Tabling the 2017 Budget in the National Assembly, Gordhan said there was evidence of a collusive culture at trading desks in banks as seen recently with the Competition Commission investigation.
Gordhan said Treasury had proposed a dedicated market conduct regulator, precisely to deal with such abuses, saying that he hoped Parliament would pass the Bill as soon as possible.
“Collusion must be stamped out, whether it is in banking, construction or the bread industry,” Gordhan said.
“But banks need tougher rules to cover financial market abuses, and the Reserve Bank and National Treasury have initiated work on a more comprehensive Financial Markets Review under the leadership of former Deputy Governor James Cross, to build on the Review conducted in 2014.”
This comes after 17 banks, including three South African banks, were implicated in collusion of currency trades to manipulate the value of the rand/dollar exchange rate.
American bank, Citibank, has been the only one that has agreed to pay an administrative penalty, amounting to R69.5 million, for its role in colluding on the price for bids, offers and bid offer spreads for spot trades in relation to currency trading involving the rand.
No other banks implicated in the currency rigging scandal have yet followed Citibank’s lead and seek a settlement agreement with authorities.
Gordhan said more needed to be done to transform the financial sector, especially now during the era of rapid technological change.
He said that government would work with partners at the National Economic Development and Labour Council, who have requested that a Financial Sector Summit take place this year, to consider transformation in this sector.
“Although progress has been made in transforming the financial sector, more needs to be done to broaden access through more affordable financial services, improve market conduct, ensure employment equity at top management levels, provide procurement opportunities and transform ownership,” Gordhan said.
“Three new banks have been granted provisional licences, including the Postbank, and two new stock exchanges. Their business models are based on technological innovation with potential to bring services more cost-effectively to more people.”
During his reply to the debate on the state of the nation address, President Jacob Zuma also spoke out against collusion in the banking sector, saying that government was committed to protecting the country’s economy against market abuse, price fixing and collusion.
African News Agency