The Regulatory Regime for Bond Markets from a South African Perspective Presentation to Africa Workshop Johannesburg - 19 June 2003 Gordon Rennie Independent Consultant

Agenda Background to FSB Business Philosophy Functions of the FSB Scope of Regulation Regulatory Framework Capital Markets

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

The FSB’s main functions are: Maintaining a regulatory framework Promoting understanding of regulatory system Enforcing compliance Supervising the financial institutions Investigating Advising interested parties Administering the reg’s and con’s

Business Philosophy of the FSB Efficient regulatory framework - sound balance between statutory control and self regulation (SA has SRO’s) Believes in consultative decision making Renders a timely and cost effective service in an impartial and consistent manner

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 Scope of supervision by the FSB

The FSB oversees: ito Stock Exchanges Control Act, No.1 of 1985 Derivatives Division of the JSE; and Bond Exchange of South Africa (BESA) JSE Securities Exchange South Africa (JSE) ito Financial Markets Control Act, No.55 of 1989 ito Custody and Admin. of Securities Act ito Insider Trading Act

New legislation to replace the previous four acts is pending Financial Advisors and Intermediaries Services Act (FAISA) Securities Services Bill (SSB) +

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

The FSB in Relation to the Regulatory Structure for the South African Exchanges Minister of Finance Financial Services Board (FSB) Stock Exchanges Control Act Financial Markets Control Act JSE - Deriv.JSE – Eq.BESA EXCHANGES MEMBERSHIP

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