The South African Reserve Bank, National Treasury, and the Financial Sector Conduct Authority (FSCA) are developing a law that will curb currency manipulation and this bill will be tabled in the national legislature soon.
Chief Director of Financial Sector Policy in the National Treasury, Vukile Davidson, and Olano Makhubela of the FSCA said the new bill will be able to curb the practise of price fixing in the markets.
The Conduct of Financial Institutions Bill will be tabled in the national legislature shortly, said Davidson.
He said they will also bring amendments to the Financial Markets Act to prevent this behaviour in the sector.
The SARB, National Treasury, FSCA, and Competition Commission were briefing the standing committee on finance on the findings by the commission that found that UK-based Standard Chartered Bank manipulated the rand on Friday. Standard Chartered was fined R43 million and has agreed to give evidence against other banks involved in rand rigging.
Davidson said work was already under way to deal with banks involved in this conduct in the future.
He said despite some work that has been done, they needed to ensure they improved the system and the market operated with integrity.
“To that end, as you are aware, we intend to introduce the Conduct of Financial Institutions Bill very soon into Parliament, as well as amendments to the Financial Markets Act soon after that,” said Davidson.
Makhubela said they were working with the SARB’s Prudential Authority and the National Treasury to address the challenges in the sector by tabling laws.
Makhubela said one of the interventions was that they have started licencing over-the-counter derivative providers.
“Secondly, there was a financial markets review done in 2014-2017 of our financial markets, and it came with various proposals. The FSCA, together with the Prudential Authority and National Treasury, is currently amending the Financial Markets Act to include in its definition foreign currency as a security. Currently, we don’t have that definition in the Act, and once this is done, it will give authorities the power to use the Financial Markets Act to supervise the conduct of institutions in the foreign currency market.
“Thirdly, and in line with the above, the amendments also seek to extend market abuse provisions in the Financial Markets Act to the foreign currency market,” said Makhubela.
He said they want to include the definition of listed and unlisted markets.
Makhubela said the Conduct of Financial Institutions Bill will give them powers to deal with currency manipulation.
“Davidson touched on this one, which is the Conduct of Financial Institutions Bill. This is one area and one bill we are quite passionate about because it will, for the first time, provide us with that dedicated instrument to be able to discharge our duty as a conduct authority.
“This bill is intended to cover both entity-to-entity and conduct issues, and these are the issues we are seeing in this price manipulation or fixing matter. But it goes beyond that. It will be covering entity-to-retail client issues,” said Makhubela.
Doris Tshepe of the Competition Commission said the settlement with Standard Chartered brings to five the number of banks that have reached a settlement agreement over the last few years.
She said the other 23 banks are still challenging the findings of the commission.
siyabonga.mkhwanazi@inl.co.za
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