Desiree Reddy (ZA)

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FSCA takes first steps in the regulation of crypto assets

On 20 November 2020, the Financial Sector Conduct Authority issued a draft Declaration of Crypto Assets as a Financial Product under the Financial Advisory and Intermediary Services Act 2002 (FAIS Act). The Declaration will be made in terms paragraph (h) of the definition of ‘financial product’ in the FAIS Act, which provides that a financial … Continue reading

Conduct of Financial Institutions

On 28 September 2020, National Treasury released the second draft Bill regulating the conduct of Financial Institutions, for comment. The aim of the Bill is to impose conduct standards for financial institutions to protect financial customers. The Bill is the second peak of the Twin Peaks model and will require market conduct that emphasises the … Continue reading

FSCA clamps down on FICA non-compliance

Financial services providers (FSPs) registered under the Financial Advisory and Intermediary Services Act 2002 fall within the ambit of ‘accountable institutions’ under the Financial Intelligence Centre Act 2001. As accountable institutions, these FSPs are obliged to comply with the FIC Act and are subject to oversight by the FSCA. The FSCA has recently investigated compliance with … Continue reading

FSCA publishes the conduct standard for banks

When the Financial Sector Regulation Act (FSRA) was introduced in 2018, the FSCA was tasked with regulating and supervising the way banks conduct themselves in relation to the provision of financial products and services to customers. In fulfilment of this mandate, the FSCA has published a conduct standard for banks. The conduct standard is supported … Continue reading

POPI compliance – have you considered your existing data protection measures?

The majority of the Protection of Personal Information Act 2013 (POPI) effectively commenced on 1 July 2020. The sections that commenced deal with how personal information (which is any information that can identify and infringe the privacy rights of a natural or juristic person) may be processed in South Africa or transferred across borders. As POPI … Continue reading

Financial Sector Laws Amendment Bill 2020 to go to Parliament

During a virtual meeting held on 10 June 2020, Cabinet approved the Financial Sector Laws Amendment Bill of 2020, for submission to Parliament. In the first step to formalising a resolution process for financially distressed banks, the Bill proposes to designate the SARB as the Resolution Authority, and enhances the SARB’s regulatory tools for discharging … Continue reading

FSCA publishes two drafts: conduct standard and directive for securities exchanges

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 … Continue reading

Dirty money and the rise of digital payments

Exchanging bank notes and coins are increasingly seen as risky business, as noted by Thomson Reuters in an article on the rise of digital money transactions. The COVID-19 pandemic may speed up the global move towards digital-only payments. Apart from the more widespread use of payment apps, electronic funds transfers and cryptocurrencies, the idea of … Continue reading

Fintech innovation hub launched

The financial services regulators launched the Intergovernmental Fintech Working Group (IFWG) Innovation Hub on 7 April 2020 to respond to changes in the financial sector driven by fintech. The IFWG seeks to promote responsible innovation in the sector. The Innovation Hub is intended to support the sector in introducing innovations that complement the core mandates … Continue reading

FSCA relaxes reporting requirement in response to COVID-19

On 24 March 2020, in recognition of the impact of the current COVID-19 pandemic on the financial services industry, the FSCA released general communication 9 of 2020 which sets out relaxations of regulatory requirements. In summary, the FSCA has granted: Financial services providers A four month extension for the submission of some financial statements (not … Continue reading

COVID-19: Checklist of actions for Financial Services firms to consider

The speed at which the COVID-19 situation is evolving means that financial services firms are having to work rapidly to ensure that their business services can continue to operate. Effective and successful management of crises such as these is directly related to how well prepared organisations are to respond. In light of the developing situation, … Continue reading

FinTech in the legal arena

Financial technology, often referred to as FinTech, is the marriage between financial and technology services. The FinTech offering seeks to provide innovative alternatives to traditional methods in the delivery of financial services. The different categories that sit within the ambit of the broader FinTech offering include: lending, payments, wealth management and personal finance, digital currencies … Continue reading

