On 21 July 2016, National Treasury released the third draft of the regulations under the Financial Markets Act, 2012 (the "Third Draft Regulations"). The previous draft of the regulations was released in June 2015. The Third Draft Regulations are, together with pending legislation, aimed at progressing the financial sector reform strategy for South Africa. This is in line with the country's commitment to the G20 obligations to make financial markets safer and to regulate over-the-counter ("OTC") derivatives.
The Third Draft Regulations were accompanied by a number of draft notices relating to OTC derivatives providers and trade repositories. A new draft of the notice relating to margin requirements for non-centrally cleared OTC derivatives, which is of particular interest to participants in the South African derivatives market, was not released.
The explanatory memorandum on the Third Draft Regulations (July 2016) sets out a summary of the timeline for implementation of the various areas of regulation forming the financial sector reform strategy. According to the timeline:
the Third Draft Regulations, as may be amended, will be tabled in Parliament and promulgated in the fourth quarter of 2016
OTC derivatives providers will become authorised and margin requirements for non-centrally cleared OTC derivatives will be phased in
trade reporting of all OTC derivatives will become mandatory in the third quarter of 2017
a determination of which "vanilla" products will need
to be centrally cleared in the second half of 2017, with
determinations in respect of other asset classes following in the
second half of 2018
The deadline for comments on the Third Draft Regulations and draft notices is 31 August 2016. Comments should be sent via email to Petula Sihlali at email@example.com with the subject title "FMA: Ministerial Regulations (Round 3)".
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