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AMEDA 26-28 October 2011 CPSS – IOSCO FMI Principles. Monica Singer CEO – Strate Limited. 1. The Importance of a Regulatory Structure. An essential regulatory objective is to ensure legal certainty in post- trading ( IOSCO # 1) Why ? Enhance efficiency and safety of post-trading

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slide1

AMEDA

26-28 October 2011

CPSS – IOSCO FMI Principles

Monica Singer

CEO – Strate Limited

1 the importance of a regulatory structure
1. The Importance of a Regulatory Structure
  • An essential regulatory objective is to ensure legal certainty in post- trading (IOSCO # 1)
  • Why? Enhance efficiency and safety of post-trading
  • How? Regulation and laws must be

(a) sound, and

(b) cross-border compatible (IOSCO # 1; UNIDROIT; HAGUE)

  • Focus after credit crises is on the reduction of risk; integration of markets; promotion of financial stability; improvement of transparency.
  • Warning: Don’t over-regulate! (high costs; inefficiencies; false sense of safety)
2 regulatory objectives for strate in south african legislation
2. Regulatory Objectives for Strate in South African Legislation
  • Objects of South African securities legislation states:

“This Act aims to –

(a) increase confidence in the SA financial markets by

    • (i) requiring that securities services be provided in a fair, efficient and transparent manner, and
    • (ii) contributing to the maintenance of a stable financial market environment;

(b) promote the protection of regulated persons and clients;

(c) reduce systemic risk; and

(d) promote international competitiveness of securities services in SA.”

3 evolving regulatory landscape in south africa
3. Evolving Regulatory Landscape in South Africa
  • New legislation

Companies Act, 2008 (“CA”)

Financial Markets Bill, 2011 (“FMB”)

Consumer Protection Act, 2008 (“CPA”)

Income Tax Act, 1962 - withholding tax issues

Sound legal system (IOSCO #1; UNIDROIT; HAGUE)

  • New Codes

King III - corporate governance for Board and Committees.

  • New Guidelines

NT Policy Document “A Safer Financial Sector to Serve South Africa Better” (“Red Book”) (2011)

4 coordinated process to strengthen global markets
4. Coordinated Process to Strengthen Global Markets
  • South Africa is bound, participates or is guided by:
    • UNIDROIT convention
    • HAGUE convention
    • G20 outcomes
    • CPSS-IOSCO Recommendations
5 strategic intent of strate to reduce risk also in financial crises
5. Strategic Intent of Strate toReduce Risk, also in Financial Crises
  • Regulatory Intent = Reduction of Systemic Risk & Protection of Investors
  • Strate actions:
    • Segregated Depository Accounts (SDAs)
    • Participant Failure Manual
    • Focus on Risk Management
  • Actions address following regulatory principles specifically:

Insolvency circumstances (IOSCO # 11;13)

Segregation and Portability (IOSCO # 14)

Settlement Finality (IOSCO # 1; 8)

Netting Arrangements and Default Rules (IOSCO # 1)

Reduction and Management of Risk (IOSCO # 3;4;7;16;17)

6 strategic intent of strate re international competitiveness
6. Strategic Intent of Stratere International Competitiveness
  • Regulatory Intent = Promote International Competitiveness
  • Strate actions:
    • International Linkages & Linkup
    • Take on New CSD Participants (also Foreign Participation)
    • CSD 11; International Forums
    • Development & Implementation of an African Strategy
    • WFC: Key actions to enhance understanding at a worldwide level.
  • Actions address following principles specifically:

Create Links (IOSCO #20)

Harmonisation to address legal risks (IOSCO # 1)

Fair and open access based on criteria (IOSCO # 18)

Exchange of information amongst Regulators (IOSCO # 24; G 20 par 28)

7 strategic intent of strate re disclosure and transparency
7. Strategic Intent of Stratere Disclosure and Transparency
  • Regulatory Intent = Disclosure, transparency and regulatory oversight
  • Strate actions:
    • Trade Repository (“TR”) (including OTC Derivatives Register)
    • Collateral management
    • SOR
  • Actions address following principles specifically:

Creation of TR (IOSCO #24)

OTC derivative contracts reported to TR (IOSCO # 24; G 20 par 25)

Exchange of information amongst Regulators (IOSCO # 24)