Thank you, House Chairperson. The DA supports the replacement of the Securities Services Act 36 of 2004 to better regulate securities exchanges and clearing houses and other related entities, to align South Africa's regulation with global standards, and to introduce some regulation of derivative trading.
It is generally accepted that, while the existence of over-the-counter derivatives such as credit default swaps, CDS, did not necessarily cause the global financial crisis, they definitely worsened the crisis by gearing up the losses at institutions like Lehman Brothers and American International Group, AIG.
It must also be noted that South Africa currently ranks number one in the world for the regulation of securities exchanges according to the World Economic Forum, and this law builds on the base of that regulation. Most industry role-players, including the banks, have broadly welcomed the review of the legislation.
We do, however, have several concerns with the final draft before us today. The first is around the sequencing of this law with the forthcoming overhaul of South Africa's financial regulation to a twin-peaks model. It was felt by some stakeholders that amending this law now would put the cart before the horse since it would pre-empt some of the decisions that would need to be made in the establishment of the twin-peaks model. We believe there are grounds for their concern.
Secondly, one such decision would be around the relative roles of the Financial Services Board, FSB and the Reserve Bank in the Bill. Under twin- peaks the FSB is intended to handle issues of market conduct, but much of the content of this law does not deal with market conduct. So, in a way, it is expanding the FSB's mandate before the twin-peaks reforms are fully designed.
Thirdly, the objects of the Bill seem to underplay the role of competition in financial regulation. There should always be a balance between the promotion of competition and the preservation of stability in financial regulation. This Bill stops short of highlighting the promotion of competition in the objects of the Bill.
Fourthly, we think the Bill could go further in specifying how conflicts of interest can and should be resolved. In particular the functions of the Registrar should have been amended to highlight this, and section 62 should have been amended to provide for independent assessments of potential conflicts of interest within market infrastructure.
Lastly, Parliament's role in overseeing the regulations should have been enhanced. Our Standing Committee on Finance heard various opinions on the powers of parliamentary committees when it comes to regulations that are tabled in terms of this legislation. The most convincing of them called for an enhanced role for the committee in signing off or approving certain regulations. These amendments were, however, not supported. Nevertheless, despite these reservations we do support the legislation.
If I may respond to the Finance Minister's accusation that I was scoring cheap political points, on the contrary, I believe that my speech on the Fiscal Framework was simply revolving around some analysis of the numbers. I'm sorry that the Minister got so sensitive about it. I referred to smoke and mirrors because there is, indeed, an illusion in the so-called spending freeze.
In order to achieve the spending freeze, the government had to call in the contingency reserve, and bank on underspending by departments. Spending is actually up by R11,5 billion. That R11,5 billion is driven mainly by the additional R5,5 billion that is being spent on Public Service salaries because the wage settlement came in considerably higher than the 5% limit that the Finance Minister imposed in his February budget.
In fact, I hope that the House will see that there are some smoke and mirrors inherent in that illusion, simply because in order to balance out the additional spending, and to achieve a spending freeze, which the DA supports, we had to jig some numbers around to pay for the additional amounts that Cosatu and Cosatu-aligned unions managed to negotiate up, in spite of the Finance Minister's commitment to constraining those increases in salaries to 5%. [Time expired.] [Applause.]