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05 Jul 2024
BY Matthew Morrison AND Sinovuyo Damane

The PA and FSCA publish draft joint standard for market infrastructures

The Prudential Authority (“PA”) and the Financial Sector Conduct Authority (“FSCA”) (“Authorities”) published the Draft Joint Standard – Minimum requirements for the Recovery Plans of Market Infrastructures for consultation (“Draft Joint Standard”) on 31 May 2024. The Draft Joint Standard is accompanied by a Draft Guidance Notice on requirements pertaining to recovery tools available in support of compliance with Joint Standard of 2024 - Minimum Requirements for the Recovery Plans of Market Infrastructures (“Draft Guidance Notice”) and other supporting documents. Submissions from the public are invited on both the Draft Joint Standard and the Draft Guidance Notice on or before 18 July 2024.

The Draft Joint Standard proposes minimum requirements that market infrastructures should comply with in establishing and maintaining recovery plans. These minimum requirements aim to ensure that stress scenarios do not impair the management of the market infrastructure and enable the market infrastructure’s recovery from threats to its viability while continuing to provide critical functions, without requiring the use of resolution powers as contemplated in the Financial Sector Regulations Act, No. 9 of 2017.

Once published, the Joint Standard will apply to all licensed market infrastructures which in terms of section 1(1) of the Financial Markets Act, No. 19 of 2012, includes licensed central counterparties (“CCPs”), central securities depositories (“CSDs”), clearing houses, exchanges and trade repositories. These categories include the following licensed market infrastructures in South Africa:

  • JSE Clear (clearing house and CCP), Granite (CSD), Strate (CSD and clearing house), and
  • The Johannesburg Stock Exchange, A2X, I-Ex and the Cape Town Stock Exchange (exchanges).

Readers should take note that the requirements proposed by the Draft Joint Standard do not directly apply to central securities depository participants (“CSDPs”) but are relevant to them insofar as references are made in the Draft Joint Standard and Draft Guidance Notice to market infrastructure participants. For example, market infrastructures will be required to take into account the interests of their participants likely to be affected by the market infrastructure’s recovery plan in the development of their recovery plans.

In addition to setting out proposed general requirements for market infrastructures to comply with in their recovery plans, the Draft Joint Standard also includes the proposed contents of the recovery plan, recovery tools, recovery indicators and critical functions and staff.

The Draft Joint Standard comes after the FSCA published Draft Guidelines on Recovery Plans for Market Infrastructures (“Draft Guidelines”) in 2018 to provide guidance to market infrastructures regarding the development of recovery plans, certain sections of which have been incorporated into the Draft Joint Standard.

Prior to the publication of the Draft Guidelines, the Committee on Payment and Settlement Systems (“CPSS”) and the International Organization of Securities Commissions (“IOSCO”) published the Principles for Financial Market Infrastructures (“PFMI”) in 2012 which introduced the requirement for financial market infrastructures to have recovery plans in place.

In 2014, the Committee on Payments and Market Infrastructures (“CPMI”) (formerly the CPSS) and IOSCO, to which South Africa is a member, published a report titled Recovery of Financial Market Infrastructures providing further guidance on the development of the recovery plans required by the PFMI, recognising that the disruptive failure of such market infrastructures would lead to severe systemic disruptions.

The Draft Joint Standard thus intends to set out the minimum requirements for such recovery plans in line with the PFMI and to enhance the Authorities' oversight of market infrastructure recovery plans. Furthermore, the Draft Guidance Notices offers guidance on recovery tools that market infrastructures should consider incorporating into their recovery plans.

All relevant documents may be accessed here.


Matthew Morrison

Executive | Corporate Commercial Department


Sinovuyo Damane

Candidate Legal Practitioner | Corporate Commercial Department