On 20 May 2020, the Financial Sector Conduct Authority (FSCA) published a draft Conduct Standard for Exchanges and a draft Directive for Exchanges.

Conduct Standard for Securities Exchanges

The main objective of the proposed conduct standard is to introduce requirements for the conduct of securities exchanges in response to increased competition in the South African financial markets sector due to the emergence of a multiple exchange environment. They include requirements for cooperation between exchanges, capital requirements, and obligatory exchange rules.

The draft conduct standard is issued in terms of section 106 of the Financial Sector Regulation Act 2017 and section 17(2A) of the Financial Markets Act 2012 (FMA).

A conduct standard is equivalent to a regulation and those affected should take the opportunity to comment on any proposals that might negatively affect their business.

Directive for Securities Exchanges

The intention of the draft Directive is to compel a securities exchange which has dual listed securities with another exchange, to amend or replace its listing requirements in accordance with the requirements of the Directive. The FMA requires an exchange to have listing requirements that comply with the Act, but now that there are multiple exchanges listing dual securities, there is a need to align the listing requirements and level the playing fields for these exchanges.

The Directive will require an exchange to provide for accounting standards, corporate governance, continuing disclosure and price sensitive information in its listing requirements.

This draft is made in terms of section 6(4)(a) of the FMA.

A failure to comply with a directive can have severe consequences and now is the time to comment on any requirements that may cause difficulties in future.

The draft Conduct Standard and the draft Directive, are available on the FSCA’s website. Comments on the documents must be submitted using the comments templates available on the FSCA website, by no later than 15 July 2020, to FSCA.RFDStandards@fsca.co.za