Building on years of regulatory reform, South Africa’s financial markets are advancing towards greater integrity and trust.
At last week’s South African Institute of Financial Markets Regulatory Summit in Johannesburg, FSCA Commissioner Unathi Kamlana (pictured) outlined how proactive regulation is shaping the country’s financial landscape, ensuring stability while keeping pace with innovation.
Kamlana said integrity “does not emerge on its own. It is something we must actively shape, among other things, through sound regulation that is consistently enforced by strong and robust institutions, such as financial sector regulators, as well as through ethical behaviour by both individuals and firms that operate within the system.”
He emphasised the strategic importance of regulation in maintaining market confidence.
“Too often regulation is seen as a costly hurdle to clear or an inconvenience to be endured, rather than a strategic imperative to be embraced. The reality is that without strong regulation, trust erodes, misconduct and abuse go unchecked, and stability is put at risk. And yes, regulation does carry costs, but the cost of no regulation, or weak regulation, is far greater.”
Financial Markets Act review
One of the FSCA’s major projects is the review of the Financial Markets Act (FMA). Kamlana explained that the FSCA has been supporting National Treasury to implement recommendations from the Financial Markets Review Committee and Treasury’s 2020 policy paper, Building Competitive Financial Markets for Innovation and Growth.
The changes aim to expand the scope of market infrastructures; align licensing, conduct, and prudential powers; clarify regulator roles; address competition and digital asset gaps; and embed global best practices in governance, transparency, and operational resilience.
“National Treasury has indicated that these amendments are expected to be released for public consultation sometime this year,” Kamlana said.
However, some challenges require immediate action, which the FSCA can tackle using its powers under the Financial Sector Regulation Act.
“This proactive regulation has enabled us to advance other critical reforms that both complement and reinforce the objectives of the FMA review, while addressing urgent market needs.”
Central clearing and trade reporting
The FSCA is also developing a regulatory framework for central clearing, working closely with the Prudential Authority. Phase 1 finalised the licensing for local central counterparties (CCPs), while Phase 2 focuses on equivalence frameworks allowing external CCPs or trade repositories (TRs) to provide services locally. Phase 3 will introduce mandatory central clearing for certain over-the-counter derivative transactions.
Kamlana highlighted the progress in trade reporting, with South Africa now hosting its own licensed TR. “Once fully operational, these developments will complete a critical piece of South Africa’s post-crisis reform agenda: ensuring that OTC derivatives are not only centrally cleared but also transparently reported, in line with international standards.”
Levelling the playing field for non-bank ODPs
The FSCA is closing a prudential gap between banks and non-bank over-the-counter derivative providers (ODPs), aiming to ensure consistent standards for capital and risk management.
Kamlana advised non-bank ODPs to use the lead time to review capital buffers, stress-test risk frameworks, and prepare for higher prudential requirements.
Market infrastructure standards and competition
Kamlana noted that multiple licensed exchanges and market infrastructures bring both opportunity and complexity.
“Competition delivers real value only when it is anchored in co-operation, interoperability, and consistent standards that safeguard investors and preserve market resilience. Without these safeguards, we run the risk of fragmentation, operational inefficiencies, and regulatory blind spots.”
A draft Conduct Standard, published last year for consultation, will make co-operation mandatory, formalise interoperability, and embed best-execution practices, greater fee transparency, and stronger conflict-of-interest management.
The FSCA is preparing a second round of consultation following constructive industry feedback.
Closing the benchmark gap
The FSCA has worked with National Treasury to close gaps in benchmark oversight, ensuring that prices and rates underpinning financial instruments are beyond reproach. Kamlana said a Conduct Standard, incorporating amendments from the EU Benchmark Regulation, is near finalisation.
“This will mean clear rules for authorisation, robust oversight of administrators, and a focus on significant and critical benchmarks that truly matter to market stability.”
JIBAR-to-ZARONIA transition
As part of broader benchmark reform, South Africa is transitioning from JIBAR to ZARONIA, with JIBAR to be fully discontinued by December 2026.
Kamlana said the FSCA will take all necessary steps to support a smooth transition, working with the South African Reserve Bank, Treasury, and the industry to address legislative amendments, safe-harbour provisions, and fair outcomes for financial customers. Joint supervisory inspections will ensure market participants are prepared.
In closing, Kamlana emphasised the forward-looking nature of regulatory integrity. He said success will depend on the ability to embrace innovation without compromising stability, to open new frontiers while preserving foundational principles, and to build resilience not just in systems but in the trust that sustains them.
“Trust is our most valuable currency, earned slowly, tested constantly, and lost quickly.”
