Regulation and market development

1. Regulation and market development Sisanda Mrwetyana

2. OVERVIEW • The need for regulation • Historical background to our legislation • South African approach to regulation & critical success factors • Detection • Investigation • Enforcement

3. South African approach to regulation & critical success factors • The Insider Trading Act, 1999 • The Securities Services Act, 2004

4. South African approach to regulation & critical success factors • Detection • Investigation • Enforcement

5. Detection • Key features for successful surveillance • Reliability • Constant surveillance • Red flags • Access to client information • Flexibility • Adaptability to new instruments

6. Investigations • Powers • MOU’s • Trading databases • Avoid investigation by correspondence • Powers to be clearly stipulated

7. Enforcement: Criminal sanction • In the hands of the NDPP • 10 years/R50 million • Jail major deterrent • But difficult to prove

8. The Civil Action - Liability1 Trader: 100 000 Profit - Penalty - 300 000 400 000 Total

9. Profit Penalty Total Tipper 100 000 300 000 400 000 100 000 300 000 400 000 Tippee Total 100 000 600 000 700 000 The Civil Action - Liability2

10. Creating confidence Persons who dealt in the opposite direction, on the same day, iow: the victims Offender

11. Our activities to date • Investigated 200 cases to date • Took legal action in 29 • Recovered R50million in penalties • 1 500 victims benefited from distribution

12. Name and shame Enforcement actions/settlements are published

13. Registrar of High Court • Penalty • Compensation Enforcement Committee Directorate of Market Abuse Enforcement Committee (Administrative action)

14. Keeping abreast of developments in the industry • Keeping legislation up to date • Maintaining good relationships with the industry

15. Sharing a common vision with the exchange, right down to the details in the Rules is the most important success factor