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Act No. and year
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Short Title
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Extent of repeal or amendment
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Act No. 19 of 2012
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Financial Markets Act, 2012
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1. |
The amendment of section 1— |
| (a) |
by the deletion in subsection (1) of the definition of "appeal board"; |
| (b) |
by the insertion in subsection (1) after the definition of "authorised user" of the following definition: |
" 'Authority' means the Financial Sector Conduct Authority established in terms of section 56 of the Financial Sector Regulation Act;";
(c) by the deletion in subsection (1) of the definition of "board";
| (d) |
by the insertion in subsection (1) after the definition of "bank" of the following definition: |
" 'central counterparty' means a clearing house that—
| (a) |
interposes itself between counterparties to transactions in securities, becoming the buyer to every seller and the seller to every buyer and thereby ensuring the performance of open contracts; and |
| (b) |
becomes a counterparty to trades with market participants through novation, an open offer system or through a legally binding agreement;"; |
| (e) |
by the substitution in subsection (1) for the definition of "clearing house directive" of the following definition: |
" 'clearing house directive' means a directive issued by a licensed independent clearing house or a licensed central counterparty in accordance with its rules;";
| (f) |
by the substitution in subsection (1) for the definition of "clearing house rules" of the following definition: |
" 'clearing house rules' means the rules made by a licensed independent clearing house or a licensed central counterparty in accordance with this Act;";
| (g) |
by the substitution in subsection (1) for paragraph (b) of the definition of "clearing member" of the following paragraph: |
| "(b) |
in relation to a licensed independent clearing house or a licensed central counterparty, a person authorised by that independent clearing house to perform clearing services or settlement services or both clearing services and settlement services in terms of the clearing house rules,"; |
| (h) |
by the insertion in subsection (1) after the definition of "Companies Act" of the following definition: |
" 'conduct standard' has the same meaning ascribed to it in terms of the Financial Sector Regulation Act;";
| (i) |
by the deletion in subsection (1) of the definition of "enforcement committee:"; |
| (j) |
by the insertion in subsection (1) after the definition of "external authorised user" of the following definition: |
" 'external central counterparty' means a foreign person who is authorised by a supervisory authority to perform a function or functions similar to one or more of the functions of a central counterparty as set out in this Act and who is subject to the laws of a country other than the Republic, which laws—
| (a) |
establish a regulatory framework equivalent to that established by this Act; and |
| (b) |
are supervised by a supervisory authority;"; |
| (k) |
by the insertion in subsection (1) after the definition of "external exchange" of the following definition: |
" 'external market infrastructure' means each of the following:
| (a) |
An external central counterparty; |
| (b) |
an external central securities depository; |
| (c) |
an external clearing house; |
| (d) |
an external exchange; |
| (e) |
an external trade repository;"; |
| (l) |
by the insertion in subsection (1) after the definition of "Financial Intelligence Centre Act" of the following definitions: |
" 'financial sector law' has the same meaning ascribed to it in terms of section 1(1) of the Financial Sector Regulation Act;
'Financial Sector Regulation Act' means the Financial Sector Regulation Act, 2017;";
| (m) |
by the deletion in subsection (1) of the definition of "Financial Services Board Act"; |
| (n) |
by the substitution in subsection (1) for the definition of "independent clearing house" of the following definition: |
" 'independent clearing house' means a clearing house that clears transactions in securities on behalf of any person in accordance with its clearing house rules, and authorises and supervises its clearing members in accordance with its clearing house rules;"
| (o) |
by the insertion in subsection (1) after the definition of issuer" of the following definition: |
" 'joint standard' has the same meaning ascribed to it in terms of section 1(1) of the Financial Sector Regulation Act;";
| (p) |
by the insertion in subsection (1) after the definition of "juristic person" of the following definition: |
" 'licensed central counterparty' means a central counterparty licensed under section 49;";
| (q) |
by the insertion in subsection (1) after the definition of "licensed exchange" of the following definitions: |
" 'licensed external central counterparty' means an external central counterparty licensed under section 49A;
'licensed external trade repository' means an external trade repository licensed under section 56A;";
| (r) |
by the substitution in subsection (1) for the definition of "market infrastructure" of the following definition: |
" 'market infrastructure' means each of the following—
| (a) |
a licensed central counterparty; |
| [(a)](b)
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a licensed central securities depository; |
| [(b)](c)
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a licensed clearing house; |
| [(c)](d)
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a licensed exchange; |
| [(d)](e)
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a licensed trade repository;"; |
| (s) |
by the deletion in subsection (1) of the definition of "official website"; |
| (t) |
by the substitution in subsection (1) for the definition of "participant" of the following definition: |
" 'participant' means a person authorised by a licensed central securities depository to perform custody and administration services or settlement services or both, in terms of the [central securities] depository rules, and includes an external participant, where appropriate;";
| (u) |
by the insertion in subsection (1) after the definition of "participant" of the following definition: |
" 'prescribed' means prescribed by the Minister by regulations, or by a conduct standard or a joint standard;";
| (v) |
by the deletion in subsection (1) of the definitions of "prescribed by the Minister" and "prescribed by the registrar"; |
| (w) |
by the insertion in subsection (1) after the definition of "prescribed" of the following definitions: |
" 'Prudential Authority' means the authority established in terms of section 32 of the Financial Sector Regulation Act;
'prudential standard' has the same meaning ascribed to it in terms of section 1(1) of the Financial Sector Regulation Act;
'Register' means the Financial Sector Information Register referred to in section 256 of the Financial Sector Regulation Act;";
| (x) |
by the substitution in subsection (1) for the definition of "registrar" of the following definition: |
" 'registrar' means [the person referred to in section 6] the Registrar and Deputy Registrar of Securities Services referred to in section 1A(1);";
| (y) |
by the substitution in subsection (1) for the definition of "regulated person" of the following definition: |
" 'regulated person' means—
| (a) |
a licensed central counterparty; |
| [(a)](b)
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a licensed central securities depository; |
| [(b)](c)
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a licensed clearing house; |
| [(c)](d)
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a licensed exchange; |
| [(d)](e)
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a licensed trade repository; |
| [(e)](f)
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an authorised user; |
| [(f)](g)
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a clearing member; |
| [(i)](j)
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except for the purposes of section 3(6), sections 74 and 75, sections 89 to 92, and sections 100 to 103, an issuer; |
| (k) |
except for the purposes of sections 89 to 92, and sections 100 to 103, a licensed external central counterparty and a licensed external trade repository; or |
| [(j)](l)
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any other person [prescribed by the Minister in terms of section 5] specified in regulations for this purpose;"; |
| (z) |
by the substitution in subsection (1) in paragraph (a) of the definition of "securities" for subparagraph (v) of the following subparagraph: |
| "(v) |
participatory interests in a collective investment scheme as defined in the Collective Investment Schemes Control Act, 2002 (Act No. 45 of 2002), and units or any other form of participation in a foreign collective investment scheme approved by the [Registrar of Collective Investment Schemes] Authority in terms of section 65 of that Act; and"; |
| (zA) |
by the substitution in subsection (1) in paragraph (c) of the definition of "settle" for subparagraph (ii) of the following subparagraph: |
| "(ii) |
the parties have appointed a licensed independent clearing house, a licensed central counterparty or a licensed central securities depository to settle a transaction, in which case it has the meaning assigned in paragraph (a);"; |
| (zB) |
by the insertion in subsection (1) after the definition of "transfer" of the following definition: |
" 'Tribunal' means the Financial Services Tribunal established in terms of section 219 of the Financial Sector Regulation Act;";
| (zC) |
by the substitution for subsection (3)of the following subsection: |
| "(3) |
Where in this Act any supervisory authority is required to take a decision in consultation with the [registrar] Authority, such decision requires the concurrence of the [registrar] Authority."; and |
| (zD) |
by the addition of the following subsection: |
| "(4)
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Unless the context otherwise indicates, words and expressions not defined in subsection (1) have the same meaning ascribed to them in terms of the Financial Sector Regulation Act.". |
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| 3. |
The insertion after section 1 of the following section: |
"Relationship between Act and Financial Sector Regulation Act
1A.
| (1) |
If the Minister has determined by notice in the Gazette that the amendments of this Act contained in Schedule 4 to the Financial Sector Regulation Act must come into operation before the provisions of the Financial Sector Regulation Act in terms of which the Authority is established come into operation, then until the date on which the Authority is established—
|
| (a) |
a reference to "Authority" must be read as a reference to the executive officer and a deputy executive officer referred to in section 1 of the Financial Services Board Act, who are the Registrar and the Deputy Registrar of Securities Services, respectively; and |
| (b) |
the Registrar and Deputy Registrar of Securities Services exercise the powers and perform the functions of the Authority. |
| (2) |
If the Minister has determined by notice in the Gazette that the amendments of this Act contained in Schedule 4 to the Financial Sector Regulation Act must come into operation before the provisions of the Financial Sector Regulation Act in terms of which the Prudential Authority is established come into operation, then until the date on which the Prudential Authority is established—
|
| (a) |
a reference to "Prudential Authority" must be read as a reference to the Registrar of Banks; and |
| (b) |
the Registrar of Banks designated under section 4 of the Banks Act, 1990 (Act No. 94 of 1990) exercises the powers and performs the functions of the Prudential Authority. |
| (3) |
Except as otherwise provided by this Act or the Financial Sector Regulation Act, the powers and duties of the Authority in terms of this Act are in addition to the powers and duties that it has in terms of the Financial Sector Regulation Act. |
| (4) |
A reference in this Act to the Authority determining or publishing a matter by notice in the Gazette must be read as including a reference to the Authority determining or publishing the matter by notice in the Register.
