- NO. 73 OF 1996: FINANCIAL
MARKETS CONTROL AMENDMENT ACT, 1996.
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- PRESIDENT'S OFFICE No.
1873.
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20 November 1996
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- NO. 73 OF 1996: FINANCIAL
MARKETS CONTROL AMENDMENT ACT, 1996.
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- It is hereby notified that
the President has assented to the following Act which is hereby
published for general information:-
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GENERAL
EXPLANATORY NOTE: -
- Words in bold type
indicate omissions from existing enactments. Words in italics
indicate insertions in existing enactments.
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ACT
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- To amend the Financial
Markets Control Act, 1989, so as to insert, amend or delete certain
definitions; to further regulate restrictions
on the management of
investments; to further regulate the juristic personality of an
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association;
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to make further provision for
the rules of a financial exchange; to make further provision for the
separation of funds of members
and other persons; to provide for the
recognition of interdealer brokers; to further regulate the board
for the hearing of appeals;
to further regulate advertising or
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canvassing
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in relation to financial
instruments; to make further provision for inspections; to further
regulate certain provisions relating
to penalties; to further
regulate limitation of liability; and to effect certain technical
amendments to the text; to amend the
Financial Markets Control
Amendment Act,
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1995, so as to further
regulate the application of that Act; and to provide for
-
matters connected
therewith.
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- (Afrikaans text
signed by the President.) (Assented to 6 November 1996.)
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BE IT ENACTED by the
Parliament of the Republic of South Africa. as follows:-
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- Amendment of section 1 of
Act 55 of 1989, as amended by section 29 of Act 97 of
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1990, section 23 of Act
54 of 1991, section 36 of Act 83 of 1992 and section 1
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of Act 55 of 1995
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- 1. Section 1 of the
Financial Markets Control Act, 1989 (hereinafter referred to as the
principal Act), is hereby amended-
-
- (a) by the substitution
for paragraph (b) of the definition of "financial market"
of the following paragraph:
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- "(b) by means of
any system or facility;";
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- (b) by the insertion
after the definition of "futures contract" of the
following definition:
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- "'interdealer
broker' means a participant in a financial market who facilitates
transactions in listed financial instruments
between
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members;"; and
-
- (c) by the substitution
for paragraph (b) of the definition of "loan stock" of
the following paragraph:
-
- "(b) an institution
or body contemplated in section 84(1)(f) of the Provincial
Government Act, 1961 (Act No. 32 of 1961)a
local government body
contemplated in the Local Government Transition Act,
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1993 (Act No. 209 of
1993), or a provincial government;".
-
- Amendment of section 3 of
Act 55 of 1989
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- 2. Section 3 of the
principal Act is hereby amended-
-
- (a) by the substitution
in the Afrikaans text for subsection (2) of the following
subsection:
-
- "(2) Die adviesraad
kan van tyd tot tyd ondersoek instel en die Registrateur van advies
dien, of aanbevelings by die Minister
doen, aangaande enige
aangeleentheid betreffende finansiele markte en
effektebeurseaandelebeurse, en moet die Minister van
advies
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dien oor 'n aangeleentheid
wat deur die Minister na die adviesraad verwys word.";
-
- (b) by the substitution
in the Afrikaans text for paragraph (a) of subsection (5) of the
following paragraph:
-
- "(a) Die adviesraad
kan een of meer subkomitees aanstel om die aangeleenthede
betreffende finansiele markte en effektebeurse
aandelebeurse wat
deur die adviesraad na so 'n subkomitee verwys word, te oorweeg en
daaroor advies te gee."; and
-
- (c) by the substitution
in the Afrikaans text for subsection (6) of the following
subsection:
-
- "(6) Die adviesraad
kan die hulp inroep van die persoon of persone wat hy mag nodig
vind om hom by te staan, of om aangeleenthede
betreffende
finansiele markte en effektebeurseaandelebeurse te ondersoek.
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- Amendment of section 5 of
Act 55 of 1989, as substituted by section 2 of Act
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55
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of 1995
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- 3. Section 5 of the
principal Act is hereby amended-
-
- (a) by the substitution in
subsection (1) for the words preceding paragraph
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(a) of the following words:
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- "No person shall, as
a regular feature of his or herbusiness, manageundertake the
management ofinvestments on behalf of
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another person, and for such
management receive any remuneration in whatever form, other than
fees charged by a member for the
buying and selling of financial
instruments, unless heor she-";
-
- (b) by the substitution
for paragraph (c) of subsection (4) of the following
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paragraph:
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- "(c) the applicant
complies with the capital adequacy prudentialrequirements
determined by the Registrar by notice in the
Gazette;
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(c) by the substitution for
paragraph (e) of subsection (4) of the following
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paragraph:
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- "(e) the applicant
undertakes to pay the prescribedannual levy prescribed under
section 15A of the Financial Services Board
Act.
