime. The role of corporate governance. Financial stability and
systemic risk. The Financial Intelligence Centre and money laundering. |
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Topical:
Overview
of the main regulatory regimes after the 2008/2009 financial crisis
Updated
Novenber 2009.
The economic crisis has prompted governments across
the world to re-evaluate their financial regulatory framework, to try
to tackle the causes of, and fallout from, the global downturn. The
next 12 months could bring the most dramatic change in financial
services regulation in decades.
This interactive graphic provides an overview of the
financial regulation framework, both present and proposed, in the
United Kingdom (UK); the European Union (EU); and the United States of
America (US).
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Understanding
South African Financial Markets, van Zyl, Botha & Skerritt
2nd edition, 2006
The SA
Government, Polity and actsonline
provide a
legislation retrieval service
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May
2007 |
SA Financial Sector Forum - An Overview of the SA Regulatory Framework and
Legislation |
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An overview of the structure, legislation
and organisations which regulate and supervise the
financial sector in South Africa. Links are provided to the involved organisations and
to legislation, where available. |
November
2009 |
SA Reserve Bank - Financial Stability Review: September 2009 |
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... Africa has
not been totally shielded from the spillover effects of the global
economic downturn. Nevertheless, the global economic crisis is still
regarded as presenting both challenges and opportunities for the
continent and its people, although such opportunities are dependent on
a solid global recovery. Financial systems in sub- Saharan Africa have
been relatively resilient to the effects of the financial crisis.
However, in recent months adverse pressures from recessions abroad
have weighed on the region, resulting in a deceleration in regional
economic activity, and a rise in credit risk and non-performing
assets. ... more |
October
2009 |
IMF - Global
Financial Stability Report |
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This GFSR
chronicles the evolution of the path toward reestablishing sound
credit intermediation and the near-term risks that could interrupt its
restoration, including the rising burden of sovereign financing. The
report addresses how to restart securitization markets and the
pitfalls if done improperly. The effectiveness of unconventional
public sector interventions and the principles for disengagement are
discussed. The report also discusses the design of medium-term
policies that aim to reshape the financial system to make it more
resilient and stable. ... more |
July
2008 |
SA Reserve Bank - Bank Supervision, 2008 Annual Report |
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Notwithstanding
the turmoil experienced in international financial markets and the
domestic cyclical economic developments during 2008, the South African
banking system again remained stable, and banks were adequately
capitalised and profitable. The banking sector’s capital-adequacy
ratio increased from 11,8 per cent in January 2008 to 13,0 per cent at
the end of December 2008. The tier 1 capital-adequacy ratio increased
from 8,9 per cent at the end of January 2008 to 10,2 per cent at the
end of December 2008.
Total banking-sector assets increased from R2 663 billion in January
2008 to R3 170 billion at the end of December 2008. The year-on-year
growth rate at the end of December 2008 was 24,5 per cent (January
2008: 27,0 per cent). Total assets of the four largest banks,
amounting to R2 676 billion, accounted for 84,4 per cent of total
banking-sector assets. ... more |
June
2009 |
Bank of England - Financial Stability Report |
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... Authorities internationally are working to
strengthen financial system resilience over the medium term. Policies on
market discipline, bank regulation, market infrastructure and bank
structure and size should be based on their impact on overall financial
system stability, not just on individual firms. This systemic perspective
has not always shaped policy around the world sufficiently in the past.
...
Changes needed to increase the resilience of the
financial system:
• Market discipline should be strengthened significantly, for example
through improved bank disclosures, a credible threat of closure/wind-down
for financial institutions and risk-based, pre-funded deposit insurance
schemes.
• Financial institutions should self-insure more than in the past, for
example through higher capital and liquidity buffers and contingency plans
for capital, liquidity and their own wind-down in periods of stress.
• Management of risks arising from interactions among financial
institutions and with the real economy needs to be improved, including
through higher buffers for firms posing greater systemic risks and
countercyclical prudential policy to limit the growth of financial
imbalances.
• Authorities domestically and internationally should consider whether
they need to more actively influence or constrain the size and structure
of financial systems to support stability
• Where self-protection fails, a safety net is required that encourages
prudent behaviour and contains risks to the public finances, for example
via clear principles guiding authorities' actions as market maker or
capital provider of last resort during financial crises. ... more |
April
2009 |
Financial
Stability Board - Financial
Stability Board |
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The
Financial Stability Forum was convened in April 1999 to promote
international financial stability through information exchange and
international co-operation in financial supervision and surveillance.
