Authored By: Makuachukwu Blessing Ewelukwa
University of Nigeria, Nsukka
Abstract:
This article investigates the historical development, current legal framework, and ongoing reforms of securities regulation in South Africa, analysing the role of statutory, institutional, and judicial interventions in promoting capital market integrity and inclusivity. It traces the evolution of securities law from the exclusionary policies of the apartheid era to the progressive and inclusive reforms of the post-apartheid landscape. Through doctrinal and comparative analyses of statute, case law, and regulatory guidelines, the article examines key features of South African securities, the regulatory mechanisms governing trading and investor protection, and recent trends shaping market conduct. Ultimately, recommendations are provided to enhance robust oversight, transparency, and equitable access within South African financial markets.
1 Introduction
Securities are the backbone of modern capitalist economies, enabling the mobilisation of resources, liquidity, and efficient capital allocation necessary for economic development and stability. In South Africa, the character of securities regulation has been critically shaped by shifts in political, social, and economic paradigms, most notably, the transition from apartheid to democracy. This evolution has significantly impacted market structure, investor protection, and overall regulatory philosophy. Understanding South Africa’s historical regulatory journey is crucial for evaluating the current effectiveness and future direction of its securities regime.
This article adopts a doctrinal approach by analysing statutory provisions, leading judicial decisions, and regulatory structures. Comparative references are made to foreign models and internationally recognised standards, particularly those of the International Organization of Securities Commissions (IOSCO), to contextualise South African reforms. The discussion interweaves legislative analysis with practical evaluations of regulatory enforcement and market practice.
2 Key Judicial Precedents.
Securities regulation in South Africa is primarily governed by the Financial Markets Act,2 which defines securities and sets out regulatory responsibilities, and the Companies Act,3 which provides further structure for corporate governance and the issuance of securities. These statutes distinguish between certificated and uncertificated securities, supporting modern trading platforms such as Strate Ltd, South Africa’s central securities depository. Self-regulatory organisations (SROs), most notably the Johannesburg Stock Exchange (JSE), operate under the oversight of the Financial Sector Conduct Authority (FSCA), ensuring adherence to statutory principles and international best practice. The legal distinction between equity and debt securities is foundational in demarcating investor rights and market obligations.4
South African courts have played a vital role in shaping securities law, especially through landmark judgments on creditors’ rights, market conduct, and investor protection. In Standard Bank of South Africa Ltd v Ocean Commodities Inc,5the Appellate Division emphasised cession as a means of securing creditor interests, demanding both rigorous documentation and statutory compliance under the Companies Act.6In the case of Mondi Ltd v Securities Regulation Panel,7 the regulation of dual-listed company arrangements tested the transparency and procedural fairness required by securities law, affirming the responsibilities of regulatory panels in safeguarding minority shareholder rights and upholding statutory standards during complex corporate actions.
Pretorius v JSE Ltd addressed market abuse and disclosure obligations, underscoring the JSE’s authority, as a self-regulatory organisation, to enforce transparent corporate behaviour and defend the public interest against asymmetry and unfair practices.8 Directorate for Market Abuse v Zietsman demonstrated the seriousness with which South African law pursues insider trading and highlights the critical importance of judicial and regulatory cooperation in maintaining market integrity.9
3 Enduring Enforcement Challenges.
Notwithstanding its progress, South African securities regulation faces persistent challenges relating to systemic risk, market access, and enforcement. The historical legacy of exclusion during apartheid is still manifest in areas of market participation, although statutory reforms have substantially promoted financial inclusion post-1994. Loopholes arise in the transition between traditional and electronic securities, necessitating continuous updating of technological and statutory safeguards. Further, while the FSCA and Takeover Regulation Panel have proven effective in overseeing the formal sector, enforcement in smaller markets, as well as combating sophisticated forms of market abuse, remains resource constrained.10
Comparative analyses reveal that South Africa’s alignment with IOSCO standards and global best practice has fortified oversight, but regulatory gaps exist regarding asset-backed securitisation and emerging financial technologies. For instance, the Exemption Notice Relating to Securitisation Schemes (2008) provides crucial legal protections but requires further harmonisation with insolvency and consumer protection law for optimal investor safety. Active judicial review and robust regulatory intervention are necessary to navigate complex transactions such as derivatives and cryptocurrencies.11
4 FSCA Restructuring Advances
Recent regulatory amendments highlight South Africa’s commitment to market reform and investor protection. The establishment of the FSCA restructured supervisory authority, enhancing coordination and transparency. Amendments to insider trading provisions, as analysed by Osode, have rationalised substantive law and strengthened investigative powers, although debate continues about proportionality and the risk of legislative overreach.12 Evolving global practices, such as the JSE’s adoption of new disclosure protocols and the integration of technological solutions for transaction monitoring, further reflect an ongoing transformation. The Mondi case and related cross-border schemes point to a growing trend towards internationalisation and convergence with foreign markets, presenting new challenges and opportunities.