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1990 (Act No. 97 of 1990).";
and
-
- (d) by the substitution
in paragraph (a) Of Subsection (6) for the words preceding
subparagraph (i) of the following words:
-
- "For the purposes of
subsection (1) it shall be deemed that the managingmanagement of
investments is not a regular feature
of
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the business of any
person if such investments form part of the assets
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- Amendment of section 10 of
Act 55 of 1989, as substituted by section 7 of Act
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55 of 1995
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4. Section
10 of the principal Act is hereby amended- -
- (a) by the substitution in
subsection (1) for subparagraph (ii) of paragraph
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(a) of the following
subparagraph
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- "(ii) the provisions
of section 8(1)(a), (c) or (d) no longer applied to the financial
market exchange concerned;";
and
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(b) by the substitution for
subsection (2) of the following subsection: "(2) The
Registrar shall not refuse to renew
a stock exchange
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financial market licence on
any grounds unless heor shehas furnished the association concerned
with the reasons for hisor her
proposed refusal and the association
has had the opportunity to show cause within a period specified in
a notice by the Registrar
to the association why such renewal
should not be refused.".
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- Substitution of section 12
of Act 55 of 1989
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- 5. The following section
is hereby substituted for section 12 of the principal Act:
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"Juristic
personality of association
- the
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- 12. An association
referred to in section 7 shall as from the date on which it is for
the first time issued with a financial
market
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licence be a juristic person
capable of suing or being sued in the name in which it is licensed,
and of acquiring, owning, burdening,
hiring, letting and alienating
property. and subject to the provisions of this Act, of doing such
things as may be necessary
for or incidental to the exercise of its
powers or the carrying out of its duties in terms of
-
- rules.".
- Amendment of section 17
of Act 55 of 1989, as amended by section 25 of Act 54 of 1991,
section 18 of Act 7 of 1993, section
65 of Act 104 of 1993 and
-
section
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12 of Act 55 of 1995
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- 6. Section 17 of the
principal Act is hereby amended-
-
- (a) by the substitution
in subsection (1) for the words preceding item (aa)
-
of subparagraph (iii) of
paragraph (a) of the following words:
-
- "that no person is
admitted as a member or allowed to continue as a
- member unlesshethat
person-";
-
- (b) by the substitution in
subsection (1) for item (cc) of subparagraph
-
(iii) of paragraph (a)
of the following item:
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"(cc)
employs the number of brokerspersons required in terms
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of the rules and who comply
with the standards and other qualifications contemplated in item
(bb);";
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- (c) by the deletion of
subparagraph (i) of paragraph (1) of subsection (1);
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and
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- (d) by the deletion of
paragraph (w) of subsection (1).
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- Amendment of section 17B
of Act 55 of 1989, as inserted by section 14 of Act
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55
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of 1995
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- 7. Section 17B of the
principal Act is hereby amended by the substitution in
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subsection (1) for the words
preceding the proviso of the following words: "Every member
who has one or more clientsshall-
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(a)open and maintain a
separate trust account at a bank;or
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- (b) utilise a separate
trust account at a bank, opened and maintained
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by a stock exchange as
defined in the Stock Exchanges Control Act,
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1985 (Act No. 1 of
1985), or by a financial exchange, to which the
-
member belongs, and shall on
the date of receipt of any payment from or on behalf of
apersonclient deposit insuch account
eitherthe account in
questionthe cheque, draft or instrument
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by means of which such
payment is made or alternatively deposit for same day value in
such account funds equal to the amount
of such payment".
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- Insertion of section 17C
in Act 55 of 1989
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- 8. The following section
is hereby inserted in the principal Act after section 17B:
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- "Recognition of
interdealer brokers
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- 17C. An interdealer
broker who is not a member of a financial exchange shall comply
with such conditions as the Registrar may
determine.".
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- Amendment of section 18 of
Act 55 of 1989, as amended by section 66 of Act 104 of 1993 and
section 15 of Act 55 of 1995
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- 9. Section 18 of the
principal Act is hereby amended by the addition of the following
subsection:
-
- any or
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- "(7) The decision of
a majority of the members of the board shall be the decision of the
board, but the chairperson alone
shall decide
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question of law, and whether
any matter constitutes a question of law a question of fact.".