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| (5) |
Unless expressly provided otherwise in this Act, or this Act requires a matter to be prescribed by regulation, a reference in this Act to a matter being— |
| (a) |
prescribed must be read as a reference to the matter being prescribed in a prudential standard, a conduct standard, or a joint standard; or |
| (b) |
determined must be read as a reference to the Authority determining the matter in writing and registering the determination in the Register. |
(6)
| (a) |
A reference in this Act to an on-site visit in terms of a provision of this Act, must be read as a reference to a supervisory on-site inspection in terms of the Financial Sector Regulation Act. |
| (b) |
A reference to an inspection in terms of a provision of this Act other than section 79(b) must be read as a reference to an investigation in terms of the Financial Sector Regulation Act. |
(7)
| (a) |
A reference in this Act to the Authority announcing or publishing information or a document on a website must be read as a reference to the Authority publishing the information or document in the Register. |
| (b) |
The Authority may also publish the information or document on the Authority’s website. |
| (8) |
A reference in this Act to a determined or prescribed fee must be read as a reference to the relevant fee determined in terms of section 237 and Chapter 16 of the Financial Sector Regulation Act. |
| (9) |
A reference in this Act to an appeal of a decision of the Authority or a market infrastructure to the appeal board must be read as a reference to a reconsideration of the decision by the Tribunal in terms of the Financial Sector Regulation Act. |
| (10) |
For the purposes of the Financial Sector Regulation Act, conduct standards made in terms of section 74 are regulatory instruments.". |
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4. |
The amendment of section 3— |
| (a) |
by the substitution for subsection (3) of the following subsection: |
| "(3) |
Despite any other law, [other than the Financial Intelligence Centre Act,] if there is an inconsistency between any provision of this Act and a provision of any other national legislation, except the Financial Intelligence Centre Act and the Financial Sector Regulation Act, this Act prevails."; and |
| (b) |
by the substitution for subsection (5) of the following subsection: |
| "(5) |
Despite any other law, if other national legislation confers a power on or imposes a duty upon an organ of state, other than the South African Reserve Bank or the Prudential Authority, in respect of a matter regulated under this Act, that power or duty must be exercised or performed in consultation with the [registrar] Authority, and any decision taken in accordance with that power or duty must be taken with the [approval] concurrence of the [registrar] Authority.". |
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| 5. |
The amendment of section 4— |
| (a) |
by the substitution in subsection (1) for paragraph (e) of the following paragraph: |
| "(e) |
act as a clearing member unless authorised by a licensed exchange [or], a licensed independent clearing house, a licensed central counterparty, a licensed external central counterparty or an external central counterparty that is exempt from the requirement to be licensed in terms of section 49A, as the case may be;"; |
| (b) |
by the substitution in subsection (1) for paragraph (g) of the following paragraph: |
| "(g) |
perform the functions of or operate as a trade repository unless that person is licensed under section 56 or section 56A, as the case may be; or"; |
| (c) |
by the substitution for subsection (2) of the following subsection: |
| "(2) |
A person who is not— |
| (a) |
licensed as an exchange, a central securities depository, a trade repository [or], a clearing house or a central counterparty; |
| (e) |
an approved nominee; [or] |
| (f) |
an issuer of listed securities[,]; |
| (g) |
licensed as an external central counterparty, or exempt from the requirement to be licensed in terms of section 49A; or |
| (h) |
licensed as an external trade repository, |
may not purport to be an exchange, central securities depository, trade repository, clearing house, central counterparty, external central counterparty, external trade repository, participant, authorised user, clearing member, approved nominee or issuer of listed securities, as the case may be, or behave in a manner or use a name or description which suggests, signifies or implies that there is some connection between that person and an exchange, a central securities depository, trade repository, clearing house, central counterparty, external central counterparty, external trade repository, participant, authorised user or clearing member, as the case may be, where in fact no such connection exists."; and
| (d) |
by the substitution for subsection (5) of the following subsection: |
"(5)
| (a) |
A clearing member may only provide the clearing services or settlement services for which it is authorised by a licensed exchange [or], licensed independent clearing house, or a licensed central counterparty, as the case may be, in terms of the exchange rules or clearing house rules, as the case may be. |
| (b) |
A clearing member may only provide clearing services or settlement services for which it is authorised by a licensed external central counterparty or an external central counterparty that is exempt from the requirement to be licensed in terms of section 49A, with the joint prior written approval of the Authority, the Prudential Authority and the South African Reserve Bank.". |
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| 6. |
The amendment of section 5— |
| (a) |
by the substitution in subsection (1) for paragraphs (b) and (c) of the following paragraphs: |
| "(b) |
a category of regulated persons, other than those specifically regulated under this Act, if the securities services provided, and the functions and duties exercised, whether in relation to listed or unlisted securities, [provided] by persons in such category, are not already regulated under this Act, and if, in the opinion of the Minister, it would further the objects of the Act in section 2 to regulate persons in such categories; |
| (c) |
the securities services that may be provided, and the functions and duties that may be exercised, by an external authorised user, external exchange, external participant, external central securities depository, external clearing house, external clearing member, external central counterparty or external trade repository, as the case may be."; and |
| (b) |
by the substitution for subsection (2) of the following subsection: |
| "(2) |
An external authorised user, external exchange, external participant, external central securities depository, external clearing house, or external clearing member [or external trade repository] may only provide those securities services or exercise functions or duties, as the case may be, prescribed by the Minister in terms of subsection (1)(c).". |
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| 7. |
The amendment of section 6: |
| (a) |
by the substitution for the heading of the section of following heading: |
"[Registrar and Deputy Registrar] Authority";
| (b) |
by the deletion of subsections (1) and (2); |
| (c) |
by the substitution in subsection (3) for the words preceding paragraph (a) of the following words: |
"In performing [those] its functions in terms of this Act, the Authority—";
| (d) |
by the substitution in subsection (3) for paragraph (k) of the following paragraph: |
| "(k) |
may issue [guidelines] guidance notices on the application and interpretation of this Act;"; |
| (e) |
by the substitution in subsection (3) for paragraph (m) of the following paragraph: |
| "(m) |
may exempt, for a specified period which may be renewed, any person or category of persons from the provisions of a section of this Act if the [registrar] Athority is satisfied that— |
| [(i) |
the application of said section will cause the applicant or clients of the applicant financial or other hardship or prejudice; and] |
|
[(ii)](i)
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the granting of the exemption will not— |
| (aa) |
conflict with the public interest; or |
| (bb) |
frustrate the achievement of the objects of this Act; and |
| (ii) |
the application of the section will cause the applicant or clients of the applicant financial or other hardship or prejudice; and |
| (iii) |
in relation to an external market infrastructure, and with the concurrence of the South African Reserve Bank and the Prudential Authority, the applicant— |
| (aa) |
is based in an equivalent jurisdiction in terms of section 6A and is authorised by the supervisory authority of such jurisdiction; |
| (bb) |
complies with any criteria prescribed in joint standards for the exemption of such persons; and |
| (cc) |
undertakes to cooperate and share information with the Authority, the South African Reserve Bank and the Prudential Authority to assist with the performance of functions and the exercise of powers in terms of financial sector law;"; |
| (f) |
by the substitution in subsection (3) for paragraph (n) of the following paragraph: |
| "(n) |
must inform the Minister and the Governor of any matter that in the opinion of the [registrar] Authority may pose systemic risk [to the financial markets; and];"; |
| (g) |
by the deletion in subsection (3) of paragraph (o); |
| (h) |
by the substitution for subsection (5) of the following subsection: |
| "(5) |
The [registrar] Authority must, where an exemption or a directive applies to all persons, regulated persons or securities services generally, publish the directive in the Gazette and on the [official] Authority’s website, and a copy of the published exemption or directive must be tabled in Parliament."; |
| (i) |
by the substitution in subsection (7) for the words preceding paragraph (a) of the following words: |
"The [registrar] Authority may, with the concurrence of the Prudential Authority, and in accordance with the requirements prescribed by the Minister under section 5(1)(a), in conduct standards or joint standards for, or in respect of, securities services—";
| (j) |
by the substitution in subsection (7) for paragraph (b) of the following paragraph: |
| "(b) |
prescribe conditions and requirements for the provision of securities services in respect of unlisted securities, including, but not limited to, [prescribing a code of conduct and] imposing reporting requirements;"; |
| (k) |
the substitution in subsection (7) for paragraph (d) of the following paragraph: |
| "(d) |
prescribe conditions and requirements in terms of which securities services in respect of specified types of unlisted securities may be provided, including[, but not limited to,] the manner in which clearing and settlement of such securities must take place;"; |
| (l) |
by the substitution in subsection (8) for the words preceding paragraph (a) of the following words: |
"In relation to the persons in the category prescribed [by the Minister under] in terms of section 5(1)(b), [the registrar] standards may—";
| (m) |
by the substitution in subsection (8) for paragraph (b) of the following paragraph: |
| "(b) |
prescribe conditions and requirements for the provision of securities services by such persons, including[, but not limited to,] prescribing [a code of conduct] conduct standards and imposing reporting requirements;"; |
| (n) |
by the substitution in subsection (8) for paragraph (d) of the following paragraph: |
| "(d) |
prohibit such persons from providing securities services or undertaking any activities which may frustrate the objects of [the] this Act or the Financial Sector Regulation Act."; and |
| (o) |
by the addition of the following subsection: |
| "(9)
|
In relation to the securities services that may be provided, or the functions and duties that may be exercised by an external authorised user, external exchange, external participant, external central securities depository, external clearing house, external central counterparty, external clearing member or external trade repository, as the case may be, joint standards may prescribe additional criteria for the approval, authorisation, licensing or exemption of those persons in the Republic, and for the equivalence recognition of the applicable foreign country.". |
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| 8. |
The insertion after section 6 of the following sections: |
"Equivalence recognition of foreign jurisdictions
6A.
| (1) |
On application by an interested party, the Authority, with the concurrence of the South African Reserve Bank and the Prudential Authority, may determine that the regulatory framework of a specified foreign country is equivalent (an "equivalent jurisdiction") to the regulatory framework established in terms of financial sector law, if the legislative and regulatory framework established in that foreign country meets the objectives of the financial sector law. |
| (2) |
A recognition in terms of section 6A(1) must be published on the Authority’s website and in the Register. |
| (3) |
The Authority must maintain a list of all foreign countries recognised under this section. |
| (4) |
When assessing the equivalence of the regulatory framework of a foreign country, the Authority, the South African Reserve Bank and the Prudential Authority must take into account — |
| (a) |
the nature and intensity of the supervisory authority’s oversight processes, including direct comparison with the regime applied by the Authority, the Prudential Authority and the South African Reserve Bank, as the case may be; |
| (b) |
alignment of the foreign country’s regulatory framework with relevant principles developed by international standard setting bodies applicable to market infrastructures; |
| (c) |
observed outcomes of the foreign regulatory framework applicable to market infrastructures relative to those in South Africa; and |
| (d) |
the need to prevent regulatory arbitrage. |
Withdrawal of recognition
| 6B. |
The Authority may, with the concurrence of the South African Reserve Bank and the Prudential Authority, withdraw recognition where the criteria set out in section 6A are no longer met. |
Principles of co-operation
6C.
| (1) |
The Authority must enter into a supervisory co-operation arrangement with the relevant supervisory authority from the equivalent jurisdiction for the purpose of performing its functions in terms of this Act. |
| (2) |
A supervisory co-operation arrangement referred to in subsection (1) must at least specify— |
| (a) |
the mechanism for the exchange of information between the Authority, the South African Reserve Bank, the Prudential Authority, and the relevant supervisory authorities ("the authorities:), including access to all information requested by the Authority regarding a licensed external market infrastructure; |
| (b) |
the mechanism for prompt notification to the Authority, the South African Reserve Bank and the Prudential Authority where the supervisory authority deems an external market infrastructure which it is supervising to be in breach of the conditions of its authorisation or of other law to which it is subject, or any other matter which may have an effect on the authorisation of the market infrastructure; |
| (c) |
the procedures concerning the coordination of supervisory activities including, where appropriate, for collaboration regarding the timing, scope and role of the authorities with respect to any cross-border supervisory on-site inspections; |
| (d) |
the processes the authorities should use if an authority subsequently determines that it needs to use requested supervisory information for law enforcement or disciplinary purposes, such as obtaining the consent of the requested authority and handling such information in accordance with the terms of existing memoranda of understanding for enforcement co-operation; |
| (e) |
the procedures for co-operation, including, where applicable, for discussion of relevant examination reports, for assistance in analysing documents or obtaining information from a licensed external market infrastructure and members of the controlling body or senior management; and |
| (f) |
the degree to which a supervisory authority may onward-share to a third party any non-public supervisory information received from another authority, and the processes for doing so. |
| (3) |
The Authority and supervisory authorities that have entered into supervisory co-operation arrangements in terms of subsection (1) must— |
| (a) |
establish and maintain appropriate confidential safeguards to protect all non-public supervisory information obtained from another supervisory authority; |
| (b) |
consult with each other and share risk analysis assessments and information to support the identification, assessment and mitigation of risks to markets and investors; |
| (c) |
consult, co-operate and, to the extent possible, share information regarding entities of systemic significance or whose activities could have a systemic impact on markets; |
| (d) |
co-operate in the day-to-day and routine oversight of internationally active licensed external market infrastructures; |
| (e) |
provide advance notification and consult, where possible and otherwise as soon as practicable, regarding issues that may materially affect the respective regulatory or supervisory interests of another authority; |
| (f) |
design mechanisms for supervisory co-operation to provide information both for routine supervisory purposes and during periods of crisis; and |
| (g) |
undertake ongoing and ad hoc staff communications regarding internationally active licensed external market infrastructure as well as more formal periodic meetings, particularly as new or complex regulatory issues arise.".
