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:

Penalty -

Profit - 100 000

300 000

400 000Total

9

The Civil Action - Liability2

Tipper

Tippee

PenaltyProfit Total

100 000

400 000300 000100 000

300 000

700 000

400 000

Total 600 000100 000

10

Persons who dealt in the opposite direction, on the same day, iow: the victims

Offender

Creating confidence

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

Directorate of Market Abuse

Enforcement Committee•Penalty

•Compensation

Registrar of High Court

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

16