FSCA Commissioner stresses the importance of market integrity in challenging economic times

Unathi Kamlana, Commissioner of the Financial Sector Conduct Authority (FSCA), has called for a renewed commitment to market integrity as South Africa grapples with significant economic challenges.

Speaking at the opening of the South African Institute of Financial Markets Summit on Friday, Kamlana said that market integrity was crucial during the challenging global economic times that South Africa is facing.

Kamlana underscored that the current global economic climate remains fraught with uncertainty, capturing the complex interplay of trade relations and geopolitical tensions.

“The IMF’s latest economic outlook report, published in July, describes a world where growth is still positive, but uneven and subject to significant downside risks. Geopolitical tensions are elevated, and trade frictions are beginning to reshape the way economies relate to each other.”

While new United States tariffs pose immediate challenges, Kamlana noted that South Africa’s financial markets are also contending with more profound structural shifts.

“As many of you will appreciate, developments like these rarely remain isolated; there are potential spillover effects on our financial markets including impacts on investment sentiment, currency movements, and potentially capital flows,” he said.

Kamlana added that alongside the more immediate shocks, financial markets were also contending with deeper structural shifts that are fundamentally transforming how they operate.

“It’s also important to make the point that competition and innovation may mean the emergence of new challenges and even risks, which may have implications for market integrity – but that notwithstanding, they’re still important for the continued evolution and competitiveness of our markets.”

Kamlana asserted that maintaining this integrity requires proactive measures, enforcing sound regulations supported by strong institutions, and fostering ethical behaviour among market participants.

“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.”

Highlighting the role of the SAIFM, he pointed out its significance in nurturing the ethical landscape of markets through educational initiatives and professional development programmes.

“While regulation sets the rules of the game, it’s the market practitioners who determine whether those rules lead to markets that are ethical in conduct, contributing to financial stability and trust. In the end, the strength of markets rests not only on the regulations themselves, but on the knowledge, skills, and values of the people who bring those rules to life every single day.”

Among the most pressing regulatory initiatives is the comprehensive review of the Financial Markets Act (FMA). This transformative process arises from a recognition that the market environment has substantially evolved since the Act was first established.

“This review is underpinned by an appreciation that the market landscape has evolved substantially since the Act was enacted. In this regard, we have been supporting the National Treasury to give effect to the recommendations of the Financial Markets Review Committee along with the policy proposals from Treasury’s 2020 paper, “Building Competitive Financial Markets for Innovation and Growth.”

The proposed changes are extensive and include expanding the scope of market infrastructures, strengthening the alignment of regulatory powers, clarifying roles of regulators, and addressing gaps in competition and digital asset regulation.

Kamlana said that the National Treasury has indicated that these amendments were expected to be released for public consultation later this year.

“These reforms are not only far-reaching, but they are also time-relevant. Some of them address challenges that require immediate action and cannot wait for the legislative process to run its course.”

While these significant reforms await public scrutiny, Kamlana reassured stakeholders that current legislation provides the FSCA with the agility to respond to emerging risks and close regulatory gaps immediately.

“We have been using these tools to close regulatory gaps, respond to emerging risks, and strengthen our supervisory approaches as conditions evolve. 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.”

Kamlana noted that the evolving market landscape amplifies the need for a robust framework that not only addresses traditional financial metrics but embraces sustainable finance criteria such as environmental, social, and governance (ESG) considerations, alongside traditional financial metrics.

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