South Africa Aims for Market Integrity with New Draft Code of Conduct

South Africa's financial services industry is making significant strides toward fortifying its market surveillance systems. Key financial services institutions alongside regulatory bodies have united for an unprecedented collaboration to formulate the SA Market Surveillance Draft Code of Conduct. This initiative, spotlighted at the 2nd South African Market Surveillance Conference, aims to refine the regulatory framework, matching international standards to reinforce safeguards against market abuse and unfair competition.

With the financial industry tangled in a web of complex global connections, rigorous market surveillance has become an indispensable strategic measure. It is no longer just a regulatory obligation but a significant buffer against burgeoning risks. Nishlan Samujh, Investec Group CFO, highlighted the importance of creating a system of transparency ingrained with integrity, pointing out the industry's self-regulatory momentum to embed trust into the market's very fabric.

Under the SA Market Surveillance Draft Code of Conduct, contributors to the exchange are called to act ethically and responsibly, safeguarding the integrity and efficiency of South Africa's financial markets. The code encompasses a variety of protocols, such as communication surveillance, oversight of social media activities, remote working policies, and the handling of sensitive information. These principles extend to the governing of algorithmic trading and actions to mitigate financial crime.

Olano Makhubela, the Executive Director at the Financial Sector Conduct Authority (FSCA), shed light on the pressing need to regulate Over the Counter (OTC) markets and fortify the ICT infrastructure against threats. He urged stakeholders to maintain robust market infrastructures to anticipate and mitigate unforeseen risks. The Draft Code, while voluntary, will augment statutory changes and buttress the regulatory framework.

The South African financial sector's resolve to mitigate market abuses such as insider trading and market manipulation is clear, with the new code serving as a testament. Happy Shihau, Head of Compliance at Investec, emphasized the role of the code in upholding South Africa's financial market reputation, drawing investments, and fostering economic progress. Appropriate representatives from institutions such as the Johannesburg Stock Exchange (JSE), the SA Institute of Financial Markets (SAIFM), and FSCA, to name a few, have been integral to this collaborative effort.

The collective endeavor to refine market transparency, accountability, and ethical conduct indicates the local financial industry's dedication to maintaining sectoral integrity. This cooperation could enhance investor confidence, stoking economic growth and job creation. Adopting the Draft Code paves the way for South Africa to adopt world-class market practices and protect market integrity. In ensuring fair play across institutions, the sector aims to develop comprehensive solutions that will enable monitoring of market activities through their entire life cycle.

Looking towards the future, Makhubela highlighted the importance of reassessing the Self-Regulating Organisation (SRO) model and adopting improvements rooted not just in following international trends but in doing what's right for the local context. As the conference concluded, it was evident that the Draft Code stands as a significant marker of South Africa's commitment to superior market conduct and a proactive approach to financial regulation.