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| 9. |
The amendment of section 7— |
| (a) |
by the substitution in subsection (3) for paragraph (a) of the following paragraph: |
| "(a) |
be made in the manner and contain the information prescribed by the [registrar] Authority;"; |
| (b) |
by the substitution in subsection (3)(c) for subparagraph (v) of the following subparagraph: |
| "(v) |
the application fee [prescribed by the registrar] determined in terms of the Financial Sector Regulation Act;"; |
| (c) |
by the substitution in subsection (4) for paragraph (a) of the following paragraph: |
| "(a) |
The [registrar] Authority must publish a notice of an application for an exchange licence in two national newspapers at the expense of the applicant, and on the [official] Authority’s website."; |
| (d) |
by the substitution in subsection (4)(b) for subparagraphs (ii) and (iii) of the following subparagraphs: |
| "(ii) |
[where] that the proposed exchange rules and listing requirements [may be inspected by] are available on the website of the Authority for comments from members of the public; and |
| (iii) |
the period within, and the process by, which objections to the application or rules and listing requirements may be lodged with the [registrar] Authority;"; and |
| (e) |
by the addition in subsection (4) of the following paragraph: |
| "(c)
|
The Authority must publish the proposed exchange rules and listing requirements referred to in paragraph (b)(ii) on the Authority’s website.". |
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| 10. |
The amendment of section 8— |
| (a) |
by the substitution in subsection (1) for paragraph (c) of the following paragraph: |
| "(c) |
demonstrate that the fit and proper requirements prescribed [by the registrar] in relevant joint standards are met by the applicant, or the licensed exchange, as the case may be, [its directors] members of its controlling body and senior management;"; and |
| (b) |
by the addition of the following subsection: |
"(3)
| (a) |
Despite subsection (1), requirements prescribed under this section that are in force immediately before the commencement of this subsection continue to be in force. |
| (b) |
In respect of regulations prescribed in terms of subsection (1)(a), the Minister may repeal regulations, and new requirements may then be prescribed in joint standards or conduct standards. |
| (c) |
Paragraph (b) does not affect or limit the power of the Minister to prescribe or amend regulations in terms of subsection (1)(a). |
| (d) |
Requirements prescribed in terms of subsection (1)(c) or (2)(c) before the commencement of this subsection may be amended or repealed by conduct standards or joint standards.". |
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| 11. |
The amendment of section 9(4) by the substitution for paragraph (a) of the following paragraph: |
| "(a) |
The [registrar] Authority must publish a notice of an application for an amendment of the terms of an exchange licence or the conditions subject to which the licence was granted in two national newspapers, at the expense of the applicant, and on the [official] Authority’s website.". |
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| 12. |
The amendment of section 10— |
| (a) |
by substitution in subsection (2) for paragraph (f) of the following paragraph: |
| "(f) |
must, as soon as it becomes aware [thereof], inform the [registrar] Authority of any matter that it reasonably believes may [pose systemic risk to the financial markets] give rise to, or increase systemic risk;"; and |
| (b) |
by the substitution in subsection (2)(i) for subparagraph (ii) of the following subparagraph: |
| "(ii) |
may appoint [an associated or independent] a clearing house or central counterparty licensed under Chapter V to clear or settle transactions or both clear and settle transactions on behalf of the exchange;". |
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| 13. |
The amendment of section 11— |
| (a) |
by the substitution in subsection (2) for paragraph (c) of the following paragraph: |
| "(c) |
an exchange may take into account at a hearing information obtained by the [registrar] Authority in the course of [an] a supervisory on-site [visit or] inspection or investigation conducted [under section 95] in terms of the Financial Sector Regulation Act or obtained by the directorate in an investigation under section 84, read with section 85."; |
| (b) |
by the substitution in subsection (6) by the substitution for paragraphs (c) and (d) of the following paragraphs: |
| "(c) |
The [registrar] Authority must, as soon as possible after the receipt of a proposed amendment, publish— |
| (i) |
the amendment on the [official] Authority’s website; and |
| (ii) |
a notice in the Gazette that the proposed amendment is available on the [official] Authority’s website, calling upon all interested persons who have any objections to the proposed amendment, to lodge their objections with the [registrar] Authority within a period of 14 days from the date of publication of the notice. |
| (d) |
If there are no such objections, or if the [registrar] Authority has considered the objections and, if necessary, has consulted with the exchange and the persons who raised such objections and has decided to approve or amend the proposed amendment, the [registrar] Authority must publish — |
| (i) |
the amendment and the date on which it comes into operation on the [official] Authority’s website; and |
| (ii) |
a notice in the Gazette, which notice must state— |
| (aa) |
that the amendment of the listing requirements has been approved; |
| (bb) |
that the listing requirements as amended are available on the [official] Authority’s website and the website of the exchange; and |
| (cc) |
the date on which the amendment of the listing requirements will come into operation."; |
| (c) |
by the substitution in subsection (7)(a) for the words proceeding subparagraph (i) of the following words: |
| "(a) |
The [registrar] Authority may, by notice in the Gazette and on the [official] Authority’s website, amend the listing requirements of an exchange—"; and |
| (d) |
by the substitution in subsection (7)(b) for subparagraph (ii) of the following subparagraph: |
| "(ii) |
publish the reasons for the amendment, and the imperative for such amendment in the Gazette and on the [official] Authority’s website.". |
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14. |
The amendment of section 12(6) by the substitution for paragraph (b) of the following paragraph: |
| "(b) |
If the refusal to list securities was due to any fraud or other crime committed by the issuer, or any material mis-statement of its financial position or non-disclosure of any material fact, or if the removal of securities was due to a failure to comply with the listing requirements of the exchange, no other exchange in the Republic may, for a period of six months from the date referred to in paragraph (a), grant an application for the inclusion of the securities concerned in the list kept by it, or allow trading in such securities, unless the refusal or removal is withdrawn by the first exchange or set aside on [appeal] reconsideration by the [appeal board in terms of section 105] Tribunal.". |
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| 15. |
The amendment of section 17— |
| (a) |
by the substitution for subsection (1) of the following subsection: |
| "(1) |
The exchange rules must be consistent with this Act, the Financial Sector Regulation Act and any standard made in terms of this Act or the Financial Sector Regulation Act."; |
| (b) |
by the insertion after subsection (2) of the following subsection: |
| "(2A)
|
Regulations or standards may prescribe additional matters to those listed in subsection (2) that must be contained in the exchange rules."; and |
| (c) |
by the substitution in subsection (4) for paragraph (a) of the following paragraph: |
| "(a) |
Subject to section 5(1)(c) and (2) and the requirements prescribed [by the registrar] in joint standards, the exchange rules may provide for the approval of external authorised users to be authorised users of the exchange.". |
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| 16. |
The amendment of section 25(2) by the substitution for the words preceding paragraph (a) of the following words: |
"The [registrar] Authority may[,] prescribe standards in respect of [a report] reports referred to in subsection (1)[, prescribe] specifying—".
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17. |
The amendment of section 27— |
| (a) |
by the substitution in subsection (4) for paragraph (a) of the following paragraph: |
| "(a) |
The [registrar] Authority must publish a notice of an application for a central securities depository licence in two national newspapers, at the expense of the applicant, and on the [official] Authority’s website."; and |
| (b) |
by the addition in subsection (4) of the following paragraph: |
| "(c)
|
The Authority must publish the proposed depository rules referred to in paragraph (b)(ii) on the Authority’s website." |
|
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| 18. |
The amendment of section 28— |
| (a) |
by the substitution in subsection (1) for paragraph (c) of the following paragraph: |
| "(c) |
demonstrate that the fit and proper requirements prescribed [by the registrar] in the relevant joint standards are met by the applicant, or the central securities depository, as the case may be, [its directors] members of its controlling body and senior management;"; and |
| (b) |
by the addition of the following subsection: " |
(3)
| (a) |
Despite subsection (1), requirements prescribed under this section that are in force immediately before the commencement of this subsection continue to be in force. |
| (b) |
In respect of regulations prescribed in terms of subsection (1)(a), the Minister may repeal regulations, and new requirements may then be prescribed in joint standards or conduct standards. |
| (c) |
Paragraph (b) does not affect or limit the power of the Minister to prescribe or amend regulations in terms of subsection (1)(a). |
| (d) |
Requirements prescribed in terms of subsection (1)(c) or (2)(c) before the commencement of this subsection may be amended or repealed by conduct standards or joint standards.". |
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| 19. |
The amendment of section 29— |
| (a) |
by the substitution for subsection (2) of the following subsection: |
| "(2) |
The licence must specify the registered office of the central securities depository in the Republic and the places where the central securities depository may be operated, and that the central securities depository may not be operated at any other place without the joint prior written approval of the [registrar] Authority, the Prudential Authority and the South African Reserve Bank."; and |
| (b) |
by the substitution in subsection (4) for paragraph (a) of the following paragraph: |
| "(a) |
The [registrar] Authority must publish a notice of an application for an amendment of the terms of a central securities depository licence and the conditions subject to which the licence was granted in two national newspapers at the expense of the applicant and on the [official] Authority’s website.". |
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| 20. |
The amendment of section 30(2) by the substitution for paragraph (h) of the following paragraph: |
| "(h) |
must, as soon as it becomes aware [thereof], inform the [registrar] Authority of any matter that it reasonably believes may [pose systemic risk to the financial markets] give rise to, or increase, systemic risk;". |
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21. |
The amendment of section 33 by the substitution in subsection (1) for the words preceding paragraph (a) of the following words: |
"An issuer may convert certificated [Certificated] securities [may be converted] to uncertificated securities, at the election of the issuer or the holder of certificated securities, and an issuer may, subject to subsection (2), issue uncertificated securities despite any contrary provision in—".
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| 22. |
The amendment of section 35— |
| (a) |
by the substitution for subsection (1) of the following subsection: |
| "(1) |
The depository rules must be consistent with this Act, the Financial Sector Regulation Act and any standard made in terms of this Act or the Financial Sector Regulation Act."; |
| (b) |
by the insertion after subsection (2) of the following subsection: |
| "(2A)
|
Regulations or standards may prescribe additional matters to those listed in subsection (2) that must be contained in the depository rules."; |
| (c) |
by the substitution in subsection (4) for paragraph (a) of the following paragraph: |
"(4)
| (a) |
Subject to section 5(1)(c) and (2) and requirements prescribed [by the registrar] in conduct standards or joint standards, the depository rules may provide for the approval of external participants or external central securities depositories to be participants of the central securities depository."; and |
| (d) |
by the substitution in subsection (4)(b) for subparagraph (ii) of the following subparagraph: |
| "(ii) |
where a central securities depository has approved an external central securities depository as a participant, for the identification of the relevant laws or depository rules that apply to each aspect of the participation, including, but not limited to, the laws regulating effectiveness against third parties and insolvency proceedings.[—
|
| (aa) |
the identification of the supervisory authority that supervises that external central securities depository; |
| (bb) |
the identification of the relevant laws or depository rules that apply to each aspect of the participation, including, but not limited to, the laws regulating effectiveness against third parties and insolvency proceedings.] |
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23. |
The amendment of section 36 by the substitution for subsection (1) of the following subsection: |
| "(1) |
The [registrar] Authority may [direct] determine that any securities held by a central securities depository in its central securities account must, unless they are bearer instruments, money market securities or recorded in a uncertificated securities register in accordance with section 50 of the Companies Act and the depository rules, be registered in the name of that central securities depository or its wholly owned subsidiary, as defined in section 1 of the Companies Act, and approved by the [registrar] Authority.". |
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24. |
The amendment of section 39 by the substitution for subsection (3) of the following subsection: |
| "(3) |
An interest in respect of uncertificated securities may be granted under this section, where applicable, and in the manner provided for in the depository rules, and is effective against third parties, in relation to a central securities account or a securities account, where such an interest extends to all uncertificated securities standing to the credit of the relevant central securities account or securities account at the time the pledge is effected.". |
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| 25. |
The amendment of the heading in Chapter V preceding section 47 by the substitution for the heading of the following heading: |
"Licensing of clearing house and central counterparty".
