Treasury moots tighter regulation

Cape Town - The treasury is in the process of creating a council of regulators, which would bring together all financial regulators for increased coordination and information-sharing.

This was disclosed in parliament on Tuesday in a written reply by Finance Minister Pravin Gordhan to Dion George, Democratic Alliance spokesperson for finance.
 
Gordhan said a round table of regulators is being formalised into the council, and that it has already begun work on areas of financial stability, enforcement, market conduct and legislative alignment.
 
"This council will perform a similar role to the financial stability oversight council established as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act recently passed in the USA," Gordhan said.
 
George asked about an analysis of the financial regulation framework following the global financial crisis, and was told the treasury is also considering proposals to improve the governance and accountability of financial regulatory agencies.

The minister added that the treasury is also considering increasing the scope of regulation to cover previously unregulated activities, such as hedge funds and private equity firms.
 
"Changes to regulations governing over-the-counter derivative products have been incorporated into the Financial Markets Bill which will come before the house before the end of the year," he said.

International commitments

"Credit rating agencies, which play an important role in global investment, will also be brought under regulation through a credit ratings services bill which will be tabled in 2011," he said.

In addition, South Africa has been fully committed to international efforts to address financial regulatory issues. As a member of the Group of 20, the Financial Stability Board (FSB) and the Basel Committee on Banking Supervision, South Africa has been an active participant in dialogue on improving financial regulation internationally.
 
Because of South Africa's international commitments and the proposed changes to the Basel II framework measures to raise the quality and quantity of capital, steps to reduce the pro-cyclicality of current rules, a new risk framework, and liquidity and leverage ratios are to be implemented in 2011/12, following an impact assessment.

"During the first half of 2010 the IMF and World Bank reviewed South Africa's adherence to global regulatory standards in banking, insurance and securities and the balance between regulators' independence and accountability, as part of the country's G-20 and FSB commitments," Gordhan said.
 
"The results of these assessments are currently being used to inform our own ongoing review of the regulatory framework."