National Treasury, the South African Reserve Bank and the Financial Services Board (FSB) on Friday called for public comment on the proposed regulations for unlisted over-the-counter (OTC) derivatives, mooted to ensure South Africa met its G20 obligations.
These proposed regulations were the last step in a multiyear international effort to improve the regulation of derivatives.
The proposed regulations outlined the requirements with which a central securities depository (CSD) must comply for approval of an external CSD as a participant; the securities services to be provided by an external CSD and external clearing members; and the functions and duties that may be exercised by an external clearing house, central counterparties (CCPs) or external trade repository.
The proposed regulations would bring the South African regulatory framework in line with those implemented in other G20 jurisdictions, Treasury said in a statement on Friday.
“The regulations will enhance supervision of the OTC derivatives markets in South Africa by requiring that OTC derivative providers (ODPs) be authorised as a category of regulated persons and by ensuring sound and resilient CCPs,” it explained.
Treasury said the reforms were necessary to improve transparency in the global derivatives markets, mitigate systemic risk and protect against market abuse, with regulators worldwide moving towards consistent standards for derivatives.
Along with progress in implementing higher capital requirements for non-centrally cleared derivatives, most jurisdictions were committed to the implementation of margin requirements for these derivatives consistent with the internationally agreed start of phase-in during 2015.
The regulations would ensure promotion of transparency of the derivatives markets through regulations applicable to the licensing of trade repositories.
The FSB expected to release the criteria for authorisation as an ODP, an ODP code of conduct and reporting obligations in terms of derivatives later this year.
The deadline for comment submissions was September 3.