The inherent challenges in the South African anti-market abuse enforcement framework in relation to selected market abuse practices that occurred during the global financial crisis

Abstract

The article discusses selected market abuse activities that manifested in several financial markets during the recent global financial crisis. In relation to this, market abuse activities such as front running and quote stuffing, dark pools and flash orders, hedge funds insider trading and high yield securities investment fraud, high frequency trading, credit default swaps and short selling will be briefly analysed. This is done to investigate whether the current South African anti-market abuse enforcement framework is robust enough to effectively combat these activities. This is further aimed at exposing certain challenges embedded in the South African anti-market abuse enforcement framework in relation to the prevention and combating of the aforementioned practices in the financial markets in South Africa. To this end, the article seeks to explore these challenges by, first, examining the adequacy of the South African anti-market abuse enforcement framework with regard to the combating of front running and quote stuffing. Secondly, the adequacy of the South African anti-market abuse enforcement framework with regard to the curbing of dark pools and flash orders will be discussed. Thirdly, the adequacy of the aforesaid enforcement framework will be examined in relation to the combating of hedge funds insider trading and high yield securities investment fraud. Fourthly, a similar examination will be done in respect of high frequency trading. Fifthly, the adequacy of the South African anti-market abuse enforcement framework with regard to the curbing of credit default swaps will be discussed. Lastly, a similar discussion regarding short selling will be undertaken.