|
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|
26. |
The amendment of section 47— |
(a) by the substitution for the heading of the section of the following heading:
"Application for clearing house licence and central counterparty licence";
(b) by the substitution for subsection (1) of the following subsection:
"(1) A clearing house and a central counterparty must be licensed under section 49.";
(c) by the insertion after subsection (1) of the following subsection:
| "(1A) |
Subject to section 110(6), a central counterparty must be an independent clearing house."; |
(d) by the substitution for subsection (2) of the following subsection:
| "(2) |
A juristic person may apply to the [registrar] Authority for a clearing house licence or a central counterparty licence."; |
| (e) |
by the substitution in subsection (3) for the words preceding paragraph (a) of the following words: |
"An application for a clearing house licence or central counterparty licence must—";
| (f) |
by the substitution in subsection (3)(c) for subparagraph (iii) of the following subparagraph: |
| "(iii) |
the application fee [prescribed by the registrar] determined in terms of the Financial Sector Regulation Act;"; |
| (g) |
by the substitution in subsection (3)(c) for subparagraph (v) of the following subparagraph: |
| "(v) |
in relation to an application for an independent clearing house licence or a central counterparty licence, a copy of the proposed clearing house rules that must comply with section 53; and"; |
| (h) |
by the substitution in subsection (4) for paragraph (a) of the following paragraph: |
| "(a) |
The [registrar] Authority must publish a notice of an application for a clearing house licence in two national newspapers at the expense of the applicant and on the [official] Authority’s website."; |
| (i) |
by the substitution in subsection (4)(b) for subparagraph (ii) of the following subparagraph: |
| "(ii) |
in relation to an independent clearing house or a central counterparty, [where] that the proposed clearing house rules [may be inspected by] are available on the Authority’s website for comments from members of the public; and"; and |
| (j) |
by the addition in subsection (4) of the following paragraph: |
| "(c)
|
The Authority must publish the proposed clearing house rules referred to in paragraph (b)(ii) on the Authority’s website. |
|
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| 27. |
The amendment of section 48— |
| (a) |
by the substitution for the heading of the section of the following heading: |
"Requirements applicable to applicants for clearing house licence, central counterparty licence [and], licenced clearing house and licensed central counterparty";
| (b) |
by the substitution for subsection (1) of the following subsection: |
| "(1) |
An applicant for a clearing house licence and a licensed clearing house, and an applicant for a central counterparty licence and a licensed central counterparty must— |
| (a) |
subject to the requirements prescribed by the Minister, have sufficient assets and resources, which resources include financial, management and human resources with appropriate experience, to perform its functions as set out in this Act; |
| (b) |
have governance arrangements that are clear and transparent, promote the safety and efficiency of the clearing house or central counterparty, and support the stability of the broader financial system, other relevant public interest considerations, and the objectives of relevant stakeholders; |
| (c) |
demonstrate that the fit and proper requirements prescribed [by the registrar] in the relevant joint standards are met by the applicant [ or], the licensed clearing house or the licensed central counterparty, as the case may be, [its directors]members of its controlling body and senior management; |
| (d) |
comply with the requirements prescribed [by the registrar] in the joint standards for the clearing or settlement of transactions in securities, or both; |
| (e) |
implement an effective and reliable infrastructure to facilitate the clearing of securities cleared by the clearing house or central counterparty; |
| (f) |
implement effective arrangements to manage the material risks associated with the operation of a clearing house or central counterparty; |
| (g) |
have made arrangements for security and back-up procedures to ensure the integrity of the records of transactions cleared, settled or cleared and settled through the clearing house or central counterparty; and |
| (h) |
in relation to an applicant for an independent clearing house licence [ or], a central counterparty licence, a licensed independent clearing house or a licensed central counterparty, have made arrangements for the efficient and effective supervision of clearing members so as to ensure compliance with the clearing house rules and clearing house directives and this Act."; |
| (c) |
by the insertion after subsection (1) of the following subsection: |
| "(1A)
|
Subject to subsection (1) and the regulations prescribed by the Minister, a central counterparty must— |
| (a) |
implement a margin system that establishes margin levels commensurate with the risks and particular attributes of each product, portfolio, and market it serves; |
| (b) |
collect and manage collateral held for the due performance of the obligations of clearing members or clients of clearing members; |
| (c) |
establish and maintain a default fund to mitigate the risk should there be a default by a clearing member and to ensure, where possible, that the obligations of that clearing member continue to be fulfilled; |
| (d) |
maintain initial capital as prescribed, including an appropriate buffer; |
| (e) |
have a clearly defined default waterfall where the obligations of the defaulting clearing member, other clearing members and the central counterparty are legally and clearly managed; |
| (f) |
provide an appropriate segregation and portability regime to protect the positions of clients of a defaulting clearing member; and |
| (g) |
provide the necessary infrastructure, resources and governance to facilitate its post trade management functions and, in the event of default of one or more of the clearing members— |
| (i) |
ensure that sufficient risk policies, procedures and processes are in place; and |
| (ii) |
have sound internal controls for robust transaction processing and management."; |
| (d) |
by the substitution in subsection (2) for paragraphs (a) and (b) of the following paragraphs: |
| "(2) |
The [registrar] Authority may— |
| (a) |
require an applicant[ or], a licensed clearing house or licensed central counterparty to furnish such additional information, or require such information to be verified, as the [registrar] Authority may deem necessary; |
| (b) |
take into consideration any other information regarding the applicant, a licensed clearing house or licensed central counterparty, derived from whatever source, including any other supervisory authority, if such information is disclosed to the applicant or a licensed clearing house and the latter is given a reasonable opportunity to respond thereto; and"; and |
| (e) |
by the addition of the following subsection: |
"(3)
| (a) |
Despite subsection (1), requirements prescribed under this section that are in force immediately before the commencement of this subsection continue to be in force. |
| (b) |
In respect of regulations prescribed in terms of subsection (1)(a), the Minister may repeal regulations, and new requirements may then be prescribed in joint standards or conduct standards. |
| (c) |
Paragraph (b) does not affect or limit the power of the Minister to prescribe or amend regulations in terms of subsection (1)(a). |
| (d) |
Requirements prescribed in terms of subsection (1)(c) or (2)(c) before the commencement of this subsection may be amended or repealed by conduct standards or joint standards.". |
|
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|
| 28. |
The amendment of section 49— |
| (a) |
by the substitution for the heading of the section of the following heading: |
"Licensing of clearing house and central counterparty";
| (b) |
by the substitution for subsection (1) of the following subsection: |
| "(1) |
The [registrar] Authority may, with the concurrence of the Prudential Authority and the South African Reserve Bank and after consideration of any objection received as a result of the notice referred to in section 47(4) and subject to the conditions which the [registrar] Authority may consider appropriate, grant a clearing house licence to perform the functions referred to in section 50, if—"; |
| (c) |
by the insertion after subsection (1) of the following subsection: |
| "(1A) |
Subject to the regulations or joint standards, the Authority may, with the concurrence of the Prudential Authority and the South African Reserve Bank, and after consideration of any objection received as a result of the notice referred to in section 47(4) and subject to the conditions which the Authority may consider appropriate, grant a central counterparty licence to perform the functions referred to in section 50, if— |
| (a) |
the applicant complies with the relevant requirements of this Act; and |
| (b) |
the objects of this Act referred to in section 2 will be furthered by the granting of the licence."; |
| (d) |
by the substitution in subsection (2) for the words preceding paragraph (a) of the following words: |
"The clearing house licence and the central counterparty licence —";
| (e) |
by the substitution in subsection (2) for paragraphs (a) and (b) of the following paragraphs: |
| "(a) |
must specify the functions that may be performed by the clearing house and central counterparty, and the securities in respect of which those functions may be performed, any other terms and conditions of the licence, the registered office of the clearing house and central counterparty, and the places where the clearing house and central counterparty may be operated, and stipulate that the clearing house and central counterparty, may not be operated at any other place without the joint prior written approval of the [registrar]Authority, the Prudential Authority and the South African Reserve Bank; and |
| (b) |
may specify that insurance, a guarantee, compensation fund, or other warranty must be in place to enable the clearing house and central counterparty to provide compensation, subject to the clearing house rules, to clients of clearing members."; |
| (f) |
by the substitution in subsection (3) of the following subsection: |
| "(3) |
A clearing house and a central counterparty, may at any time apply to the [registrar] Authority for an amendment of the terms of the licence and the conditions subject to which the licence was granted."; and |
| (g) |
by the substitution in subsection (4) for paragraph (a) of the following paragraph: |
| "(a) |
The [registrar] Authority must publish a notice of an application for an amendment of the terms of a clearing house licence and central counterparty licence and the conditions subject to which the licence was granted in two national newspapers at the expense of the applicant and on the [official] Authority’s website.". |
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29. |
The insertion after section 49 of the following section: |
"Licensing of external central counterparty
49A.
| (1) |
An external central counterparty must be licensed under this section to perform functions or provide services, unless it is exempt from the requirement to be licensed in terms of section 6(3)(m). |
| (2) |
An external central counterparty from an equivalent jurisdiction may apply to the Authority for a licence. |
| (3) |
An application for a licence in terms of this section must— |
| (a) |
be made in the manner and contain information determined by the Authority; |
| (b) |
be accompanied by a copy of the proposed rules; |
| (c) |
be accompanied by the application fee determined in terms of the Financial Sector Regulation Act; and |
| (d) |
be supplemented by any additional information that the Authority may reasonably require. |
(4)
| (a) |
The Authority must publish a notice of an application for a licence in two national newspapers at the expense of the applicant and on the Authority’s website. |
| (b) |
The notice must state— |
| (i) |
the name of the applicant; and |
| (ii) |
the availability of the operating rules of the external central counterparty on the Authority’s website, for members of the public. |
| (5) |
An applicant for a licence or a licensed external central counterparty must be either— |
| (a) |
a company as defined in section 1(1) of the Companies Act; or |
| (b) |
an external company as defined in section 1(1) of the Companies Act that is registered as required by section 23 of that Act. |
| (a) |
require an applicant or a licensed external central counterparty to furnish such information, or require such information to be verified, as the Authority may deem necessary in connection with the application; and |
| (b) |
take into consideration any other information regarding the applicant or the external central counterparty, derived from whatever source, including any other supervisory authority, if such information is disclosed to the applicant or the external central counterparty, as the case may be, and the latter is given a reasonable opportunity to respond thereto. |
| (7) |
Regulations or joint standards may prescribe additional criteria for the licensing or exemption of an external central counterparty. |
| (8) |
The Authority may, with the concurrence of the South African Reserve Bank and the Prudential Authority, grant a licence or an exemption, if— |
| (a) |
the applicant or the external central counterparty undertakes to co-operate and share information with the Authority, the Prudential Authority and the South African Reserve Bank to assist with the performance of functions and the exercise of powers in terms of financial sector law; and |
| (b) |
the objects of this Act referred to in section 2 will be furthered by the granting of the licence. |
| (9) |
A licence or exemption may only be granted after the following factors have been taken into consideration: |
| (a) |
Relevant international standards; |
| (b) |
the type and size of external central counterparty; |
| (c) |
the impact of the activities of the external central counterparty on the South African financial system; |
| (d) |
the degree of systemic risk posed by the activities of the external central counterparty; and |
| (e) |
any other factors that the Minister, the Authority, the South African Reserve Bank or the Prudential Authority, as the case may be, deem relevant. |
| (10) |
A licensed external central counterparty must comply with the relevant requirements of this Act and any other terms and conditions of the licence. |
| (11) |
The licence granted in terms of subsection (8) must specify those functions or duties, or services that may be provided by the external central counterparty and the securities in respect of which those functions or duties, or services may be performed. |
| (12) |
A licensed external central counterparty may at any time apply to the Authority for an amendment of the terms of its licence or the conditions subject to which the licence was granted. |
(13)
| (a) |
The Authority must publish a notice of an application for an amendment of the terms of a licence and the conditions subject to which the licence was granted in two national newspapers at the expense of the applicant and on the Authority’s website. |
| (b) |
The notice must state— |
| (i) |
the name of the applicant; |
| (ii) |
the nature of the proposed amendments; and |
| (iii) |
the period within which objections to the application may be lodged with the Authority. |
| (14) |
The Authority may, with the concurrence of the South African Reserve Bank and the Prudential Authority, amend the terms of a licence or the conditions subject to which the licence was granted. |
(15)
| (a) |
In respect of regulations that may be prescribed in terms of subsection (7), the Minister may repeal regulations, and new requirements may then be prescribed in joint standards or conduct standards. |
| (b) |
Paragraph (a) does not affect or limit the power of the Minister to prescribe or amend regulations in terms of subsection (7). |
| (c) |
Joint standards may be prescribed to address any matters that are not prescribed in regulations, or to provide detail that is additional to, but not inconsistent with, regulations prescribed by the Minister in terms of subsection (7).". |
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| 30. |
The amendment of the heading in Chapter V preceding section 50 by the substitution for the heading of the following heading: |
"Functions of licensed clearing house and licensed central counterparty".
