Hon Chairperson, hon members, colleagues and comrades, let me say that the Minister must not expect anything from shadow ministers because they see things in smokescreens, and that is in their nature. The current economic global crisis demonstrates what can go wrong should there be a regulatory failure that allows exploitation of the financial system by people within the system itself in order to manipulate information for greed and selfishness. This conduct is at the centre of the critical weaknesses of the financial system as a whole globally. These kinds of weaknesses create economic instability and have a negative impact on financial markets. The Securities Services Act 36 of 2004 has governed the regulation of securities services in South Africa since 2005. The Act primarily focuses on the regulation of securities exchanges, central securities depositories, clearing houses and their respective members. The Act consolidated the South African regulatory framework relating to capital markets and aligned the regulation and supervision of South African financial markets with the then prevailing international developments and regulatory standards.
The developments in the local and international financial markets necessitated a rigorous assessment of the Act to determine the appropriateness and effectiveness of the regulatory approach and framework provided for in the same Act. The Financial Markets Bill was and still is introduced under circumstances that warrant maximum attention by all of us. The Act is introduced at a time when instability of financial markets remains a serious concern and continues to pose economic threats globally. The Bill equally addresses the global financial crisis as recommended by the G20 and is designed to enhance the regulatory framework.
The Financial Markets Bill is intended to align the South African legislation and regulatory framework with developments and standards in other jurisdictions to enable integration and open the markets to local and foreign market players. Co-operation between various local and foreign regulators will strengthen the ability to detect and act on regulatory contraventions and systemic risk aspects.
The Bill aims to provide for the licensing and regulation of exchanges, central securities depositories and clearing houses; to regulate and control securities trading and the custody and administration of securities. The Bill further seeks to do the following: strengthen the self- regulatory organisation model of supervision; align financial markets regulation with international best practice; give effect to World Bank and International Monetary Fund financial sector assessment programme recommendations; improve investor protection in cross-border transactions; and align financial market legislation with the wider legislative framework. An important objective of this Bill is to ensure that there are measures in place to mitigate any future financial crisis that may arise. The so-called regulatory regime that applied internationally and to a lesser extent in South Africa prior to the global financial meltdown in 2007 and 2008, has caused regulatory reviews worldwide as well as within our own borders.
In February 2011, government released its policy document titled A safer financial sector to serve South Africa better, announcing a new approach to regulation that would place systemic stability high on the agenda. This policy document informs some of the new measures contained in the Financial Markets Bill.
As far as market abuse is concerned, new defences and offences have been introduced and removed to deal with insider trading. The defence that a person may deal with inside information because it was in pursuit of an affected transaction, has been removed because the defence is unfair to uninformed sellers before a mandatory offer is made. The defence available to a public sector body in pursuit of monetary policy has also been removed.
The Financial Markets Bill will open the regulation of securities services in South Africa including securities exchanges, central securities depositories, clearing houses and their respective members. It neatly consolidates the South African regulatory framework for capital markets and aligns the regulation and supervision of South African financial markets with prevailing international developments and regulatory standards.
Through public hearings that the standing committee conducted on 29 May 2012 in particular, we were mindful of the working group of the National Treasury and the Financial Services Board, as well as the Johannesburg Stock Exchange, JSE, and Strate Limited, whose initials on the Bill have certainly assisted the process of understanding some of the complex and technical issues attached to the Bill.
We have effected changes to the original Bill that was tabled in Parliament. The amendments effected have given better clarity on the principles and interpretation of the Bill. However, financial stability is not the only objective. The financial sector needs to do more to support the real economy as the sector has a vital role to play in the ongoing transformation of our society. Our desire to bring a better life to all is a responsibility of not only certain sectors of the economy, but the financial sector remains central to everything that we do in order to create a better life for all.
In the interests of simplicity and legal certainty, it is deemed appropriate to replace the Securities Services Act with the Financial Markets Bill rather than proposing a complex Amendment Bill.
Hon Chairperson and hon members, the ANC supports the Financial Markets Bill. Thank you. [Applause.]