Lesetja Kganyago: Market conduct and financial stability

Keynote address by Mr Lesetja Kganyago, Governor of the South African Reserve Bank, at the Financial Sector Conduct Authority Industry-wide Conference 2024, Johannesburg, 13 March 2024.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Good morning

Thank you for inviting me to speak at this inaugural industry-wide Financial Sector Conduct Authority (FSCA) Conference.

My topic today is the relationship between market conduct and financial stability.

As you know, these are the Twin Peaks of our new model for financial regulation, which came into force in 2017. This was the same landmark reform that birthed the FSCA as well as the Prudential Authority (PA).

The South African Reserve Bank (SARB), which incorporates the PA, has ultimate responsibility for financial stability. At the same time, the FSCA is the apex authority for market conduct. There is a clear separation.

Our Twin Peaks model has yet to fully mature. For instance, pension funds and collective investment schemes are expected to move to the PA only in April 2026. It is nonetheless a comparatively robust model, especially for a highly concentrated financial sector with a small number of large players, as well as for the continuous development of financial technology.

Still, even with a clear division of labour, the details of how we pursue financial stability and good conduct are more complex, and sometimes confusing. For instance, if you go to the FSCA website, you will find a list of five strategic objectives, and number one is 'ensure the stability of financial markets'.