- Amendment of section 21A
of Act 55 of 1989, as inserted by section 17 of Act
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55
-
of 1995
- 10. Section 21A of the
principal Act is hereby amended by the substitution for subsection
(1) of the following subsection:
-
- "(1) No person other
than a member or an officer or employee of a member who is so
permitted in terms of the rules,or a
financial exchange or an
employee of a financial exchange, shall in any matter or by any
means, either for himself,herselfor
for any other person, directly
or indirectly advertise or canvass for any business relating
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to
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the buying and selling
of financial instruments.".
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- Amendment of section 26 of
Act 55 of 1989, as amended by section 18 of Act 55 of 1995
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- 11. Section 26 of the
principal Act is hereby amended-
-
- (a) by the deletion in
subsection (1) of the word "or" at the end of
subparagraph (iii) of paragraph (a), the addition
of the word "and"
at the end of paragraph
-
(b) and the addition to the
said subsection of the following paragraph: "(c) any other
person whom the Registrar has reason
to believe
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contravenes or has
contravened any provision of this Act.",
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- (b) by the substitution
in paragraph (b) of subsection (2) for the words preceding
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- "'(e)" of the
following words:
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- "the proviso
tosection 8(1) thereof shall be construed as if the following
furtherproviso wereparagraph had beenaddedat
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the end thereof:"; and
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- (c) by the substitution
for paragraph (c) of subsection (2) of the following
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paragraph:
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- (c) suchanyfinancial
exchange,clearing house, memberor an
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officer or employee of a
member or other person referred to in subsection (1)(a) and
(b)shall be deemed to be a financial
institution, and the
Registraras defined in section 1 shall tobe the registrarin
respect of such financial exchange,
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member or personas
defined in section 1 of the Inspection of
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Financial Institutions Act,
1984.".
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- Amendment of section 36 of
Act 55 of 1989, as amended by section 28 of Act 54 of 1991 and
section 25 of Act 55 of 1995
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- 12. Section 36 of the
principal Act is hereby amended by the substitution for paragraph
(a) of subsection (3) of the following
paragraph:
-
- making
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- "(a) If any
personintentionally or negligentlyfails to submit
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to the Registrar or to
furnish the Registrar with any record, return, statement, report or
other document or information in
accordance with a requirement of
this Actor regulation made under section 37(1)
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within the period determined
by or under this Act, the Registrar may impose upon himor herby way
of a notice in writing a fine
not
-
exceeding the prescribed
amount for every day during which such failure continues:Provided
that the Registrar may not impose
any such fine before the person
to be fined has been afforded an opportunity of
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- representations in
writing to the Registrar setting out the reason for the failure to
submit or to furnish such record, return,
statement,
- report or other document
or information.".
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- Substitution of section
37A of Act 55 of 1989, as inserted by section 27 of
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Act
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55 of 1995
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- 13. The following section
is hereby substituted for section 37A of the principal Act:
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- "Limitation of
liability
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- 37A.(1)No executive
officer, employee or representative of a financial exchange or of a
clearing house, or any member of an
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executive
-
committee or subcommittee of
the executive committee, or of a clearing house, shall be liable
for any loss sustained by or damage
caused to
- any
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- person as a result
of anything done or omitted by the officer,
employee,
-
representative or member
inathebona fideor negligent, but not
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grossly negligent,exercise
of any power or carrying out of any duty or performance of any
function under or in terms of this
Act or the rules.
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- (2) For the purposes of
this section, 'bona fide' shall include the negligent exercise of
a power or the carrying out of a
duty, but shall exclude gross
negligence, wilful misconduct or dishonesty.".
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- Amendment of section 40
of Act 55 of 1989, as amended by section 29 of Act 54 of 1991
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- 14. Section 40 of the
principal Act is hereby amended by the substitution in the
Afrikaans text for subsection (1) of the following
subsection:
-
- "(1) Die bepalings
van hierdie Wet, uitgesonderd artikels 3 en 38, en behalwe vir
sover die Minister by kennisgewing
in die Staatskoerant$ anders
bepaal, raak nie die werking van die Wet op Beheer van
EffektebeurseAandelebeurse, 1985 (Wet
No. 1 van 1985), of
-
enigiets wat behoorlik
daarkragtens gedoen of toegelaat word nie.". Substitution of
section 29 of Act 55 of 1995
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15. (1) The following section
is hereby substituted for section 29 of the
-
Financial Markets Control
Amendment Act, 1995: "Transitional provisions
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29. Any rule, requirement,
directive or decision made, put or issued or other thing done
under or in terms of any provision
of the principal Act as it was
in force immediately prior to the commencement of this Act, shall
be deemed to have been made,
put, issued or done under or in terms
of the corresponding provision of the principal Act as amended by
this Act.".
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- (2) Subsection (1) shall
be deemed to have come into operation on 11
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October
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1995.
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- Short title
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- 16. This Act shall be
called the Financial Markets Control Amendment Act,
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1996.
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