5 Strategic Reforms for Securities Regulation.
The Mondi case and related cross-border schemes underscore a growing trend towards internationalisation and convergence with foreign markets, presenting new challenges and opportunities, while South African securities regulation should prioritise continued development of digital securities infrastructure with robust custodial and transactional safeguards, alongside expanding educational and outreach initiatives for historically marginalised communities to promote broader and more equitable market access. Periodic legislative reviews are essential to harmonise securities, insolvency, and consumer laws, especially for novel financial products and transnational structures, fostering greater collaboration among regulatory agencies, industry stakeholders, and civil society to anticipate emerging capital market risks. Ultimately, the legislature must respond dynamically to new securitisation forms and technological innovations, with the judiciary ensuring vigilant oversight for procedural fairness and substantive justice in financial disputes.
6 Conclusion
Securities play a decisive role in South Africa’s economic landscape, serving as instruments of growth, risk management, and social mobility. The nation’s regulatory trajectory from exclusionary frameworks to progressive reform reflects a dedication to market integrity, transparency, and inclusivity. Continued adaptation is required to address advances in technology, complex financial instruments, and evolving investor expectations. With comprehensive statutory support and active oversight, South African securities regulation can underpin sustainable development and resilient financial markets for all participants.
References / Bibliography
Cases
Standard Bank of South Africa Ltd v Ocean Commodities Inc, 1984 (3) SA 15 (A) (17 Feb. 1984).
Mondi Ltd v Securities Regulation Panel, (CT01288ADJ2023) COMPTRI 62 (24 May 2023).
Pretorius v JSE Ltd, (15479/14) ZAWCHC 215 (2 June 2015).
Directorate for Market Abuse v Zietsman, (A679/14) ZAGPPHC 651.
Legislation
Companies Act, 71 of 2008.
Financial Markets Act, 19 of 2012.
Securities Services Act, 36 of 2004.
Exemption Notice Relating to Securitisation Schemes, 2008.
Journal Articles
Kenton, “What Are Financial Securities? Examples, Types, Regulation, and Importance,” Investopedia (Apr. 9, 2025), https://www.investopedia.com/terms/s/security.asp.
Osode, “The New South African Insider Trading Act: Sound Law Reform or Legislative Overkill,” (2000).
Chitimira, “Overview of Selected Role-Players in the Detection and Enforcement of Market Abuse Cases and Appeals in South Africa,” Faculty of Law, North-West Univ. (2014).
1 LLB Student, Department of Mercantile Law, University of Fort Hare.
2 Financial Markets Act, 19 of 2012.
3 Companies Act, 71 of 2008.
4 Kenton, “What Are Financial Securities? Examples, Types, Regulation, and Importance,” Investopedia (Apr. 9, 2025), https://www.investopedia.com/terms/s/security.asp.
5 Standard Bank of South Africa Ltd v Ocean Commodities Inc, 1984 (3) SA 15 (A) (17 Feb. 1984). 6 Companies Act, 71 of 2008.
7 Mondi Ltd v Securities Regulation Panel, (CT01288ADJ2023) COMPTRI 62 (24 May 2023). 8 Pretorius v JSE Ltd, (15479/14) ZAWCHC 215 (2 June 2015).
9 Directorate for Market Abuse v Zietsman, (A679/14) ZAGPPHC 651.
10 Osode, “The New South African Insider Trading Act: Sound Law Reform or Legislative Overkill,” (2000).
11 Chitimira, “Overview of Selected Role-Players in the Detection and Enforcement of Market Abuse Cases and Appeals in South Africa,” Faculty of Law, North-West Univ. (2014).
12 Osode, “The New South African Insider Trading Act: Sound Law Reform or Legislative Overkill,” (2000).
