Delayed law holding back securities industry

Ghana’s capital market is losing the opportunity to exchange investor information with other markets across the globe due to the delay in the passage of new legislation for the securities industry.

A December 2012 deadline had been stipulated by the International Organisation of Securities Commissions (IOSCO), the global securities regulatory body, for Ghana to enact the law to ensure cross-border enforcement cooperation and investor protection.

IOSCO had warned that failure to comply with the deadline would result in the country’s securities market losing the opportunity to be upgraded to the highest international standing, whereas the country could be classified as an uncooperative jurisdiction in the areas of securities regulation, market conduct and prudential supervision.

That deadline has passed without compliance as the Securities Industry Bill, which went before parliamentarians in 2012, was subsequently withdrawn. The Minister of Finance is said to have resubmitted it to Cabinet, where it is expected to be fine-tuned and sent back to parliament.

“We are hoping that Cabinet will look into it. By middle of this year we are hoping it goes through parliament. The Finance Minister has worked on it and has submitted it to Cabinet,” Adu Anane Antwi, Director-General of the Securities and Exchange Commission (SEC), told the B&FT in an interview.

“We have done so much work regarding reviewing our laws; we are hopeful and believe that parliament will be able to pass it into law and allow Ghana to conform to the IOSCO standards.

We don’t want the international financial community to look at us in a way that our laws and rules are not conducive for investment; these are some of the things we want to avoid.”

Mr. Antwi said that as a member of IOSCO, SEC is under obligation to ensure that all the securities laws in the country are aligned to achieve the three main objectives of securities regulation: protect investors; ensure fair, efficient, and transparent markets; and reduce systemic risk.

“We are working towards it; that is why we have to amend our laws to bring in provisions which will allow us to do that. If we don’t have laws that are conducive enough, we’ll have problems.”

He explained that the amendment of the securities industry law will incorporate developing, implementing and promoting adherence to internationally recognised and consistent standards of regulation, oversight and enforcement in order to protect investors, maintain fair, efficient and transparent markets, and address systemic risks.

The amended bill, when eventually passed by parliament, will enhance investor protection and promote investor confidence in the integrity of Ghana’s securities market through strengthened information exchange and cooperation in enforcement against misconduct and in supervision of markets and market intermediaries.

The country’s securities industry will also be in a position to exchange information at both global and regional levels on their respective experiences in order to assist the development of markets, strengthen market infrastructure and implement appropriate regulation.

“Our securities law, as it is now, does not permit us to share information with the other regulators. As we are working on amending our regulations, we are collaborating with IOSCO’s review group to see how they can be well-structured to meet international securities standards,” Mr. Antwi said.

South Africa, Nigeria, Kenya and Tanzania are among a few African countries whose securities industry laws and regulations are consistent with IOSCO standards.