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Financial Sector Regulation Act, 2017 (Act No. 9 of 2017)

Chapter 2 : Financial Stability

Part 6 : Systemically important financial institutions and payment systems

30. Prudential standards and regulator’s directives in respect of systemically important financial institutions and designated institutions

[Section 30 heading substituted by section 43(a) and 61(f) of the Financial Sector Laws Amendment Act, 2021 (Act No. 23 of 2021), Notice No. 789, GG45825, dated 28 January 2022- effective 1 June 2023 per (b)(i) of Commencement Notice No. 3202, GG48294, dated 24 March 2023]

 

(1) To mitigate the risks that systemic events may occur, the Reserve Bank may, after consulting the Prudential Authority, give a directive to the Prudential Authority requiring it to impose, either through prudential standards or regulator’s directives, requirements applicable to one or more specific systemically important financial institutions or to  such institutions generally in relation to any of the following matters:

[Words preceding section 30(1)(a) substituted by section 43(b) of the Financial Sector Laws Amendment Act, 2021 (Act No. 23 of 2021), Notice No. 789, GG45825, dated 28 January 2022- effective 1 June 2023 per (b)(i) of Commencement Notice No. 3202, GG48294, dated 24 March 2023]

(a) Solvency measures and capital requirements, which may include requirements in relation to counter-cyclical capital buffers;
(b) leverage ratios;
(c) liquidity;
(d) organisational structures;
(e) risk management arrangements, including guarantee arrangements;
(f) sectoral and geographical exposures;
(g) required statistical returns; and
(h) [Section 30(1)(h) deleted by section 43(d) of the Financial Sector Laws Amendment Act, 2021 (Act No. 23 of 2021), Notice No. 789, GG45825, dated 28 January 2022- effective 1 June 2023 per (b)(i) of Commencement Notice No. 3202, GG48294, dated 24 March 2023]
(h) any other matter in respect of which a prudential standard or regulator’s directive may be made that is prescribed by Regulations made for this section on the recommendation of the Governor.

 

(1A) To mitigate the risk that a designated institution may need to be placed in resolution, the Reserve Bank may, after consulting the Prudential Authority, give either or both of the following directives to the Prudential Authority:
(a) A directive to make one or more prudential standards that do any of the following:
(i) Specify the characteristics of flac instruments;
(ii) prescribe requirements for the conduct of valuations for the purposes of section 166Q; or
(iii) prescribe requirements for record keeping, data management and reporting to the Reserve Bank or the Prudential Authority; and
(b) a directive to issue a regulator’s directive to a specified designated institution requiring the designated institution to hold flac instruments to at least the value specified in the Reserve Bank’s directive.

[Section 30(1A) inserted by section 43(e) of the Financial Sector Laws Amendment Act, 2021 (Act No. 23 of 2021), Notice No. 789, GG45825, dated 28 January 2022- effective 1 June 2023 per (b)(i) of Commencement Notice No. 3202, GG48294, dated 24 March 2023]

 

(1B) Subsection (1A) does not apply to a designated institution that is an operator of a systemically important payment system.

[Section 30(1B) inserted by section 43(e) of the Financial Sector Laws Amendment Act, 2021 (Act No. 23 of 2021), Notice No. 789, GG45825, dated 28 January 2022- effective 1 June 2023 per (b)(i) of Commencement Notice No. 3202, GG48294, dated 24 March 2023]

 

(1C) Without limiting the matters that the Reserve Bank must consider in relation to subsection (1A)(b) in a particular case—
(a) it must consider the—
(i) capital that the designated institution is required to hold in terms of a financial sector law;
(ii) assets and liabilities of the designated institution;
(iii) difficulties that the Reserve Bank may face in performing its resolution functions in relation to the designated institution if the designated institution does not hold flac instruments to at least the value proposed; and
(iv) impact on the viability of the designated institution of holding flac instruments to at least the value proposed; and
(b) it may also consider international best practice.

[Section 30(1C) inserted by section 43(e) of the Financial Sector Laws Amendment Act, 2021 (Act No. 23 of 2021), Notice No. 789, GG45825, dated 28 January 2022- effective 1 June 2023 per (b)(i) of Commencement Notice No. 3202, GG48294, dated 24 March 2023]

 

(2) The Prudential Authority may comply with a directive in terms of subsection (1) or (1A).

[Section 30(2) substituted by section 43(f) of the Financial Sector Laws Amendment Act, 2021 (Act No. 23 of 2021), Notice No. 789, GG45825, dated 28 January 2022- effective 1 June 2023 per (b)(i) of Commencement Notice No. 3202, GG48294, dated 24 March 2023]

 

(3) The Prudential Authority must notify the Reserve Bank and the Financial Stability Oversight Committee of any steps taken to enforce a prudential standard made or a regulator’s directive issued in terms of subsection (2), and the effect of those steps.

 

 


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