and market participants to remain alert and carefully manage risks. domestic markets within the global context given the high level of integration with international financial markets, domestic financial market developments reflected these developments, but were also significantly influenced by south africa intrinsic factors. the under - performance of the rand relative to other emergingmarket currencies was particularly noticeable over three specific periods. the first one occurred in may and june 2013, when the federal reserve first talked of “ tapering ” its quantitative easing programme. the second one, in august 2013, coincided with a rise in risk aversion towards countries with large current - account deficits and deteriorating growth fundamentals. in the third phase, from mid - december to late january this year, in addition, investors appeared to be differentiating against countries that were seen to have been slow in their policy responses to tapering and normalisation risks. this period was characterised by significant net sales of domestic securities held by non - resident investors. of course it was not only global developments that influenced local markets, as on - going labour market disruptions added to negative sentiment, underperformance in the real economy, and a worsening balance of payments situation. as mentioned earlier, the last few months have brought some signs of greater stability to both global and domestic financial markets : the rand has recovered since its late january trough ; the yield on the r186 benchmark government bond has declined by 64 basis points ; and the jse [UNK] s all - share index has climbed to new highs, gaining 10. 4 per cent on a year - todate basis, and net non - resident flows into the local currency bond market stabilised in february to april, before posting a net positive inflow of r10, 6 billion in may and r8, 2 billion for june ( until 23 june ). the levels of development, sophistication and depth of our financial markets have allowed south africa to weather the turbulence of the past year reasonably well. however, we have to acknowledge that there are still some risks in the system, even if they are difficult to quantify. bond yields are low relative to the averages of the past decade, and the nonresident share of government bond holdings remains very high by historical standards. carry trade activity, which seemed to support the domestic bond market in may, is by its own nature a temporary phenomenon, even though its timing is unpredictable. these factors suggest that local yields could be vulnerable to risks of a renewed global bond selloff or

conducted in 2015, national treasury, the financial services board and the sarb will soon embark on a more comprehensive review of conduct in the wholesale money, debt capital, foreign exchange, commodities and derivatives markets in south africa in order to strengthen market conduct. the exercise is expected to be similar to the fair and effective markets review conducted in the uk. the review, which is scheduled to commence next month ( with further details to be announced in due course ), will look at the standards and practices in south africa ’ s wholesale financial markets, both regulated and unregulated, in terms of governance, accountability and incentives ; it will ultimately develop recommendations for overall conduct standards to enhance the integrity of our financial markets. page 7 of 9 the bank for international settlements is in the process of developing a global code of conduct for foreign exchange markets which will set out the principles of good practice in the foreign exchange market. the code will be released on 25 may 2017. the sarb participated in its development and is now in the process of consulting with a wide range of market participants via the foreign exchange subcommittee of the financial markets liaison group with the view that south africa should be an early adopter of the code within any proposed time frames. conclusion let me conclude by once again expressing, on behalf of the financial markets department and the entire sarb, our appreciation to all the market participants for their cooperation and support over the years. we look forward to continuing our interactions in the future. i would like to thank our financial markets team for the sterling work over the past year, for their dedication and commitment to the task. allow me to also draw to your attention some changes that have taken place in the senior management of the financial markets department. in preparation for the upcoming retirement of mr callie hugo in 2018, with effect from 01 april 2017 callie assumed the role of special projects manager in the office of the head of department. mr zafar parker, who previously headed up our reserves management team, has taken over from him as head : market intelligence and operations this week. while callie still has his work cut out for 15 months or so, it is only proper that we already thank him today for his tremendous contribution in guiding our money market operations over many, many years. thank you also to our staff at the conference centre for organising this event. page 8 of 9 as in previous years, a newsletter called fmd update has been prepared for the occasion, which provides information on some of the key strategic initiatives that the financial