Tag Archives: exchange regulation

New exchange control regulations for Institutional Investors

South Africa’s National Treasury has introduced the further easing of foreign exchange controls in an effort to make it possible for South AfricanĀ  companies and institutions to invest more overseas.

The Treasury increased the upper limit on the amount institutional investors can take offshore by five percentage points. The limit is going to be somewhere between 25% and 35% when it comes to investors.

“The National Treasury wishes to alert investors that the proclaimed increase in prudential foreign asset limits should also be perceived as a mechanism for absorbing current holdings of inward-listed instruments not having a domestic classification.”

The Treasury said the Reserve Bank would provide additional details on this with regard with an announcement in the near future.

Finance Minister Pravin Gordhan


Emerging market investment

As part of his Medium Term Budget Policy Statement in October, Finance Minister Pravin Gordhan unveiled that the prudential framework for foreign investment by private and public pension funds, along with the Government Employees Pension Fund, would be reviewed “in order to support portfolio re-alignment and offshore diversification of such funds, especially in other African continent and into other emerging markets”.

Retirement funds in particular, which represent a substantial portion of the industry investable assets, could be restricted by the current prudential foreign asset limit, as indicated by current analysis.

Additionally, the Treasury delayed the disclosure of the discussion paper on the country’s financial sector to February 2011.

“To provide for additional time for internal consultations within government, the release of the comprehensive discussion document, known as ‘Strengthening the financial sector to better serve South Africa’, is postponed and will be unveiled for public comment in February next year,” it said.

Source: BuaNews

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South Africa best for regulation of exchanges

The latest World Economic Forum (WEF) Competiveness report ranks South Africa 1st out of 139 countries for its regulation of securities exchanges. South Africa moved up from 2nd place, overtaking Sweden for the top position.

“We are very pleased with this achievement, which acknowledges the JSE’s record in terms of regulation and surveillance,” said Russell Loubser, chief executive of the JSE, South Africa’s only securities exchange. “This ranking also sends a very good message about investing in South Africa.

“It is a testament to the effective working relationship between the JSE and the Financial Services Board,” Loubser said in a statement this week.

Financial market development

Released on 9 September, the 2010-2011 WEF Competiveness Report ranks countries according to 12 “pillars” or sets of criteria. The study rates a country’s competiveness according to quality of infrastructure and institutions, efficiency, market sophistication as well as capacity for innovation.

Regulation of securities exchanges falls under the 8th pillar, financial market development. South Africa fares well in terms of financial market development criteria, with an overall 9th place ranking.

Within this set of criteria, other rankings that demonstrate efficiency of local financial markets include: financing through the local equity market at 7th; availability of financial services at 7th; soundness of banks at 6th; and legal rights of investors at 6th.

Financial Services Board

The JSE is accountable to the Financial Services Board for the regulation of its markets, market integrity and investor protection. The two organisations work closely together on matters that could undermine investor confidence in South Africa.

“A well-regulated securities exchange is especially important to international investors post the global financial crisis,” the JSE said. “In the midst of the crisis, unlike many exchanges, the JSE did not ban short selling nor introduce circuit breakers.”

Source: southafrica.info, livescience.com, techcentral.ie

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