|
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|
| 31. |
The amendment of section 50— |
| (a) |
by the substitution for the heading of the section of the following heading: |
"Functions of licensed clearing house and licensed central counterparty, and power of Authority to assume responsibility for functions";
| (b) |
by the substitution for subsection (1) of the following subsection: |
| "(1) |
A licensed clearing house and a licensed central counterparty must conduct its business in a fair and transparent manner with due regard to the rights of clearing members and their clients."; |
| (c) |
by the substitution in subsection (2) for the words preceding paragraph (a) of the following words: |
"A licensed clearing house and a licensed central counterparty—";
| (d) |
by the substitution in subsection (2) for |
paragraph (b) of the following paragraph:
| "(b) |
must, as soon as it becomes aware thereof, inform the [registrar] Authority of any matter that it reasonably believes may [pose systemic risk to the financial markets] give rise to, or increase, systemic risk;"; |
| (e) |
by the substitution in subsection (3) for the words preceding paragraph (a) of the following words: |
"A licensed independent clearing house and a licensed central counterparty, in addition to the functions referred to in subsection (2)—";
| (f) |
by the insertion after subsection (3) of the following subsection: |
| "(3A)
|
A central counterparty, in addition to the functions referred to in subsections (1), (2) and (3), must— |
| (a) |
interpose itself between counterparties to transactions in securities through the process of novation, legally binding agreement or open offer system; |
| (b) |
manage and process the transactions from the date the central counterparty interposes itself between counterparties to transactions, becoming the buyer to every seller and seller to every buyer, to the date of fulfilment of the legal obligations in respect of such transactions; and |
| (c) |
facilitate its post-trade management functions."; and |
| (g) |
by the substitution in subsection (4) for paragraph (b) of the following paragraph: |
| "(b) |
The [registrar] Authority must, before assuming responsibility as contemplated in paragraph (a)— |
| (i) |
inform the clearing house or central counterparty of the [registrar’s] Authority’s intention to assume responsibility; |
| (ii) |
give the clearing house or central counterparty the reasons for the intended assumption; and |
| (iii) |
call upon the clearing house or central counterparty to show cause within a period specified by the [registrar] Authority why responsibility should not be assumed by the [registrar] Authority." |
|
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|
|
| 32. |
The amendment of section 51— |
| (a) |
by the substitution for subsection (1) of the following subsection: |
| "(1) |
An independent clearing house or a central counterparty required under section 49(2)(b) to have insurance, a guarantee, a compensation fund, or other warranty in place, may impose a fee on any person involved in a transaction in listed or unlisted securities cleared or settled or both through the clearing house for the purpose of maintaining that insurance, guarantee, compensation fund or other warranty."; and |
| (b) |
by the substitution for subsection (2) of the following subsection: |
| "(2) |
Any funds received or held by an independent clearing house or a central counterparty for the purpose of maintaining the insurance, guarantee, compensation fund or other warranty contemplated in section 49(2)(b), are for all intents and purposes considered to be "trust property" as defined in the Financial Institutions (Protection of Funds) Act and that Act applies to those funds.". |
|
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|
|
| 33. |
The amendment of section 52 by the substitution for the section of the following section: |
"Funds of mutual independent clearing house or central counterparty";
"A mutual independent clearing house or a central counterparty may require its clearing members to contribute towa
rds the funds of the clearing house for the purpose of carrying on the business of the clearing house.".
|
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|
|
34. |
The amendment of section 53— |
| (a) |
by the substitution for subsection (1) of the following subsection: |
| "(1) |
The clearing house rules must be consistent with this Act, the Financial Sector Regulation Act and any standard made in terms of this Act or the Financial Sector Regulation Act."; |
| (b) |
by the substitution in subsection (2) for paragraph (u) of the following paragraph: |
| "(u) |
for the administration of securities and funds held for own account or on behalf of a client by a clearing member, including the settlement of unsettled transactions, under insolvency proceedings in respect of that clearing member; and"; |
| (c) |
by the substitution in subsection (2) for paragraphs (z) and (aa) of the following paragraphs: |
| "(z) |
for the segregation and portability of funds and securities held as collateral; [and] |
| (aa) |
that clearing members must notify the clearing house as soon as it commences an insolvency proceeding or an insolvency proceeding is commenced against it; and"; |
| (d) |
by the addition in subsection (2) of the following paragraph: |
| "(bb)
|
in the case of a central counterparty, for the default procedures to be followed, including close-out procedures, in the event of a default of a clearing member;"; |
| (e) |
by the insertion after subsection (2) of the following subsection: |
| "(2A)
|
Regulations or standards may prescribe additional matters to those listed in subsection (2) that must be contained in the clearing house rules."; and |
| (f) |
by the substitution in subsection (4) for paragraph (a) of the following subsection: |
| "(a) |
Subject to section 5(1)(c) and (2) and the requirements prescribed [by the registrar; the] in joint standards, clearing house rules may provide for the approval of external clearing members to be clearing members of the clearing house.". |
|
|
|
|
| 35. |
The amendment of section 54— |
| (a) |
by the substitution for subsection (1) of the following subsection: |
| "(1) |
[Subject to the regulations prescribed by the Minister, a] A trade repository must be licensed under section 56."; |
| (b) |
by the substitution in subsection (3)(c) for subparagraph (iii) of the following subparagraph: |
| "(iii) |
the application fee [prescribed by the registrar] determined in terms of the Financial Sector Regulation Act;"; and |
| (c) |
by the substitution in subsection (4) for paragraph (a) of the following paragraph: |
| "(a) |
The [registrar] Authority must publish a notice of an application for a trade repository licence in two national newspapers, at the expense of the applicant, and on the [official] Authority’s website.". |
|
|
|
|
| 36. |
The amendment of section 55— |
| (a) |
by the substitution in subsection (1) for paragraph (c) of the following paragraph: |
| "(c) |
demonstrate that the fit and proper requirements prescribed [by the registrar] in the joint standards are met by the applicant, [its directors]members of its controlling body and senior management;"; |
| (b) |
by the substitution for subsection (2) of the following subsection: |
| "(2) |
The [registrar] Authority may [— |
| (a) |
require an applicant to furnish such additional information, or require such information to be verified, as the registrar may deem necessary; |
|
(b)] |
take into consideration any other information regarding the applicant, derived from whatever source, including any other supervisory authority, if such information is disclosed to the applicant and the latter is given a reasonable opportunity to respond thereto [; and
|
| (c) |
prescribe any of the requirements referred to in subsection (1) in greater detail]."; and |
| (c) |
by the addition of the following subsection: |
"(3)
| (a) |
Despite subsection (1), requirements prescribed under this section that are in force immediately before the commencement of this subsection continue to be in force. |
| (b) |
In respect of regulations prescribed in terms of subsection (1)(a), the Minister may repeal regulations, and new requirements may then be prescribed in joint standards or conduct standards. |
| (c) |
Paragraph (b) does not affect or limit the power of the Minister to prescribe or amend regulations in terms of subsection (1)(a). |
| (d) |
Requirements prescribed in terms of subsection (1)(c) before the commencement of this subsection may be amended or repealed by conduct standards or joint standards.". |
|
|
|
|
| 37. |
The amendment of section 56— |
| (a) |
by the substitution for subsection (1) of the following subsection: |
| "(1) |
Subject to subsection (2) [and regulations prescribed by the Minister], the [registrar] Authority may, after consideration of any objection received as a result of the notice referred to in section 54(4), and subject to the conditions which the [registrar] Authority may consider appropriate, grant a trade repository a licence to perform the duties referred to in section 57."; and |
| (b) |
by the substitution in subsection (6) for paragraph (a) of the following paragraph: |
| "(a) |
The [registrar] Authority must publish a notice of an application for an amendment of the terms of a trade repository licence and the conditions subject to which the licence was granted in two national newspapers, at the expense of the applicant, and on the [official] Authority’s website.". |
|
|
|
|
|
38. |
The insertion after section 56 of the following section: |
"Licensing of external trade repository
56A.
| (1) |
An external trade repository must be licensed under this section to perform duties or provide services, unless it is exempt from the requirement to be licensed in terms of section 6(3)(m). |
| (2) |
An external trade repository from an equivalent jurisdiction may apply to the Authority for a licence. |
| (3) |
An application for a licence in terms of this section must— |
| (a) |
be made in the manner and contain the information determined by the Authority; |
| (b) |
be accompanied by the application fee determined in terms of the Financial Sector Regulation Act; and |
| (c) |
be supplemented by any additional information that the Authority may reasonably require. |
(4)
| (a) |
The Authority must publish a notice of an application for a licence in two national newspapers, at the expense of the applicant, and on the Authority’s website. |
| (b) |
The notice referred to in paragraph (a) must state— |
| (i) |
the name of the applicant; and |
| (ii) |
the period within, and the process by, which objections to the application may be lodged with the Authority. |
| (5) |
Regulations or joint standards may prescribe additional criteria for the licensing of an external trade repository. |
| (6) |
The Authority may, with the concurrence of the Prudential Authority and the South African Reserve Bank, grant a licence, if— |
| (a) |
the applicant undertakes to co-operate and share information with the Authority, the Prudential Authority and the South African Reserve Bank to assist with the performance of functions and the exercise of powers in terms of financial sector law; and |
| (b) |
the objects of this Act referred to in section 2 will be furthered by the granting of the licence. |
| (7) |
A licence or exemption may only be granted after the following factors have been taken into consideration: |
| (a) |
Relevant international standards; |
| (b) |
the type and size of the external trade repository; |
| (c) |
the impact of the activities of the external trade repository on the South African financial system; |
| (d) |
the degree of systemic risk posed by the activities of the external trade repository; and |
| (e) |
any other factors that the Minister, the Authority, the South African Reserve Bank or the Prudential Authority, as the case may be, deem relevant. |
| (8) |
A licensed external trade repository must comply with the relevant requirements of this Act and any other terms and conditions of the licence. |
| (9) |
The licence granted in terms of subsection (6) must specify the services that may be provided by the external trade repository and the securities in respect of which those services may be provided. |
| (10) |
A licensed external trade repository may at any time apply to the Authority for an amendment of the terms of its licence or the conditions subject to which the licence was granted. |
(11)
| (a) |
The Authority must publish a notice of an application for an amendment of the terms of a licence and the conditions subject to which the licence was granted in two national newspapers at the expense of the applicant and on the Authority’s website. |
| (b) |
The notice must state— |
| (i) |
the name of the applicant; |
| (ii) |
the nature of the proposed amendments; and |
| (iii) |
the period within which objections to the application may be lodged with the Authority. |
| (12) |
The Authority may, with the concurrence of the South African Reserve Bank and the Prudential Authority, amend the terms of a licence or the conditions subject to which the licence was granted. |
(13)
| (a) |
In respect of regulations that may be prescribed in terms of subsection (5), the Minister may repeal regulations, and new requirements may then be prescribed in joint standards or conduct standards. |
| (b) |
Paragraph (a) does not affect or limit the power of the Minister to prescribe or amend regulations in terms of subsection (5). |
| (c) |
Joint standards or conduct standards may be prescribed to address any matters that are not prescribed in regulations, or to provide detail that is additional to, but not inconsistent with, regulations prescribed by the Minister in terms of subsection (5).". |
|
|
|
|
|
39. |
The amendment of section 57— |
| (a) |
by the substitution in subsection (2) for paragraph (b) of the following paragraph: |
| "(b) |
make [the] information [prescribed by the registrar] prescribed by the Authority in joint standards made with the concurrence of the South African Reserve Bank available to the [registrar] Authority, the Prudential Authority, the South African Reserve Bank, other relevant supervisory authorities and other persons, subject to the requirements prescribed by the [registrar] Authority in joint standards made with the concurrence of the South African Reserve Bank under section 58 [regarding] as to the manner, form, and frequency of disclosure;"; and |
| (b) |
by the substitution for subsection (3) of the following subsection: |
| "(3) |
[The registrar] Joint standards may prescribe [additional] duties additional to those referred to in subsection (2) [in greater detail]. |
|
|
|
|
| 40. |
The amendment of section 58 by the addition of the following subsection, the existing section becoming subsection(1): |
"(2)
| (a) |
Despite subsection (1), requirements prescribed under this section that are in force immediately before the commencement of this subsection continue to be in force. |
| (b) |
In respect of regulations prescribed in terms of subsection (1), the Minister may repeal regulations, and new requirements may then be prescribed in joint standards or conduct standards. |
| (c) |
Paragraph (b) does not affect or limit the power of the Minister to prescribe or amend regulations in terms of subsection (1). |
| (d) |
Requirements other than those that were prescribed in regulations referred to in paragraph (b) that were prescribed terms of subsection (1) before the commencement of this subsection, may be amended or repealed by conduct standards or joint standards.". |
|
|
|
|
| 41. |
The substitution for section 59 of the following section: |
"Annual assessment
| 59. |
The [registrar] Authority, in consultation with the Prudential Authority, must annually assess whether a licensed market infrastructure— |
| (a) |
complies with this Act, the Financial Sector Regulation Act and the rules of the market infrastructure; |
| (b) |
where applicable, complies with directives, and with requests, conditions or requirements of the [registrar] Authority in terms of [this Act] a financial sector law; or |
| (c) |
where applicable, gives effect to decisions of the [appeal board in terms of section 105] Tribunal.". |
|
|
|
|
| 42. |
The amendment of section 60— |
| (a) |
by the substitution in subsection (1) for the words preceding paragraph (a) of the following words: |
"The [registrar] Authority may, with the concurrence of the Prudential Authority and the South African Reserve Bank, cancel or suspend a licence if—";
| (b) |
