The Third Draft Ministerial Regulations under the Financial Markets Act
On 21st July 2016 National Treasury published the third draft of the ministerial regulations under the Financial Markets Act No. 19 of 2012, as well as several draft notices relating particularly to OTC derivatives and trade repositories. These are necessary in order that South Africa continue to advance financial reform and regulation in line with G20 recommendations. The draft regulations dealing with margin requirements for non-centrally cleared OTC derivatives were not released at this time, but are expected imminently.
It is expected that the third draft of the regulations will be promulgated in the last quarter of 2016. What is of interest is that these draft regulations set out timeframes for the implementation of certain regulations under the Financial Markets Act, meaning that market participants can now prepare more easily, with a timeframe in mind, for compliance to the Act.
Market participants may find the following timeframes of interest:
Q4 2016: Financial Sector Regulation Act will come into operation
Q1 2017: A review of the Central Clearing mandates will happen
H1 2017: The Twin Peaks architecture will be implemented (establishing the Financial Sector Conduct Authority, or “FSCA”, and the Prudential Authority, or “PA”, both of which will be responsible for the licensing of required market infrastructures under the Financial Markets Act)
H2 2017: OTC Derivative Service Providers will be required to register with the FSCA and PA and apply for a license
H2 2017: A decision will be made as to who will be licensed to clear Interest Rate Derivatives in SA, and the margin requirements for un-cleared derivatives will start to be phased in
Q3 2017: Reporting of all OTC Derivative Transactions to a licensed Trade Repository will begin
This timeline provides for a rather short period of time during which some fundamental operational and system changes will be required amongst market participants in the OTC Derivatives market as well as the creation and licensing of market infrastructures to ensure compliance with the new regulations.
For more information on the Financial Markets Act and the details of what the new regulations require with respect to OTC derivatives and OTC derivatives service providers, join DeriviDoc on 4th August 2016 at the Da Vinci Hotel in Sandton for a full day course on this topic.
The Financial Markets Act and its Impact on the OTC Derivatives Market
The draft regulations and related documents are available on the National Treasury website (www.treasury.gov.za/otc), whilst the Board Notices are available on the Financial Services Board website (www.fsb.co.za).
Melissa van der Merwe (DeriviDoc Director)
29 July 2016