The National Treasury document A Safer Financial Sector to serve South Africa better introduces a Twin Peaks regulatory architecture where prudential regulation is separated from market conduct regulation within the financial sector.
The Prudential Division facilitates the role of legislative and regulatory advocacy on behalf of the industry for matters pertaining to prudential regulation and policy formulation.
In layman’s terms, we consider the scope of prudential regulation to include the rules and regulations that banks and other financial institutions are supervised under, including their participation in financial markets. Prudential regulation could be explained within a banking context as what you must do to qualify for a business license to perform the business of a bank and the ongoing maintenance and reporting requirement of that license, whilst market conduct regulation would govern the how you engage your customers once you have a license to perform the business of a bank.
The Prudential Division does not address matters pertaining to bank customers using retail products but will address market conduct matters as it pertains to transacting in foreign currencies, debt markets, equity markets and other financial instruments.
The Prudential Division also includes within its scope, the broader financial stability role of the South African Reserve Bank, sometimes referred to as macro prudential or systemic risk management.
We monitor the pronouncements of the Financial Stability Board and the global standard setting bodies Bank for International Settlements (BIS) and the International Organisation of Securities Commissioners (IOSCO) amongst others, comment on their documents and work with policy makers and regulators domestically to ensure that these standards are appropriately implemented in the banking sector.