by the substitution in subsection (1)(a) for subparagraphs (ii) and (iii) of the following subparagraphs: |
| "(ii) |
comply with a directive, request, condition or requirement of the [registrar] Authority in terms of [this Act] a financial sector law; or |
| (iii) |
give effect to a decision of the [appeal board in terms of section 105] Tribunal;"; |
| (c) |
by the substitution in subsection (1)(b) for the words preceding subparagraph (i) of the following words: |
| "(b) |
after an [inspection in terms of section 95 of the affairs of the market infrastructure] investigation, the [registrar] Authority is satisfied on reasonable grounds that the manner in which it is operated is—"; and |
| (d) |
by the substitution in subsection (1)(b) for subparagraph (i) of the following subparagraph: |
| "(i) |
not in the best interests of clearing members of independent clearing houses or of central counterparties, authorised users or participants, or users or members of the market infrastructure, as the case may be, and their clients; or". |
|
|
|
|
|
43. |
The amendment of section 61— |
| (a) |
by the substitution for subsection (1) of the following subsection: |
| "(1) |
A market infrastructure may not conduct any additional business [which may introduce] if to do so would create or increase systemic risk."; |
| (b) |
by the substitution in subsection (3) for the words preceding paragraph (a) of the following words: |
"The [registrar] Authority may, if [the registrar is of the opinion] it considers that [the] a business, function or service referred to in subsection [(1)] (2) may—"
| (c) |
by the substitution for the words following paragraph (b) of the following words: |
"[prohibit or lay down requirements in respect of the] after consultation with the Prudential Authority and the South African Reserve Bank, make a determination specifying requirements in relation to the market infrastructure carrying on of such business, function or service.";
| (d) |
by the insertion after subsection (3) of the following subsection: |
| "(3A)
|
The Authority may not make a determination in terms of subsection (3) in respect of a particular market infrastructure unless— |
| (a) |
a draft of the determination has been given to the market infrastructure; |
| (b) |
the market infrastructure has had a reasonable period of at least 14 days to make submissions to the Authority about the matter; and |
| (c) |
the Authority had regard to all submissions made to it in deciding whether or not to make the determination. |
| (3B) |
If the Authority considers on reasonable grounds that it is necessary to make the determination urgently, it may do so without having complied, or complied fully, with subsection (3A)."; and |
| (e) |
by the substitution for subsection (4) of the following subsection: |
| "(4)
|
The Authority must, within 14 days after making a determination in terms of subsection (3), give the market infrastructure a statement of its reasons for making a determination in terms of subsection (3), and a statement of the material facts on which the determination was made." |
|
|
|
|
| 44. |
The amendment of section 62 by the substitution for paragraph (b) of the following paragraph: |
| "(b) |
an annual assessment, [in the manner prescribed by the registrar] in accordance with conduct standards or joint standards, of the arrangements referred to in [subparagraph] paragraph (a), the results of which must be published.". |
|
|
|
|
| 45. |
The amendment of section 63— |
| (a) |
by the substitution for the heading of the section of the following heading: |
"Demutualisation of exchange, central securities depository[ or], independent clearing house or central counterparty";
| (b) |
by the substitution for subsection (1) of the following subsection: |
| "(1) |
An exchange, central securities depository, [or] independent clearing house or central counterparty which is not a public company or a private company as defined in section 1 of the Companies Act, may convert to a public company or private company with the approval of the [registrar] Authority and subject to [the conditions that the registrar may prescribe] requirements imposed by the Authority."; |
| (c) |
by the substitution in subsection (2) for paragraphs (a) to (k) of the following paragraphs: |
| "(a) |
the exchange, central securities depository, [or] independent clearing house or central counterparty referred to in subsection (1) is deemed to be a company incorporated in terms of the Companies Act from a date determined by the [registrar] Authority in consultation with the exchange, central securities depository, [or] independent clearing house or central counterparty in question; |
| (b) |
the Companies and Intellectual Property Commission, established by section 185 of the Companies Act, must accept the filed notice of incorporation of the exchange, central securities depository, [or] independent clearing house or central counterparty in terms of section 13 of that Act and register the entity in question as a company in terms of section 14 of that Act on the date referred to in paragraph (a); |
| (c) |
the continued corporate existence of the exchange, central securities depository, [or] independent clearing house or central counterparty from the date on which it was first licensed [by the registrar] in terms of this Act is unaffected and any actions of the exchange, central securities depository, [or] independent clearing house or central counterparty before its conversion remain effectual; |
| (d) |
the terms and conditions of service of employees of the exchange, central securities depository, [or] independent clearing house or central counterparty are not affected; |
| (e) |
all the assets and liabilities of the exchange, central securities depository[ or], independent clearing house or central counterparty, including any insurance, guarantee, compensation fund or other warranty owned or maintained by the exchange, central securities depository[ or], independent clearing house or central counterparty to cover any liabilities of the clearing members of independent clearing houses or central counterparties, authorised users or participants, as the case may be, to clients, remain vested in and binding upon the company or such other entity acceptable to the [registrar] Authority as the company may designate; |
| (f) |
the company has the same rights and is subject to the same obligations as were possessed by or binding upon the exchange, central securities depository, [or] independent clearing house or central counterparty immediately before its conversion; |
| (g) |
all agreements, appointments, transactions and documents entered into, made, executed or drawn up by, with or in favour of the exchange, central securities depository[ or], independent clearing house or central counterparty and in force immediately before the conversion remain in force and effectual, and are construed for all purposes as if they had been entered into, made, executed or drawn up by, with or in favour of the company, as the case may be; |
| (h) |
any bond, pledge, guarantee or other instrument to secure future advances, facilities or services by the exchange, central securities depository, [or] independent clearing house or central counterparty which was in force immediately before the conversion, remains in force, and is construed as a bond, pledge, guarantee or instrument given to or in favour of the company, as the case may be; |
| (i) |
any claim, right, debt, obligation or duty accruing to any person against the exchange, central securities depository, independent clearing house or central counterparty or owing by any person to such exchange, central securities depository, [or] independent clearing house or central counterparty is enforceable against or owing to the company, subject to any law governing prescription; |
| (j) |
any legal proceedings that were pending or could have been instituted against the exchange, central securities depository, [or] independent clearing house or central counterparty before the conversion may be continued or instituted against the company, subject to any law governing prescription; and |
| (k) |
the licence of the exchange, central securities depository, [or] independent clearing house or central counterparty, remains vested in the company if the company complies with all the requirements of this Act in respect of an exchange, central securities depository, [or] independent clearing house or central counterparty.". |
|
|
|
|
| 46. |
The amendment of section 64 by the substitution in subsection (5) for paragraph (a) of the following paragraph: |
| "(a) |
all the assets and liabilities of the amalgamating entities (or in the case of a transfer of assets and liabilities, of the entity by which the transfer is effected), including any insurance, guarantee, compensation fund or other warranty owned or maintained by any of them to cover any liabilities of clearing members of independent clearing houses or central counterparties, authorised users or participants, as the case may be, to clients, vest in and become binding upon the amalgamated entity or, as the case may be, the entity taking over such assets and liabilities or such other entity acceptable to the [registrar] Authority as the parties to the amalgamation may designate;". |
|
|
|
|
| 47. |
The amendment of section 65 by the substitution for subsection (2) of the following subsection: |
| "(2) |
The members of the controlling body of a market infrastructure owe a fiduciary duty and a duty of care and skill to the market infrastructure, in the exercise of the functions as a market infrastructure.". |
|
|
|
|
| 48. |
The amendment of section 66— |
| (a) |
by the substitution in subsection (1) for paragraph (c) of the following paragraph: |
| "(c) |
does not meet the fit and proper requirements prescribed [by the registrar] in the relevant joint standards."; and |
| (b) |
by the deletion of subsections (8) and (9). |
|
|
|
|
| 49. |
The amendment of section 67— |
| (a) |
by the substitution for subsection (4) of the following subsection: |
| "(4) |
A person may not, without the prior approval of the [registrar]Authority, acquire shares or any other interest in a market infrastructure in excess of that approved under subsection (3)[, but not exceeding 49 per cent]."; |
| (b) |
by the substitution in subsection (6) for the words preceding paragraph (a) of the following words: |
"[The] An approval referred to in subsection (3), (4) or (5)—";
| (c) |
by the substitution in subsection (7) for paragraph (a) of the following paragraph: |
| "(a) |
compelling that person to reduce, within a period determined by the court, the shareholding or other interests in the market infrastructure to a shareholding with a total nominal value not exceeding [15 or 49 per cent, as the case may be,]—
|
| (i)
|
in a case where subsection (3) applies, 15 per cent; or |
of the total nominal value of all the issued shares of the market infrastructure; and"; and
| (d) |
by the substitution for subsection (8) of the following subsection: |
| "(8) |
An application referred to in [subsections] subsection (3), (4) or (5) must be made in the manner and form prescribed by the [registrar] Authority.". |
|
|
|
|
| 50. |
The substitution for section 69 of the following section: |
"Report to [registrar] Authority
| 69. |
Within four months after the financial year-end of a market infrastructure, that market infrastructure must submit to the [registrar] Authority an annual report containing the details [prescribed by the registrar] determined in joint standards and audited annual financial statements that fairly present the financial affairs and status of the market infrastructure.". |
|
|
|
|
|
51. |
The amendment of section 71— |
| (a) |
by the insertion after subsection (1) of the following subsection: |
| "(1A)
|
Rules that are made by a market infrastructure may not contradict any regulation, conduct standard, prudential standard, or joint standard issued in term of this Act or the Financial Sector Regulation Act."; |
| (b) |
by the substitution in subsection (2) for paragraph (b) of the following paragraph: |
| "(b) |
The [registrar] Authority may, after consultation with the Prudential Authority and the South African Reserve Bank, subject to this section, amend the rules or issue an interim rule."; |
| (c) |
by the substitution in subsection (3) for paragraphs (b) and (c) of the following paragraphs: |
| "(b) |
The [registrar] Authority must as soon as possible after the receipt of a proposed amendment publish— |
| (i) |
the amendment on the [registrar’s] Authority’s website; and |
| (ii) |
a notice in the Gazette that the proposed amendment is available on the [registrar’s] Authority’s website, |
calling upon all interested persons who have any objections to the proposed amendment to lodge their objections with the [registrar] Authority within a period of 14 days from the date of publication of the notice.
| (c) |
If there are no such objections, or if the [registrar] Authority has considered the objections and, if necessary, has consulted with the market infrastructure and the persons who raised such objections and has decided to approve or amend the proposed amendment, the [registrar]Authority must publish— |
| (i) |
the amendment and the date on which it comes into operation on the [official] Authority’s website; and |
| (ii) |
a notice in the Gazette, which notice must state— |
| (aa) |
that the amendment to the rules has been approved; |
| (bb) |
that the rules as amended are available on the [official] Authority’s website and the website of the market infrastructure; and"; |
| (d) |
by the substitution in subsection (4) for paragraph (a) of the following paragraph: |
| "(a) |
The [registrar] Authority, after consultation with the Prudential Authority and the South African Reserve Bank, by notice in the Gazette and on the [official] Authority’s website, may amend the rules of that market infrastructure—"; |
| (e) |
by the substitution in subsection (4) for paragraph (b) of the following: |
| "(b) |
Where the [registrar] Authority has amended the rules of a market infrastructure under paragraph (a), the [registrar] Authority must—"; |
| (f) |
by the substitution in subsection (4)(b) for subparagraph (ii) of the following |
subparagraph:
| "(ii) |
give reasons for the amendment, and explain the imperative referred to in paragraph (a)(i), in the Gazette and on the [official] Authority’s website."; |
| (g) |
by the substitution in subsection (5) for paragraphs (a) and (b) of the following paragraphs: |
| "(a) |
Subject to prior approval of the [registrar] Authority, a market infrastructure may suspend any of the rules of that organisation for a period not exceeding 30 days at a time after reasonable notice of the proposed suspension has been advertised on the [official] Authority’s website. |
| (b) |
The [registrar] Authority may after consultation with the Prudential Authority and the South African Reserve Bank, for the period of such suspension, issue an interim rule by notice in the Gazette to regulate the matter in question."; |
| (h) |
by the substitution in subsection (6)(a) for subparagraphs (iv) to (vii) of the following subparagraphs: |
| "(iv) |
suspension or cancellation of the right to be a clearing member of an independent clearing house or central counterparty, an authorised user or a participant; |
| (v) |
disqualification, in the case of a natural person, from holding the office of a director or officer of a clearing member of an independent clearing house or central counterparty, an authorised user or a participant, as the case may be, for any period of time; |
| (vi) |
a restriction on the manner in which a clearing member of an independent clearing house or central counterparty, an authorised user or a participant may conduct business or may utilise an officer, employee or agent; |
| (vii) |
suspension or cancellation of the authorisation of an officer or employee of a clearing member of an independent clearing house or central counterparty, an authorised user or a participant to perform a function in terms of the rules;"; and |
| (i) |
by the substitution in subsection (6)(b) for subparagraph (iii) of the following subparagraph: |
| "(iii) |
a market infrastructure may take into account at a disciplinary hearing any information obtained by the [registrar] Authority in the course of an inspection conducted [under section 95] in terms of the Financial Sector Regulation Act;". |
|
|
|
|
|
52. |
The amendment of the heading for Chapter VIII by the substitution for the heading of the following heading: |
"[CODE OF CONDUCT]
CHAPTER VIII
CONDUCT STANDARDS".
