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FSCA publishes various Conduct Standards – Now open for comment

Last week was a busy week at the FSCA office with the publication of four different Conduct Standards. Interested parties are invited to submit comment.

FSCA Communication 49 of 2020 (RF)
Publication of draft Conduct Standard prescribing Conditions for Securities Lending for Pension Funds
The draft Conduct Standard sets out overarching principles for securities lending and prescribes, amongst others, conditions in respect of the delegation of administration of securities lending agreements to a service provider.
Further to the above and on the basis of the comments received on the previous draft Notice, the FSCA updated the draft Conduct Standard to, amongst others, include the definition of an ‘exchange’ in the context of the Conduct Standard. This has been defined to mean a licensed exchange as defined in section 1 of the Financial Markets Act, 2012.
The draft Conduct Standard further clarifies the requirements that will be applicable to all securities irrespective of whether the securities are offshore or local.

Click here to download all documents.

FSCA Communication 50 of 2020 (CIS)
Publication of draft Conduct Standard – Advertising, Marketing and Information Disclosure Requirements for Collective Investment Schemes
The draft Conduct Standard is aimed at ensuring that investors are treated fairly and that clear information is made available to them prior to signing any contracts and on a regular basis thereafter to ensure that investors are kept appropriately informed at all times.
The draft Conduct Standard sets out principles and rules-based requirements for CIS managers and their authorised agents in respect of disclosures and advertising pertaining to the CIS Managers and their portfolios.
The draft Conduct Standard places an obligation on CIS Managers to provide certain minimum disclosures which complies with predefined requirements, to existing and potential investors.
The draft Conduct Standard further sets out requirements pertaining to record keeping and the lodgement of all required documentation, advertisements and disclosures which are produced.

Click here to download all documents.

FSCA COMMUNICATION 51 OF 2020 (RF)
Publication of Draft Conduct Standard [-] of 2020 – Conduct Standard prescribing conditions for investments in Hedge Funds
The main objective of the draft Conduct Standard is to prescribe the conditions that a fund needs to comply with in order to invest in hedge funds. This includes:
A fund may only invest in a hedge fund if such hedge fund is administered by a registered manager authorised to administer a hedge fund as referred to in paragraph 2(2) of Board Notice 52 of 2015;
a fund must ensure that when it invests in a hedge fund, the hedge fund manager contractually undertakes to disclose to the fund if the fund’s exposure to embedded derivatives in the hedge fund exceeds one hundred percent of such derivatives; and
where the board of a fund lacks the expertise to make investment choices, such board must, before it invests in a hedge fund, obtain expert advice as required in terms of section 7D(1)(e) of the Pension Funds Act, 1956 to enable it to make the most suitable investment decisions for its fund in relation to investing in a hedge fund.

Click here to download all documents.

FSCA COMMUNICATION 52 OF 2020 (RF)
Publication of FSCA Conduct Standard 5 of 2020 (RF) – Conditions for Smoothed Bonus Policies to Form Part of Default Investment Portfolios

The main objective of the Conduct Standard is to prescribe the conditions with which a smoothed bonus policy must comply in order to meet the definition of “default investment portfolio” as defined in the Regulations made in terms of section 36 of the Pension Funds Act, 1956 (Act 24 of 1956).Click here to download all documents.

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