At the G20 Summit, April 2009, The Financial Stability Forum was
re-established as the Financial Stability Board.
On 2 April 2009, the Financial Stability Forum issued reports
covering: Recommendations for Addressing Procyclicality in the
Financial System; Principles for Sound Compensation Practices; and
Principles for Cross-border Cooperation on Crisis Management. |
August
2008
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Financial Services Board - 2008 Annual Report 
(PDF) |
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The
year under review has been a challenging and exciting year for the FSB.
We have seen a significant increase in the scope of work and have
increased capacity to improve efficiency and to cope with new
responsibilities and organisational changes to ensure that we are well
positioned to meet new challenges. The Financial Advisory and
Intermediary Services division (FAIS) has caught up with the backlog
of registrations of Financial Services Providers and the emphasis has
now turned to ongoing supervision. More than 14 500 entities have been
licensed in terms of the FAIS legislation and we have increased our
staff complement to cope with supervisory requirements. It is
encouraging to note that an increased degree of professionalism is
being recognised in the conduct of financial services
intermediaries.
In 2008 and beyond, the environment can be expected to be even more
challenging as growth in the economy slows and as inflationary
pressures intensify. Increased volatility in the markets will continue
to be a feature. The challenge for macroeconomic policy will be to
sustain steady growth while reigning in inflation. ... more |
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National
Treasury - Co-operative
Banks Development Agency |
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The Co-operative Banks Act, No 40 of
2007 (the Act) defines a co-operative bank as a co-operative
registered as a co-operative bank in terms of the Act whose members
– 1. are of similar occupation or profession or who are employed by
a common employer or who are employed within the same business
district; or 2. have common membership in an association or
organisation, including a business, religious, social, co-operative,
labour or educational group; or 3. reside within the same defined
community or geographical area. The Act seeks to create a development
strategy and a regulatory environment for deposit taking financial
co-operative institutions. The supervisor within the Co-operative
Banks Development Agency has the authority to exercise the powers and
perform the functions conferred on the supervisor by or in terms of
the Act in respect of primary co-operative banks that hold deposits of
less than R20 million and more than R1 million and has 200 or more
members. |
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July |
Ernst
& Young - Basel
II: The Business Impact |
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Financial
services institutions worldwide are recognising and embracing a new
era of banking, instigated by Basel II, according to the survey
processes and systems will significantly change, along with the way
risks are managed, signifying a new era and fresh dynamic in the
global financial services market place. |
June
2006 |
Bank
for International Settlements - International
Convergence of Capital Measurement and Capital Standards: A Revised
Framework |
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This
document is a compilation of the June 2004 Basel II Framework, the
elements of the 1988 Accord that were not revised during the Basel II
process, the 1996 Amendment to the Capital Accord to Incorporate
Market Risks, and the November 2005 paper on Basel II: International
Convergence of Capital Measurement and Capital Standards: A Revised
Framework. No new elements have been introduced in this compilation. |
August
2008 |
Joint
Forum - High-level
principles for business continuity |
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Financial
authorities and financial industry participants have a shared interest
in promoting the resilience of the financial system to major
operational disruptions. This interest is the result of multiple
factors.
The Joint Forum was established in 1996 under the aegis of the Basel
Committee on Banking Supervision (BCBS), the International
Organization of Securities Commissions (IOSCO) and the International
Association of Insurance Supervisors (IAIS) to deal with issues common
to the banking, securities and insurance sectors, including the
regulation of financial conglomerates. |
November
2000 |
BIS
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Organisational Structure of Banking Supervision
(PDF) |
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Traditionally, bank supervision was under the umbrella of central
banks, recently, many countries around the world have been moving bank
supervision outside their central banks. The advantages and
disadvantages of this policy, as well as from the point of view of
emerging-market countries, are discussed by Goodhart. |
November
2001 |
The Policy Board for Financial Services
and Regulation
- SMEs'
Access to Finance
in South Africa: A Supply-side Regulatory Review |
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The
small and medium-enterprises sector (SME) includes a wide range of
enterprises. The report covers the following areas: (i) the profile of
South African SMEs and their contribution to the South African
economy; (ii) access of SMEs to equity capital and debt; and (iii)
access to other bank services. In this context the report considers
the role of banks, the role of non-bank financial institutions (NBFIs,
including the establishment of core banks or narrow banks), the
role of the securities markets and the competitive environment within
which these different institutions function.