|
|
|
|
| 53. |
The amendment of section 74— |
| (a) |
by the substitution for the heading of the section of the following heading: |
"[Code of conduct] Conduct standards for regulated persons";
| (b) |
by the substitution for subsection (1) of the following subsection: |
| "(1) |
[The registrar may in an appropriate consultative manner prescribe a code of conduct for] Conduct standards may prescribe requirements in relation to— |
| [(i)](a)
|
authorised users, participants or clearing members of independent clearing houses or central counterparties; or |
| [(ii)](b)
|
any other regulated person, where the required standard of conduct is not prescribed in another law or [code of conduct] conduct standard, and a [code of conduct] conduct standard is necessary or expedient for the achievement of the objects of this Act."; and |
| (c) |
by the substitution for subsection (2) of the following subsection: |
| "(2) |
A [code of conduct] conduct standard is binding on authorised users, participants or clearing members of independent clearing houses or central counterparties or any other regulated person in respect of whom the [code of conduct] conduct standard was prescribed, as the case may be, and on their officers and employees and clients.". |
|
|
|
|
| 54. |
The amendment of section 75— |
| (a) |
by the substitution for the heading of the section of the following heading: |
"Principles [of code of conduct] for conduct standards";
| (b) |
by the substitution in subsection (1) for the words preceding paragraph (a) of the following words: |
"A [code of conduct] conduct standard for authorised users, participants or clearing members of independent clearing houses or central counterparties must be based on the principle that—";
| (c) |
by the substitution in subsection (1) for paragraph (a) of the following paragraph: |
| "(a) |
an authorised user, participant or clearing member of an independent clearing house or central counterparty must—"; |
| (d) |
by the substitution in subsection (2) for the words preceding paragraph (a) of the following words: |
"A [code of conduct] conduct standard for regulated persons, other than the regulated persons mentioned in subsection (1), must be based on the principle that the regulated person must—";
| (e) |
by the substitution in subsection (3) for the words preceding paragraph (a) of the following words: |
"A [code of conduct] conduct standard may provide for—"; and
| (f) |
by the substitution in subsection (3) for paragraph (f) of the following paragraph: |
| "(f) |
any other matter which is necessary or expedient to be regulated in a [code of conduct] conduct standard for the achievement of the objects of this Act.". |
|
|
|
|
| 55. |
The amendment of section 76— |
| (a) |
by the substitution for subsection (2) a) by the substitution for subsection (2) of the following subsection: |
| "(2) |
The criteria for the approval of a nominee of an authorised user or a participant and the ongoing requirements applicable to it must be equivalent to [that applied by the registrar when approving a nominee under subsection (3)] criteria determined in conduct standards for nominees."; and |
| (b) |
by the substitution for subsection (3) of the following subsection: |
"(3)
| (a) |
[The registrar may prescribe requirements for—
|
| (i) |
the approval of a nominee that is not approved as a nominee in terms of subsection (1); and |
| (ii) |
approved nominees.] A nominee that is not approved as a nominee in terms of subsection (1) must—
|
| (i) |
be approved by the Authority; and |
| (ii) |
comply with conduct standards determined by the Authority. |
| (b) |
The [registrar] Authority must maintain a list of all nominees approved under this section.". |
|
|
|
|
| 56. |
The amendment of section 77— |
| (a) |
by the deletion of the definition of "claims officer"; |
| (b |
by the substitution for paragraph (b) of the definition of "inside information" of the following paragraph: |
| "(b) |
if it were made public, would be likely to have a material effect on the price or value of any security listed on a regulated market or of any derivative instrument related to such a security;"; and |
| (c) |
by the substitution in paragraph (a) of the definition of "insider" for subparagraph (i) of the following subparagraph: |
| "(i) |
being a director, employee or shareholder of an issuer of securities listed on a regulated market or an issuer of derivative instruments related to such securities to which the inside information relates; or". |
|
|
|
|
| 57. |
The amendment of section 78— |
| (a) |
by the substitution in subsection (1) for paragraph (a) of the following paragraph: |
| "(a) |
An insider who knows that he or she has inside information and who deals, directly or indirectly or through an agent for his or her own account, in the securities listed on a regulated market or in derivative instruments related to such securities, to which the inside information relates or which are likely to be affected by it, commits an offence."; |
| (b) |
by the substitution in subsection (2) for paragraph (a) of the following paragraph: |
| "(a) |
An insider who knows that he or she has inside information and who deals, directly or indirectly or through an agent for any other person, in the securities listed on a regulated market or in derivative instruments related to such securities, to which the inside information relates or which are likely to be affected by it, commits an offence."; |
| (c) |
by the substitution in subsection (3) for paragraph (a) of the following paragraph: |
| "(a) |
Any person who deals for an insider, directly or indirectly or through an agent, in the securities listed on a regulated market or in derivative instruments related to such securities, to which the inside information possessed by the insider relates or which are likely to be affected by it, who knew that such person is an insider, commits an offence."; |
| (d) |
by the substitution in subsection (4) for paragraph (b) of the following paragraph: |
| "(b) |
An insider is, despite paragraph (a), not guilty of the offence contemplated in that paragraph if such insider proves on a balance of probabilities that he or she disclosed the inside information because it was necessary to do so for the purpose of the proper performance of the functions of his or her employment, office or profession in circumstances unrelated to dealing in any security listed on a regulated market or trading with a derivative instrument related to such a security and that he or she at the same time disclosed that the information was inside information."; and |
| (e) |
by the substitution for subsection (5) of the following subsection: |
| "(5) |
An insider who knows that he or she has inside information and who encourages or causes another person to deal or discourages or stops another person from dealing in the securities listed on a regulated market or in derivative instruments related to such securities, to which the inside information relates or which are likely to be affected by it, commits an offence.". |
|
|
|
|
| 58. |
The amendment of section 82— |
| (a) |
by the substitution for the expression "Enforcement Committee", wherever it occurs in the section, of the expression "Authority"; |
| (b) |
by the substitution for subsection (4) of the following subsection: |
| "(4) |
Any amount recovered by the [board] Authority as a result of the proceedings contemplated in this section must be deposited by the [board] Authority directly into a specially designated trust account and— |
| (a) |
the [board] Authority is, as a first charge against the trust account, entitled to reimbursement of all expenses reasonably incurred by it in bringing such proceedings and in administering the distributions made to claimants in terms of subsection (5); |
| (b) |
the balance, if any, must be distributed by the [claims officer] Authority to the claimants referred to in subsection (5) in accordance with subsection (6); and |
| (c) |
any amount not paid out in terms of paragraph (b) accrues to the [board] Authority."; |
| (c) |
by the substitution in subsection (5) for paragraph (a) of the following paragraph: |
| "(a) |
submit claims to the [directorate] Authority within 90 days from the date of publication of a notice in one national newspaper or on the [official] Authority’s website inviting persons who are affected by the dealings referred to in section 78(1) to (5) to submit their claims; and"; and |
| (d) |
by the substitution in subsection (5)(b) for the words preceding subparagraph (i) of the following words: |
"prove to the reasonable satisfaction of the [claims officer] Authority that—".
|
|
|
|
|
59. |
The substitution for section 83 of the following section: |
"Attachments and interdicts
| 83. |
On application by the [board] Authority, a court may in relation to any matter referred to in Chapter X grant an interdict or order the attachment of assets or evidence to prevent their concealment, removal, dissipation or destruction." |
|
|
|
|
| 60. |
The substitution for section 84 of the following section: |
"Additional powers of Authority
84.
The Authority may—
| (a) |
after consultation with the relevant regulated markets in the Republic,— |
| (i) |
make conduct standards, or |
| (ii) |
give regulator’s directives for the implementation of such systems as are necessary for the effective monitoring and identification of possible contraventions of this Chapter; and |
(b) make conduct standards for the disclosure of inside information.".
|
|
|
|
| 61. |
The substitution for section 85 of the following section: |
"Composition and functions of directorate
85.
(1)
| (a) |
The Directorate established by section 12 of the Insider Trading Act, 1998 (Act No. 135 of 1998), and that continued to exist under the Securities Services Act, 2004 (Act No. 36 of 2004), continues to exist under the name Directorate of Market Abuse, despite the repeal of those Acts. |
| (b) |
A reference to the Insider Trading Directorate in any law must, unless clearly inappropriate, be construed as a reference to the Directorate of Market Abuse. |
| (c) |
The Authority may determine the functions, powers and duties of the directorate, which may include to consider and make recommendations relating to investigations into offences referred to in sections 78, 80 and 81 of this Act and section 135(2) of the Financial Sector Regulation Act. |
(2)
| (a) |
The directorate consists of members and alternate members appointed by the Authority. |
| (b) |
The members of the directorate holding office at the date that Part 6 of Chapter 17 of the Financial Sector Regulation Act comes into force remain as members for the terms and subject to the conditions applicable to them on their respective appointments. |
| (c) |
A member and an alternate member hold office for a period, not exceeding three years, as the Authority may determine at the time of the member’s appointment, and is eligible for reappointment upon the expiry of the member’s term of office. |
| (d) |
If on the expiry of the term of office of a member, a reappointment is not made or a new member is not appointed, the former member must remain in office for a further period of not more than six months. |
| (e) |
The Authority may remove a member of the directorate from office on good cause shown and after having given the member sufficient opportunity to show why the member should not be removed. |
| (3) |
The members of the directorate may comprise of— |
| (a) |
not more than two members of staff of the Authority; |
| (b) |
one person and an alternate from each of the licensed exchanges in the Republic; |
| (c) |
one commercial lawyer of appropriate experience and an alternate; |
| (d) |
one accountant of appropriate experience and an alternate; |
| (e) |
one person of appropriate experience and an alternate from the insurance industry; |
| (f) |
one person of appropriate experience and an alternate from the banking industry; |
| (g) |
one person of appropriate experience and an alternate from the fund management industry; |
| (h) |
one person of appropriate experience and an alternate that represents institutional investors; |
| (i) |
one person of appropriate experience and an alternate nominated by the South African Reserve Bank; |
| (j) |
one person of appropriate experience and an alternate nominated by the Prudential Authority; and |
| (k) |
two other persons of appropriate experience and alternates, to ensure that the directorate is comprised of an appropriate mix of skills and experience. |
| (4) |
The persons referred to in subsection (3) who are nominated— |
| (a) |
must be available to serve as members of the directorate; |
| (b) |
must have appropriate knowledge of financial markets; and |
| (c) |
may not be practising authorised users. |
| (5) |
The Authority must designate a chairperson, who may not be the Commissioner of the Authority, and a deputy chairperson who performs the functions of the chairperson when the office of chairperson is vacant or when the chairperson is unable to perform the chairperson’s functions. |
| (6) |
All members of the directorate, other than the additional members, have one vote in respect of matters considered by the directorate, but an alternate member only has a vote in the absence from a meeting of the member whom the alternate is representing. |
| (7) |
A meeting of the directorate is convened by the chairperson. |
| (8) |
If four members of the directorate in writing request the chairperson of the directorate to convene a meeting of the directorate, a meeting must be held within seven business days of the date of receipt of the request. |
| (9) |
A meeting of the directorate is chaired by the chairperson or, in the chairperson’s absence, by the deputy chairperson or another member designated by the chairperson or the remaining members. |
| (10) |
The directorate determines its procedures, subject to any directions of the Authority. |
| (11) |
The decision of a majority of the members of the directorate constitutes the decision of the directorate. |
| (12) |
The Authority must ensure that written minutes of each meeting of the directorate are kept in a manner determined by the Authority. |
| (13) |
A member of the directorate must disclose, at a meeting of the directorate, or in writing to each of the other members of the directorate, any interest in a matter that is being or is intended to be considered by the directorate, being an interest that— |
| (b) |
a person has who is a related party to the member. |
| (14) |
A disclosure in terms of subsection (13) must be given as soon as practicable after the member concerned becomes aware of the interest. |
| (15) |
A member referred to in subsection (13) may not participate in the consideration of or decision on that matter by the directorate unless— |
| (a) |
the member has disclosed the interest in accordance with subsection (13); and |
| (b) |
the other members of the directorate have decided that the interest does not affect the proper execution of the member’s functions in relation to the matter." |
|
|
|
|
| 62. |
The repeal of section 86. |
|
|
|
|
|
63. |
The substitution for section 88 of the following section: |
"Confidentiality and sharing of information
88.
