PRETORIA - The Johannesburg Stock Exchange [JSE], which on Thursday revealed that it was probing Steinhoff, said it was constantly monitoring investors in South Africa, as part of its regulatory role to avoid insider trading and other market manipulations.
“We have two regulatory divisions at the Exchange. I head up the division called market regulation, and we have two broad areas of activity within market regulation. The first is to regulate the services that stockbroking firms that are members of the JSE provide to their customers,” the JSE’s Shaun Davies said during his address to the National Press Club in Pretoria.
“The second broad area of activity is what we are discussing today, our market surveillance function. We have the responsibility to monitor the trading in listed securities on the JSE, and I will be talking a bit about how we do that. The main type of activity that we are looking for in monitoring trading is insider trading and market manipulation.”
Insider trading defines the illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.
Johannesburg Stock Exchange's head of market regulation Shaun Davies
Davies said the JSE is proactive and has advanced systems to adequately guard against the malpractices.
“We have a team, within my division, of surveillance specialists who are using sophisticated tools to identify potential market abuse. If we identify any activity that we think warrants further investigation, we refer that to the FSCA for them to investigate. The FSCA has the investigative powers. The JSE does have investigative powers over the stockbroking firms that are members of the JSE,” said Davies.
“When you are dealing with an issue like market abuse, you monitor activities by any investor. The investor may not be the broking firm itself – it can be any private individual or institution, both local and foreign that may be trading on the market. We are looking to identify activities by any of those investors and we have no regulatory jurisdiction over anybody other than the stockbroking firms that are members of the JSE.”
He said in the event an investor needs to be “interviewed” regarding suspicious activity, that is conducted by the FSCA.
Financial Services Board’s head of the directorate of market abuse Solly Keetse
The Financial Services Board’s head of the directorate of market abuse Solly Keetse said his entity, however, is barred from divulging intimate details of individuals or entities being probed.
“Most of you [media] quite often contact us requesting details of our investigations, and more often than not I respond with a one-liner to say that we are prohibited by the confidentiality provisions. It’s not that I don’t like you, or we are trying to be difficult, but it is because the legislation the Financial Markets Act Section 88 stipulates the persons with whom we can share information with,” he said.
“All we can say is we are investigating Steinhoff, but I cannot give you details to say we are looking at Marcus Houston who has done A, B, C.”
Steinhoff has been under the spotlight since the abrupt resignation of its CEO Markus Jooste in early December 2017 amid an accounting scandal.