THE regulatory tsunami has hit, but in many cases it has only been a knee-jerk reaction to excesses and is no guarantee the global financial environment is secure, JSE CEO Nicky Newton-King said at a KPMG seminar yesterday.
In a globally connected world, it was important to consider how regulations aimed at preventing another crisis should be applied to South Africa, Ms Newton-King said.
South Africa’s banks are well regulated and remain relatively unscathed by the derivatives bombshells that exploded during 2008-09.
The Financial Markets Bill, which is awaiting the signature of the president, will replace the Securities Services Act of 2004 to govern the regulation of securities services. The previous act was not as broad and only regulated listed securities. The aim is to consolidate the country’s regulatory framework for capital markets and align the regulation and supervision of its financial markets with international developments and regulatory standards.
"Compliance with regulation comes at a cost and too much regulation then creates hurdles for clients to do their business. Also, when large amounts of new regulation are introduced at the same time, it is difficult to digest — leading to unintended consequences," Ms Newton-King said. "We need to find out what works in this environment."
She said the JSE was aiming for regulation that was simple and which responded to the need for more corporate responsibility.
Nick Matthews, KPMG’s head of mergers and acquisitions in South Africa, warned that the new act would narrow some insider trading defences and broaden the scope of the offences to anyone who dealt on behalf of an insider, while knowing that person was an insider. The new rules would also improve the handling of price-sensitive information by companies.
KPMG corporate finance’s Robbie Cheadle said the JSE listings requirements had been amended to include clearer responsibilities for directors on assessing company secretary competence and membership of audit committees.
"The JSE is regarded by some as the home of capitalism, but we don’t want to be alienated from those who may believe capitalism has failed them, in an environment of increasing disparities between the haves and the have-nots," Ms Newton-King said.
The JSE wanted to ensure that products deliver to all levels of the population. She said the exchange needed to help "demystify" what it meant to save and invest and to provide affordable products for the emerging middle class.
Ms Newton-King indicated that while policy direction after the African National Congress electoral conference at Mangaung last year was clearer, it was not settled. She said business needed to improve its involvement and "voice", as it had still not found a "comfortable place" either.