Draft Conduct Standard for Banks published

The Financial Sector Conduct Authority (FSCA) has published a Draft Conduct Standard for Banks, under section 106(2)(b) of the Financial Sector Regulation Act 2017 (FSRA). The draft Conduct Standard applies to banks, mutual banks, co-operative banks, branches of foreign banks and representative offices of foreign banks (banks) and will apply in addition to any other … Continue reading

SARB intends to regulate crypto assets

In mid-January 2019, the SARB published its Consultation Paper on Policy Proposals for Crypto Assets, amid a growing interest, investment and participation in crypto assets by financial institutions and individuals and an estimated market capitalisation of about US$200 billion for crypto assets globally. Crypto assets are digital representations or tokens that are accessed, verified, transacted … Continue reading

Proposed changes to financial laws to deal with failing financial institutions

The Draft Financial Sector Laws Amendment Bill has been published for comment. The Bill proposes amendments to various acts including the Insolvency Act, the South African Reserve Bank Act, the Banks Act, the Mutual Banks Act, the Competition Act, the Financial Markets Act and the Insurance Act – with a view to strengthening the ability of … Continue reading

Twin Peaks signed into law

The Financial Sector Regulation Bill was signed into law by President Zuma on 21 August 2017. The commencement dates for the new Financial Sector Regulation Act (FSR Act) are not yet known. The act provides the architecture for the new ‘twin peaks’ method of regulation to be adopted across the South African financial services industry, … Continue reading

Twin Peaks refresher

The Financial Sector Regulation Bill was passed by Parliament and sent to the President for assent on 22 June 2017. The Bill provides the architecture for the new twin peaks method of regulation to be adopted across the South African financial services industry. While the immediate effect of the passing of the Financial Sector Regulation … Continue reading

Proposed amendments to the JSE Derivatives Rules and Directives

The Financial Services Board, acting in terms of the Financial Markets Act 2012, has published proposed amendments to the JSE Derivatives Rules and Directives. The proposed amendments deal with: The buying and selling of derivative securities; and Derivative transactions that take place off the JSE’s Automatic Trading System (ATS). The ATS is the computerised facility which … Continue reading

Margin requirements for derivatives – but which OTC’s will be affected?

The International Swaps and Derivatives Association Inc. (ISDA) indicated that South Africa has been in focus over recent months since the margin requirements for non-centrally cleared derivatives transactions were published for comment in June 2015. The aim of the requirements is to outline the future regulation of OTC derivatives in South Africa in line with … Continue reading

The regulation of hedge funds

In the first formal step toward hedge fund regulation in South Africa, National Treasury has published a s63 declaration under the Collective Investment Schemes Control Act, 2002 (CISCA). Investment funds conducting the business of a hedge fund will, from 1 April 2015, become collective investment schemes (CIS) and will be regulated by CISCA. Hedge funds … Continue reading

Regulation of derivatives: mandatory central clearing

What is a derivative? Although ‘derivative’ is a commonly used term, there is often confusion over what a derivative actually is. A derivative is a type of financial instrument whose price is determined by reference to one or more underlying assets, such as shares, currencies or interest rates. Derivatives may either be traded on an … Continue reading

An increased costs trap – Practical advice for SA Financial Institutions

The Liquidity Coverage Ratio (LCR) was introduced with the implementation of Basel III, and is designed to ensure that financial institutions have the necessary assets on hand to ride out short-term liquidity disruptions. Two important elements of the LCR that are especially relevant to South African banks are: 1.   The LCR in South Africa was … Continue reading

Sanctions on Russian and Ukrainian entities

The European Union, the USA and Canada have imposed sanctions on a number of Russian and Ukrainian individuals and legal entities. The nature and scope of the sanctions are explained in this briefing. If a bank has entered into credit risk mitigation arrangements with Russian or Ukrainian counterparties, or relating to Russian or Ukrainian assets, … Continue reading

FATCA reporting from 1 July 2014

Enacted in 2010, the US Foreign Account Tax Compliance Act (FATCA) seeks to prevent tax abuses by US persons living or operating outside of the US. FATCA imposes a 30% withholding tax on payments of US source income made to non-US financial institutions, unless they enter into an agreement with the US Internal Revenue Service … Continue reading
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