Related entry: Filling the Gap in South Africa’s Small and
Micro Credit Market: An Analysis of Major Policy, Legal, and
Regulatory Issues, indexed in the Financial
markets section. |
March
2005 |
Ernst & Young
- Excellence
in Corporate Reporting Survey 2005 |
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The
annual survey, which enters its eighth year, has grown to become the
benchmark for corporate reporting in South Africa. The survey covers
the top 100 listed companies on the JSE Securities Exchange. The
survey ranks companies in four different categories, namely Excellent,
Good, Adequate and Perfunctory. The Excellent category includes the
top ten companies that are ranked, while Perfunctory implies those
companies that perform only the bare minimum expected of listed
companies.
Surveys from previous years are available |
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October
2006 |
JSE Limited - Insider
Trading |
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The
purpose of this booklet is to bring together the various Acts and
requirements, as well as relevant corporate governance guidelines,
which all have a bearing on preventing market abuse. This booklet has
drawn on the Securities Services Act, 2004, section 3 of the JSE
Listings Requirements, and extracts from the SRP Merger and Takeover
Code to provide an outline of the legal framework. |
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March
2002 |
The Institute of Directors in Southern Africa
- The King Report on Corporate Governance
for South Africa - 2002 |
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The
King Committee on Corporate Governance is
available in printed format from the Institute of Directors.
Cliffe Dekker provides a PDF of the Report.
The Report finally provides corporate SA with a
world-class code of conduct. The extent to which business gives effect
to this code will be crucial to establishing a healthy and vigorous
business climate for the future. The report is not a prescriptive
document and expands on the first report on corporate governance in
1994. Key improvements include recommendations relating to the
composition of the board, specifically separating the roles of
chairman and CEO. There is a greater emphasis on the role of
independent non-executive directors, that is, directors with
absolutely no connection to the business. There is also a suggestion
of a nomination committee, in addition to the audit and remuneration
committees, which would oversee the appointment of new members to the
board. Particular attention is paid to the non-financial aspects of
corporate governance, including safety, ethics, the environment and
social issues such as HIV/Aids. |
May
2003 |
The South African Reserve Bank - The Myburgh Report on the Standard of
Corporate Governance in the Five Largest Banks |
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The
purpose of the review was to investigate compliance with corporate
governance best practices as laid down, for example, in the Banks Act,
the Regulations Relating to Banks and the recommendations of the King
Committee on Corporate Governance of March 2002.
The following findings are made in general terms: the banks are
committed to the adherence to and application of high standards of
corporate governance; acting on the advice of specialists in corporate
governance, the banks on their own initiative from time to time review
their corporate governance to ensure compliance with accepted
corporate governance principles; no serious breaches of corporate
governance were found to exist; the corporate governance of the banks
is sound; vigilance is nevertheless required to ensure continued
compliance with the standards governance which are constantly evolving
in South Africa and internationally. |
July
2003 |
The
Financial
Intelligence Centre and money
laundering |
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Money
laundering is performed to thwart the enforcement of criminal law by
creating a justification for controlling or possessing money or
property derived from any form of criminal activity. Money
laundering is discussed in the Institute for Securities Studies
Monograph: Clean
Money, Suspect Source, Turning Organised Crime Against Itself.
Money-laundering offences are contained in the Prevention
of Organised Crime Act, No. 121 of 1998 (PDF, 740
KB).
South Africa’s legal response to money-laundering is not yet
complete. A system of administrative measures to control
money-laundering and to facilitate its prevention, detection,
investigation and prosecution is being established through the Financial
Intelligence Centre Act, No. 38 of 2001 (PDF, 1800 KB). The Act seeks to combat
money-laundering activities through a Financial Intelligence
Centre (FIC) and a Money Laundering Advisory
Council (PDF).
The FIC has been established by National Treasury - see About
the FIC.
Procedures have been implemented in July 2003 - see draft Regulations
under the Financial Intelligence Centre Act (PDF). |
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December
1999 |
HB
Falkena & DT Llewellyn - The Economics of Banking:
A Target-Instrument Approach with Special Reference to South Africa |
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A
publication to assist bank executives and others in the formulation of
strategy in the rapidly changing banking environment. Trends in, and
pressures facing the banking industry are discussed.