The [directorate] Authority may share information concerning any matter dealt with in terms of this Chapter with the [institutions which have nominated persons to the directorate, the] Takeover Regulation Panel[,] established by section 196 of the Companies Act, the South African Reserve Bank, the Prudential Authority, the Independent Regulatory Board for Auditors constituted in terms of the Auditing Profession Act, a [licensed exchange, a licensed central securities depository, or a licensed independent clearing house] market infrastructure, the Financial Intelligence Centre established by the Financial Intelligence Centre Act, the National Treasury, the Minister and the persons, inside the Republic or elsewhere, responsible for regulating, investigating or prosecuting insider trading, prohibited trading practices and other market abuses.".
|
|
|
|
| 64. |
The amendment of section 90 by the substitution for paragraphs (a) and (b) of the following paragraphs: |
| "(a) |
maintain on a continual basis the accounting records [prescribed by the registrar] determined in joint standards and prepare annual financial statements that conform with the financial reporting standards prescribed under the Companies Act and contain the information that may be [prescribed by the registrar] determined in joint standards; |
| (b) |
cause such accounting records and annual financial statements to be audited by an auditor appointed under section 89, within a period [prescribed by the registrar] determined in joint standards or such later date as the [registrar] Authority may allow on application by a regulated person; and" |
|
|
|
|
|
65. |
The amendment of section 91— |
| (a) |
by the substitution in subsection (2) for the words preceding paragraph (a) of the following words: |
"When an auditor of a regulated person has conducted an audit in terms of subsection (1), the auditor must, subject to subsection (3), report to the regulated person or to the exchange, central securities depository, [or] independent clearing house or central counterparty in question, if the auditor is the auditor of an authorised user, participant or clearing member of an independent clearing house or central counterparty, and on request to the [registrar] Authority— "; and
| (b) |
by the substitution for paragraph (b) of the following paragraph |
| "(b) |
on the matters prescribed [by the registrar, including matters relating to the nominees of those regulated persons] in conduct standards.". |
|
|
|
|
|
66. |
The substitution in Chapter XII for the heading preceding section 94 of the following heading: |
"Powers of [registrar] Authority and court".
|
|
|
|
| 67. |
The substitution for section 94 of the following section: |
"General powers of [registrar] Authority
94.
| (1) |
If the [registrar] Authority receives a complaint, charge or allegation that a person ([hereinafter referred to as] "the respondent") who provides securities services (whether the respondent is licensed or authorised in terms of this Act or not) is contravening or is failing to comply with any provision of this Act, or if the [registrar] Authority has reason to believe that such a contravention or failure is taking place, the [registrar] Authority may investigate the matter [by directing that respondent in writing to—
|
| (i) |
provide the registrar with any information, document or record reasonably required by the registrar about such services; |
| (ii) |
appear before the registrar at a specified time and place] in terms of the Financial Sector Regulation Act. |
| (2) |
[Despite any contrary law, the registrar may, if] The power of the Authority to give a regulator’s directive in terms of the Financial Sector Regulation Act extends to giving such a directive in respect of an advertisement, brochure or other document relating to securities that is [misleading or] for any reason objectionable[, direct that the advertisement, brochure or other document not be published or the publication thereof be stopped or that such amendments as the registrar considers necessary be effected].". |
|
|
|
|
|
68. |
The repeal of section 95. |
|
|
|
|
| 69. |
The amendment of section 96— |
| (a) |
by the substitution for the heading of the section of the following heading: |
"Powers of [registrar] Authority after supervisory on-site [visit or] inspection or investigation";
| (b) |
by the substitution for the words preceding paragraph (a) of the following words: |
"After [an] a supervisory on-site [visit or] inspection or an investigation has been conducted [under section 95], the [registrar] Authority may, in order to achieve the objects of this Act referred to in section 2—"; and
| (c) |
by the substitution for paragraph (c) of the following paragraph: |
| "(c) |
direct the respondent to take any steps, or to refrain from performing or continuing to perform any act, in order to terminate or remedy any irregularity or state of affairs disclosed by the supervisory on-site [visit or] inspection or investigation[: Provided that the registrar may not make an order contemplated in section 6D(2)(b) of the Financial Institutions (Protection of Funds) Act.];". |
|
|
|
|
| 70. |
The repeal of section 97. |
|
|
|
|
|
71. |
The amendment of section 98 by the addition of the following subsection: |
| "(5)
|
This section does not affect Part 5 of Chapter 10 of the Financial Sector Regulation Act." |
|
|
|
|
| 72. |
The deletion of the following heading in Chapter XII preceding section 99: |
"Enforcement Committee".
|
|
|
|
| 73. |
The repeal of section 99. |
|
|
|
|
| 74. |
The amendment of section 105— |
| (a) |
by the substitution for subsection (1) of the following subsection: |
| "(1) |
A person aggrieved by a decision of— |
| (a) |
the [registrar] Authority under a power conferred or a duty imposed upon the [registrar] Authority by or under this Act or the Financial Sector Regulation Act; |
| (b) |
an exchange to refuse an application by that person to be admitted as an authorised user; |
| (c) |
an exchange to withdraw the authorisation of an authorised user or to direct an authorised user to terminate the access to the exchange by an officer or employee of such authorised user; |
| (d) |
an exchange to defer, refuse or grant an application for the inclusion of securities in the list or to remove securities from the list or to suspend the trading in listed securities; |
| (e) |
a central securities depository to refuse an application by a person to be accepted as a participant; |
| (f) |
a central securities depository to terminate the participation of a participant or to direct a participant to terminate the access to the central securities depository by an officer or employee of a participant; |
| (g) |
an independent clearing house or central counterparty to refuse an application by a person to be admitted as a clearing member; |
| (h) |
an independent clearing house or central counterparty to withdraw the authorisation of a clearing member or to direct a clearing member to terminate the access to the independent clearing house or central counterparty by an officer or employee of such clearing member; |
| (i) |
an exchange, central securities depository, independent clearing house or central counterparty to impose a penalty on an authorised user, issuer, participant or clearing member of an independent clearing house or central counterparty, as the case may be, or on an officer or employee of an authorised user, issuer, participant or clearing member of an independent clearing house or central counterparty[;
|
| (j) |
the claims officer referred to in Chapter X], may [appeal to the appeal board on the conditions determined by or under section 26 of the Financial Services Board Act and subject to this section] approach the Tribunal for a reconsideration of the decision."; and |
| (b) |
by the deletion of subsection (2). |
|
|
|
|
|
75. |
The amendment of section 108 by the substitution for subsection (1) of the following subsection: |
| "(1) |
The [registrar] Authority may [prescribe] determine fees in respect of matters contemplated in this Act and, in relation to [such] those fees [as well as fees payable in terms of this Act], the person by whom the fee must be paid, the manner of payment thereof and, where necessary, the interest payable in respect of overdue fees.". |
|
|
|
|
|
76. |
The amendment of section 109 by the substitution for paragraph (c) of the following paragraph: |
| "(c) |
contravenes or fails to comply with the provisions of sections 4, 7(1), 24, 25(1), 27(1), 47(1), 49A(1), 54(1), 56A(1) or a prohibition by the [registrar] Authority referred in terms of section 6(7), commits to both such fine and such imprisonment.". |
|
|
|
|
|
77. |
The amendment of section 110— |
| (a) |
by the deletion of subsection (5); and |
| (b) |
by the addition of the following subsection: |
| "(6)
|
Despite any other provision of this Act, a clearing house performing the functions of a central counterparty must comply with any requirements imposed by regulations or standards, and must— |
| (a) |
until 31 December 2021, be licensed as either an associated clearing house or an independent clearing house, and be approved by the Authority, the South African Reserve Bank and the Prudential Authority, in the manner and form prescribed by the Authority, to perform the functions of a central counterparty; |
| (b) |
as of 1 January 2022, be licensed as both an independent clearing house and a central counterparty.". |
|
|
|
|
|
78. |
The substitution for the long title of the following long title: |
"To provide for the regulation of financial markets; to license and regulate exchanges, central securities depositories, clearing houses, central counterparties and trade repositories; to regulate and control securities trading, clearing and settlement, and the custody and administration of securities; to prohibit insider trading, and other market abuses; to provide for the approval of nominees; to provide for [codes of conduct] conduct standards; to replace the Securities Services Act, 2004, as amended by the Financial Services Laws General Amendment Act, 2008, so as to align this Act with international standards; and to provide for matters connected therewith.".
|
|
|
|
| 79. |
The substitution for the expression "registrar", wherever it occurs, of the expression "Authority", except in section 1(1) and 1A(1). |
|
|
|
|
| 80. |
The amendment of the arrangement of sections— |
| (a) |
by the insertion after item 1 of the following item: |
| "1A.
|
Relationship between Act and Financial Sector Regulation Act"; |
| (b) |
by the substitution for item 6 of the following item: |
| (c) |
by the insertion after item 6 of the following items: |
"6A. Criteria for recognition of external market infrastructures.
6B. Withdrawal of recognition.
6C. Principles of co-operation";
| (d) |
by the substitution for the heading in Chapter V preceding item 47 of the following heading: |
"Licensing of clearing house and central counterparty";
| (e) |
by the substitution for item 47 of the following item: |
"47. Application for clearing house licence and central
counterparty licence";
| (f) |
by the substitution for item 48 of the following item: |
"48. Requirements applicable to applicants for clearing house licence, central counterparty licence, licenced clearing house and licensed central counterparty";
| (g) |
by the insertion after item 49 of the following item: |
"49A. Licensing of external central counterparty";
| (h) |
by the substitution for the heading in Chapter V preceding item 50: |
"Functions of licensed clearing house and licensed central counterparty";
| (i) |
by the substitution for item 50 of the following item: |
"50. Functions of licensed clearing house and licensed central counterparty, and power of Authority to assume responsibility for functions";
| (j) |
by the insertion after item 56 of the following item: |
"56A. Licensing of external trade repository";
| (k) |
by the substitution for item 63 of the following item: |
"63. Demutualisation of exchange, central securities depository, independent clearing house or central counterparty";
(l) by the substitution for item 69 of the following item:
"69. Report to Authority";
(m) by the substitution for the heading of Chapter VIII of the following heading:
"CHAPTER VIII
CONDUCT STANDARDS";
| (n) |
by the substitution for item 74 of the following item: |
"74. Conduct standards for regulated persons"
(o) by the substitution for item 75 of the following item:
"75. Principles for Conduct standards";
| (p) |
by the substitution for item 84 of the following item: |
"84. Additional powers of Authority";
| (q) |
by the substitution for the heading in Chapter XII preceding section 94 of the following heading: |
"Powers of Authority and court";
(r) by the substitution for item 94 of the following item:
"94. General powers of Authority";
| (s) |
by the substitution for item 96 of the following item: |
"96. Powers of Authority after supervisory on-site inspection or investigation"; and
| (t) |
by the deletion of the following heading in Chapter XII preceding item 99: |
"Enforcement Committee".
|
Protection of Businesses Act, 1978
