A comparative evaluation of the Financial Markets Act 19 of 2012 and the Financial Sector Regulation Bill 2015 with reference to the regulation of insider trading

Abstract

Inside information is information that is non-public and not generally available to non-insiders. It is also information that has, or may have, a material effect on the price of a security listed on a regulated market, if that information should become public. A person who has access to such information may enjoy a significant and arguably unfair advantage over others in relation to trading in securities. The Financial Markets Act makes provision for the licensing and regulation of the activities of and on market infrastructures, namely exchanges, central securities depositories, clearing houses and trade repositories and also prohibits three forms of “market abuse”, namely insider trading, market manipulation and market disinformation. An insider who has inside information is not allowed to trade on that information and is obliged to disclose it publicly via appropriate channels. The Financial Markets Act is interwoven with other financial sector regulatory laws under the umbrella of the Financial Services Board Act, 97 of 1990. The latter Act is about to be replaced by a Financial Sector Regulatory Act. The proposed Act introduces a wide-ranging revision of financial sector law and impacts particulary on the regulatory framework for enforcing the prohibition of insider trading, more particularly administrative law aspects of regulating market abuse and insider trading. The purpose of the dissertation is to analyse the Financial Markets Act and the proposed Financial Sector Regulation Act and to evaluate the changes in insider trading regulation that are effected by the Financial Sector Regulation Act.