In South Africa the regulatory authorities have three ultimate
objectives, namely (i) to ensure a safe and sound financial system;
(ii) to enhance the confidence of and fairness to investors; and (iii)
to ensure an efficient and effective financial system. The ultimate
objectives of the regulatory authorities must also be those of the
financial services industry.
The book can be downloaded in PDF format. |
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CISA
- The
Compliance Institute of South Africa |
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The
Compliance Institute of South Africa objectives are to encourage and
promote compliance within the regulatory environment of the South
African Financial Services industry.
The current emphasis of CISA is the development of an industry
compliance manual, referred to as the "CISA Members'
Handbook". Other priorities include compliance officer
accreditation programmes and the promotion of the professional status
of members. |
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July
2006 |
National
Credit Regulator - NCR |
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The
National Credit Regulator (NCR) was established as the regulator under
the National Credit Act 34 of 2005 (the Act) and is responsible for
the regulation of the South African credit industry. It is tasked with
carrying out education, research, policy development, registration of
industry participants, investigation of complaints, and ensuring
enforcement of the Act. The NCR is also tasked with the registration of
credit providers, credit bureaux and debt counsellors; and enforcement
of compliance with the Act.
The Micro Finance Regulatory Council (MFRC) has now been incorporated.
A report has been commissioned by the NCR, Credit
Extension to Households, December 2006 |
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MFRC - The
Micro Finance Regulatory Council |
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Now
incorporated into the National Credit Regulator (see above).
The primary aim
of the Micro Finance Regulatory Council (MFRC) has been identified as
the promotion of the money-lending industry so as to allow for
sustainable growth in the industry and to serve legitimate unserviced
credit needs. The MFRC has been established in accordance with
the Usury Act Exemption Notice of 1 June 1999 and has been recognised
as the official and single regulator of all money lending transactions
falling within the scope of the Usury Act Exemption Notice. Any money
lender who wishes to avail themselves of the benefits of the Usury Act
Exemption, will be required to register with the MFRC and thereafter
comply with the rules of the MFRC and the Exemption Notice.
Related entry: Filling the Gap in South Africa’s Small and
Micro Credit Market: An Analysis of Major Policy, Legal, and
Regulatory Issues, indexed in the Financial
markets section. |
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May
2003 |
The
Banking Sector Education and Training Authority
- BANKSETA |
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BANKSETA
supports and grows the level of current and future skills needed in
the banking sector. BANKSETA, does this by making Sector Grants
available for projects that contribute directly to the development of
priority skills.
A regulatory function of BANKSETA is to ensure the quality of
education and training in and for the workforce; and to provide and
regulate employment services. |
April
2003
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Cliffe
Dekker - South African Banking Regulation |
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The South
African banking system is well developed and effectively
regulated. This Website provides information on the legal
and formal requirements to be met before a bank may
accept deposits, conduct the commercial activities of
banking and the registration requirements for foreign
banks doing business in South Africa (through inter alia the
Banks Act and the Mutual Banks Act). Liquidation procedures pertaining
to banks, investment prudence,
taxation of banks and various statutory arrangements
affecting business in general and banks in particular are
discussed.
For an overview of the
Bank Supervision Department of the SA Reserve Bank, see SA Reserve Bank
Fact
Sheet no. 10. |
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SA
Reserve Bank - Exchange Control Manual |
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For
an overview of exchange rates and exchange control see SA Reserve Bank
Fact
Sheet no. 4.
This manual
is issued to assist Authorised Dealers in Foreign
Exchange, their customers and other interested parties by
providing a general understanding of the purpose, scope
and operation of the exchange control system in the
Republic of South Africa and in the Common Monetary
Area. |
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SA
Reserve Bank - Exchange Control Regulations |
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For
an overview of exchange rates and exchange control see SA Reserve Bank
Fact
Sheet no. 4.
The
regulations are promulgated by Government Notice R1111 of
1 December 1961 and amended up to Government Notice No.
R.1022 in Government Gazette No. 18170 of 1 August
1997. The State President has, in terms of section nine
of the Currency and Exchanges Act, 1933 (Act No. 9 of
1933), made Exchange Control Regulations as contained in
the Schedule in this Notice. |
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