Twin Peaks Proposals Released for Comment

National Treasury

A summary of the proposals for implementing the twin peaks model of financial regulation has been released for public comment.

The proposals were published by the financial regulatory reform steering committee (FRRSC).

The committee consists of national treasury, the South African reserve bank and the financial services board.

In August last year, national treasury indicated that legislation designed to introduce the twin peaks approach to financial regulation in South Africa should be introduced in parliament in 2013.

Treasury wants to introduce a safer financial sector in South Africa.

A twin-peaks system of financial regulation is being sought. The finance minister, Pravin Gordhan, first mentioned it during his budget speech in 2011.

Market conduct will be the responsibility of the financial service board while prudential regulation will reside within the reserve bank.

According to a statement accompanying the release, the FRRSC was tasked by the finance minister, Pravin Gordhan, and the governor of the reserve bank, Gill Marcus, to come up with detailed proposals on how the twin peaks concept is to be implemented.

“The objective of the prudential regulator will be to maintain and enhance the safety and soundness of regulated financial institutions. Prudential safety and soundness imply the continued financial health of regulated institutions. The market conduct regulator’s objective will be to protect consumers of financial services and promote confidence in the South African financial system”.

Part of the proposals includes allocating new powers to the reserve bank in terms of financial market infrastructure with particular focus on exchanges, clearing houses and Strate, the central securities depository.

Written comment is invited until 8 March 2013.

The statement makes it clear that comment received will be considered during the drawing up of the legislation.

Comment can be emailed to twinpeaks@resbank.co.za.

Sabinet Cape Town Office

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