1. PRESENTATION BY FINANCIAL SERVICES BOARD TO THE NCOP SELECT COMMITTEE ON FINANCE THE SECURITIES SERVICES BILL, 2004

2. TOPICS TO BE ADDRESSED  Background  Ambit  Application  Structure  Conclusion

3. BACKGROUND  Policy Board reviewed regulatory framework in 1998  Legislation outdated  Legislation does not comply with best international practice  FSB established drafting team in 1998

4. AMBIT  Will consolidate the - –Stock Exchanges Control Act, 1985: JSE –Financial Markets Control Act, 1989: BESA & JSE –Custody and Administration of Securities Act, 1992: STRATE Ltd –Insider Trading Act, 1998  Will repeal these Acts  Also adds new provisions to those Acts

5. APPLICATION  Exchange and authorised users (members)  CSD and participants  Clearing house  Person trading unlisted securities  Issuers of securities  Clients of authorised users and participants  Market abuse - insider trading and market manipulation

6. STRUCTURE  The Bill confers the status of a SRO on exchanges and CSD’s  The Bill is structured in 9 chapters  Emphasis is placed on significant legislative changes and new principles

7. CHAPTER 1: PRELIMINARY PROVISIONS  Objects and application of Bill and prohibited activities  Concepts common to the whole Bill are defined

8. CHAPTER 2: REGULATION & SUPERVISION OF SECURITIES SERVICES - Functions of the Registrar/Deputy Registrar of Securities Services - Financial Markets Advisory Board

9. CHAPTER 3: EXCHANGES  Licensing  Functions of an exchange  Rules of the exchange  Off-market transactions in listed securities and the reporting thereof  Trading of unlisted securities

10. CHAPTER 4: CUSTODY & ADMINISTRATION OF SECURITIES - Licensing of a CSD - Acceptance of participants - Approval of nominees

11. CHAPTER 5 : GENERAL PROVISIONS APPLICABLE TO SROs  SRO is defined as an exchange or a CSD  Renewal of licences  Demutualisation of SROs  Limitation on control of SROs

12. CHAPTER 6: CLEARING HOUSE  Clearing houses need to be licensed (annually renewed) if this function is not performed in-house by an exchange  Amalgamation or transfer of clearing house – two or more clearing houses may amalgamate or merge with one another or with any SRO

13. CHAPTER 7: CODE OF CONDUCT  The Bill requires the Registrar to prescribe a code of conduct  The Bill prescribes the basic principles for the Code  The Code is binding on authorised users, their officers, employees and clients

14. CHAPTER 8: MARKET ABUSE  Insider trading and other market abuse practices

15. MARKET ABUSE  As in the case of insider trading, these abuses will henceforth fall under the supervision of the Directorate of Market Abuse, formerly known as the Insider Trading Directorate.  The penalties for these prohibited practices as well as for insider trading have been substantially increased, i.e. a fine not exceeding R50m or imprisonment for a period not exceeding 10 years, or both a fine and imprisonment.

16. CHAPTER 9: GENERAL PROVISIONS  Auditing  Powers of the Registrar and court

17. CHAPTER 9: ESTABLISHMENT OF ENFORCEMENT COMMITTEE  Establishment, composition, functions, proceedings, etc. of an independent EC  With the power to impose an administrative penalty on, or to require the payment of compensation (only iro insider trading) by a person who contravenes, or fails to comply with the Bill  It is expected that the EC will give the FSB more effective and expeditious enforcement powers

18. CHAPTER 9: GENERAL PROVISIONS  Winding-up, judicial management and curatorship  Right of appeal  Offences and penalties  Regulations

19. SCHEDULE - AMENDMENTS TO THE FSB ACT, COMPANIES ACT AND INSOLVENCY ACT  The amendments to these Acts are of a consequential nature

20. CONCLUSION  SSB will bring SA’s securities legislation on a par with best international practice  SSB takes cognisance of important developments within the local and foreign securities markets industry  SSB will further promote confidence and the maintenance of a stable SA securities market environment

21.  The SSB strives to maintain a healthy balance between investor protection and the enhancement of international competitiveness of securities services in the Republic CONCLUSION

22. ANY QUESTIONS?