FINANCIAL MARKETS ACT NO. 19 OF 2012 - …

1 FINANCIAL MARKETS ACT NO. 19 OF 2012 [View Regulation] [ASSENTED TO 30 JANUARY, 2013] [DATE OF COMMENCEMENT: 3 JUNE, 2013] (English text signed by the President) This Act has been updated to Government Gazette 37351 dated 18 February, 2014. as amended by FINANCIAL Services Laws General Amendment Act, No. 45 of 2013 [with effect from 28 February, 2014, unless otherwise indicated] ACT To provide for the regulation of FINANCIAL MARKETS to license and regulate exchanges, central securities depositories, clearing houses and trade repositories to regulate and control securities trading, clearing and settlement, and the custody and administration of securities to prohibit insider trading, and other market abuses to provide for the approval of nominees to provide for codes of conduct to replace the Securities Services Act, 2004, as amended by the FINANCIAL Services Laws General Amendment Act, 2008.

2 So as to align this Act with international standards and to provide for matters connected therewith. ARRANGEMENT OF SECTIONS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. CHAPTER I PRELIMINARY PROVISIONS Definitions and interpretation Objects of Act Application of Act and rules Prohibitions and adherence to authorisation by authorised users, participants and clearing members CHAPTER II REGULATION AND SUPERVISION OF FINANCIAL MARKETS Powers of the Minister Registrar and Deputy Registrar of Securities Services CHAPTER III EXCHANGES Licensing of exchange Application for exchange licence Requirements applicable to applicant for exchange licence and licensed exchange Licensing of exchange Functions of licensed exchange Functions of licensed exchange and power of registrar to assume responsibility for functions Listing of securities Removal of listing and suspension of trading Application of amended listing requirements to previously listed

3 Securities Note: This content is licensed for use by mbali makhanya of Shepstone & Wylie Attorneys. Terms & Conditions 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. Disclosure of information by issuers of listed securities Maintenance of insurance, guarantee, compensation fund or other warranty Funds of mutual exchange Exchange rules Requirements with which exchange rules must comply Authorised users Restriction on borrowing against and repledging of securities belonging to other persons Marking of or recording details of securities Restriction on alienation of securities Segregation of funds Segregation of securities General provisions in relation to listed securities Use of designation "stockbroker" and related designations Buying and selling listed securities Reporting of transactions in listed securities CHAPTER IV CUSTODY AND ADMINISTRATION OF SECURITIES

4 Definition Licensing of central securities depository Application for central securities depository licence Requirements applicable to applicant for central securities depository licence and licensed central securities depository Licensing of central securities depository Functions of licensed central securities depository Functions of licensed central securities depository and power of registrar to assume responsibility for functions Participant Authorisation of participant Duties of participant Duties of participant Uncertificated securities Uncertificated securities Duties of issuer of uncertificated securities Depository rules Requirements with which depository rules must comply General provisions relating to custody and administration of securities Registration of securities Ownership of securities Transfer of uncertificated securities or interest in uncertificated securities Pledge or cession of securities in securitatem debiti Ranking of interests in securities Acquisition by bona fide transferee Withdrawal and delivery of securities Records Warranty and indemnity Attachment Effectiveness in insolvency CHAPTER V CLEARING HOUSE Licensing of clearing house Application for clearing house licence 48.

5 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. Requirements applicable to applicant for clearing house licence and licensed clearing house Licensing of clearing house Functions of licensed clearing house Functions of licensed clearing house and power of registrar to assume responsibility for functions Maintenance of insurance, guarantee, compensation fund or other warranty Funds of mutual independent clearing house Clearing house rules Requirements with which clearing house rules must comply CHAPTER VI TRADE REPOSITORIES Application for trade repository licence Requirements applicable to applicant for trade repository licence and licensed trade repository Licensing of trade repository Duties of licensed trade repository Reporting obligations CHAPTER VII GENERAL PROVISIONS APPLICABLE TO market INFRASTRUCTURES Annual assessment Cancellation or suspension of licence Carrying on of additional business Conflicts of interest Demutualisation of

6 An exchange, central securities depository, or independent clearing house Amalgamation, merger, transfer or disposal Duty of members of controlling body Appointment of members of controlling body Limitation on control of and shareholding or other interest in market infrastructures Delegation of functions Report to registrar Attendance of meetings by, and furnishing of documents to, registrar Manner in which rules of certain market infrastructures may be made, amended or suspended, and penalties for contraventions of such rules Limitation of liability Disclosure of information CHAPTER VIII CODE OF CONDUCT Code of conduct for regulated persons Principles of code of conduct CHAPTER IX PROVISIONS RELATING TO NOMINEES Approval of nominee CHAPTER X market ABUSE 77.

7 Definitions Offences 78. Insider trading 79. Publication 80. Prohibited trading practices 81. False, misleading or deceptive statements, promises and forecasts 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. 101. 102. 103. 104. 105. 106. 107. 108. 109. 110. 111. 112. Schedule Insider trading sanction Liability resulting from insider trading Procedural matters Attachments and interdicts Administration of Chapter Powers and duties of FINANCIAL Services Board Composition and functions of directorate Financing of directorate General provisions Protection of existing rights Confidentiality and sharing of information CHAPTER XI AUDITING Auditor Accounting records and audit Functions of auditor Furnishing of information in good faith by auditor Power of registrar to request audit CHAPTER XII GENERAL PROVISIONS Powers of registrar and court General powers of registrar

8 Inspections and on-site visits Powers of registrar after on-site visit or inspection Power of registrar to impose penalties Power of court to declare person disqualified Enforcement committee Referral to enforcement committee Winding-up, business rescue and curatorship Winding-up or sequestration by court Business rescue Appointment of curator Appointment of business rescue practitioner or liquidator and approval of business rescue plan Miscellanea General interpretation of Act Right of appeal Evidence Regulations Fees Offences and penalties Savings and transitional arrangements Repeal or amendment of laws Short title and commencement Laws repealed or amended BE IT ENACTED by the Parliament of the Republic of South Africa, as follows:- CHAPTER I PRELIMINARY PROVISIONS 1.

9 Definitions and (1) In this Act, unless the context indicates otherwise- "advice" means any recommendation, guidance or proposal of a FINANCIAL nature furnished, by any means or medium, to a client or group of clients- (a) in respect of the buying and selling of securities (b) on any corporate action or other event affecting the rights or benefits in respect of securities or (c) on the exercise or lapse of any right in respect of securities irrespective of whether or not such advice results in any such transaction being effected, but does not include- (i) factual advice given merely- (aa) on the procedure for entering into a transaction in respect of securities (bb) on the procedure relating to a corporate action or other event affecting the rights or benefits in respect of securities (cc) in relation to the description of securities (dd) in reply to routine administrative queries (ee) in the form of objective information about securities or ( ff ) by the display or distribution of promotional material (ii)

10 An analysis or report on securities without any express or implied recommendation, guidance or proposal that any particular transaction in respect of the securities is appropriate to the particular investment objectives, FINANCIAL situation or particular needs of a client "appeal board" means the appeal board established by section 26A of the FINANCIAL Services Board Act "associated clearing house" means a clearing house that clears transactions in securities on behalf of one or more exchanges in accordance with the rules of the relevant exch