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Johannesburg - A panel established to investigate South Africa's foreign-exchange markets found that some of the country’s authorised dealers inappropriately shared confidential client information and recommended laws be changed to charge traders for future wrongdoing.
While the Foreign Exchange Review Committee found no evidence of “malpractice” or "serious misconduct" in domestic rand trading, it proposed legislation that will allow authorities to prosecute dealers, the panel said in a report released in Pretoria on Monday.
During its investigation, the panel, formed by the Reserve Bank and Financial Services Board, found that there is no need for “criminal investigations or punitive measures” as it had not found evidence of "front-running client transactions, collusion or the manipulation of any foreign exchange benchmarks".
The review committee drafted a code of conduct for over- the-counter markets with market participants and recommended a change in legislation that will allow the code to be "subsidiary" law.
It also proposed that sections of the Financial Markets Act dealing with insider trading, market manipulation and false reporting be extended to the foreign exchange market, which would give authorities powers to prosecute market players "for instances of wrongdoing".
The committee also wants a Financial Markets Standards Group of senior market professionals and compliance officers to be formed, modeled on the US Treasury Markets Practice Group. The group’s immediate task would be to conduct a similar review to the Fair and Efficient Markets Review in the UK, which will take about 18 months.
While the Competition Commission’s investigation is still ongoing into international banks for allegedly fixing spot, futures and forward currency prices, regulators will take action if evidence of wrongdoing is found in the antitrust probe, the panel said.
