South Africa is set to adopt a raft of legislative changes over the next three to five years to modernise the regulatory framework for financial institutions and bring it into line with international norms.

The country has been slow to implement new rules and regulations and has fallen out of step with its peers, undermining its attractiveness as an investment destination, according to Astrid Ludin, deputy commissioner at the Financial Sector Conduct Authority. The national treasury is finalising a Conduct of Financial Institutions Bill to present parliament that seeks to streamline the licensing of financial institutions and enhance disclosure requirements to provide greater visibility into their business practices, she said.

The Financial Markets Act is also being reviewed and changes are expected to be submitted to parliament by the end of the year. They include enhanced controls over short selling and securities financing transactions, and additional disclosure requirements of pre- and post- trading data to improve market surveillance.

The amendments are needed to ensure “that the South African regulatory framework is appropriate for the environment that we are in, that we keep abreast of the changes that have happened internationally”, Ludin said in an interview. “There is quite a big regulatory agenda over the next three to five years” and it will need to be carefully managed to “balance the impact on industry, our global competitiveness as a market and the impact on our investors”, she said.

The disclosure of the planned legislative overhaul comes after the Financial Action Task Force, a Paris-based global financial watchdog, placed South Africa on its so-called grey list in February because of the state’s shortcomings in tackling illicit financial flows and the financing of terrorism. Two major cryptocurrency scams have also originated in South Africa, both of which saw investors lose billions of dollars.

The FSCA will spend the next three years improving the digitisation of its systems to enable it to streamline its reporting requirements, remove redundancies, and facilitate the sharing of information with other regulators such as the prudential authority and the Financial Intelligence Centre, Ludin said. — (c) 2023 Bloomberg LP