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AMEDA 26-28 October 2011 CPSS – IOSCO FMI Principles

AMEDA 26-28 October 2011 CPSS – IOSCO FMI Principles. Monica Singer CEO – Strate Limited. 1. The Importance of a Regulatory Structure. An essential regulatory objective is to ensure legal certainty in post- trading ( IOSCO # 1) Why ? Enhance efficiency and safety of post-trading

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AMEDA 26-28 October 2011 CPSS – IOSCO FMI Principles

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  1. AMEDA 26-28 October 2011 CPSS – IOSCO FMI Principles Monica Singer CEO – Strate Limited

  2. 1. The Importance of a Regulatory Structure • An essential regulatory objective is to ensure legal certainty in post- trading (IOSCO # 1) • Why? Enhance efficiency and safety of post-trading • How? Regulation and laws must be (a) sound, and (b) cross-border compatible (IOSCO # 1; UNIDROIT; HAGUE) • Focus after credit crises is on the reduction of risk; integration of markets; promotion of financial stability; improvement of transparency. • Warning: Don’t over-regulate! (high costs; inefficiencies; false sense of safety)

  3. 2. Regulatory Objectives for Strate in South African Legislation • Objects of South African securities legislation states: “This Act aims to – (a) increase confidence in the SA financial markets by • (i) requiring that securities services be provided in a fair, efficient and transparent manner, and • (ii) contributing to the maintenance of a stable financial market environment; (b) promote the protection of regulated persons and clients; (c) reduce systemic risk; and (d) promote international competitiveness of securities services in SA.”

  4. 3. Evolving Regulatory Landscape in South Africa • New legislation Companies Act, 2008 (“CA”) Financial Markets Bill, 2011 (“FMB”) Consumer Protection Act, 2008 (“CPA”) Income Tax Act, 1962 - withholding tax issues Sound legal system (IOSCO #1; UNIDROIT; HAGUE) • New Codes King III - corporate governance for Board and Committees. • New Guidelines NT Policy Document “A Safer Financial Sector to Serve South Africa Better” (“Red Book”) (2011)

  5. 4. Coordinated Process to Strengthen Global Markets • South Africa is bound, participates or is guided by: • UNIDROIT convention • HAGUE convention • G20 outcomes • CPSS-IOSCO Recommendations

  6. 5. Strategic Intent of Strate toReduce Risk, also in Financial Crises • Regulatory Intent = Reduction of Systemic Risk & Protection of Investors • Strate actions: • Segregated Depository Accounts (SDAs) • Participant Failure Manual • Focus on Risk Management • Actions address following regulatory principles specifically: Insolvency circumstances (IOSCO # 11;13) Segregation and Portability (IOSCO # 14) Settlement Finality (IOSCO # 1; 8) Netting Arrangements and Default Rules (IOSCO # 1) Reduction and Management of Risk (IOSCO # 3;4;7;16;17)

  7. 6. Strategic Intent of Stratere International Competitiveness • Regulatory Intent = Promote International Competitiveness • Strate actions: • International Linkages & Linkup • Take on New CSD Participants (also Foreign Participation) • CSD 11; International Forums • Development & Implementation of an African Strategy • WFC: Key actions to enhance understanding at a worldwide level. • Actions address following principles specifically: Create Links (IOSCO #20) Harmonisation to address legal risks (IOSCO # 1) Fair and open access based on criteria (IOSCO # 18) Exchange of information amongst Regulators (IOSCO # 24; G 20 par 28)

  8. 7. Strategic Intent of Stratere Disclosure and Transparency • Regulatory Intent = Disclosure, transparency and regulatory oversight • Strate actions: • Trade Repository (“TR”) (including OTC Derivatives Register) • Collateral management • SOR • Actions address following principles specifically: Creation of TR (IOSCO #24) OTC derivative contracts reported to TR (IOSCO # 24; G 20 par 25) Exchange of information amongst Regulators (IOSCO # 24)

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