South Africa extends code of conduct consultation deadline
18 December 2017 Pretoria
Image: Shutterstock
The South African Registrar of Securities Services has extended the deadline for its new code of conduct for the country鈥檚 securities lending market.
The deadline for industry comment was initially set for 20 November 2017, but has been pushed back until 31 December 2017 to give regulators more time to review requirements in the face of early criticism from industry stakeholders.
According to the Registrar, the extension will allow parties who deal with securities financing transactions to review the new requirements under a more generous timeframe.
The code covers securities lending and securities borrowing, repo and margin trade transactions.
Among the main principles to adhere to are that 鈥減rudent practices and standards of market conduct鈥� are followed at all times and there is always to be a 鈥渄isclosure of whether parties to an securities financing transactions (SFTs) are acting as principal or agent鈥�.
All parties should make sure that 鈥渁ll SFTs must be arranged through or concluded with authorised financial institutions鈥� and there should be 鈥渙pen and cooperative engagement between parties in the SFT market and the Financial Sector Conduct Authority鈥�.
In addition, 鈥減arties to a SFT must not enter into such a transaction with the intention
of creating a false or distorted market or disrupting an orderly and a fair market in the underlying securities.鈥�
Any person or financial institution considered a 鈥減arty鈥� is required to follow the Code of Conduct which will come in to operation on the date of publication.
At the beginning of December, the South African Securities Lending Association (SASLA) raised concerns over the applicability of the code.
鈥淸The proposed code] did not adequately distinguish between different types of securities financing transactions鈥�, according to SASLA鈥檚 chair Juanita Taylor and Gary Haylett, general manager of strategic projects at the Banking Association South Africa.
鈥淎lso, in many instances the defined terms are not used where they could be. As a suggestion, where defined terms are used in the body of the code they should be indicated with initially capitals, for ease of reference.鈥�
The deadline for industry comment was initially set for 20 November 2017, but has been pushed back until 31 December 2017 to give regulators more time to review requirements in the face of early criticism from industry stakeholders.
According to the Registrar, the extension will allow parties who deal with securities financing transactions to review the new requirements under a more generous timeframe.
The code covers securities lending and securities borrowing, repo and margin trade transactions.
Among the main principles to adhere to are that 鈥減rudent practices and standards of market conduct鈥� are followed at all times and there is always to be a 鈥渄isclosure of whether parties to an securities financing transactions (SFTs) are acting as principal or agent鈥�.
All parties should make sure that 鈥渁ll SFTs must be arranged through or concluded with authorised financial institutions鈥� and there should be 鈥渙pen and cooperative engagement between parties in the SFT market and the Financial Sector Conduct Authority鈥�.
In addition, 鈥減arties to a SFT must not enter into such a transaction with the intention
of creating a false or distorted market or disrupting an orderly and a fair market in the underlying securities.鈥�
Any person or financial institution considered a 鈥減arty鈥� is required to follow the Code of Conduct which will come in to operation on the date of publication.
At the beginning of December, the South African Securities Lending Association (SASLA) raised concerns over the applicability of the code.
鈥淸The proposed code] did not adequately distinguish between different types of securities financing transactions鈥�, according to SASLA鈥檚 chair Juanita Taylor and Gary Haylett, general manager of strategic projects at the Banking Association South Africa.
鈥淎lso, in many instances the defined terms are not used where they could be. As a suggestion, where defined terms are used in the body of the code they should be indicated with initially capitals, for ease of reference.鈥�
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