SEC wants levy on market funds

The Securities and Exchange Commission (SEC) is negotiating with entities under its purview for them to commit to paying a percentage of funds under management to the commission.

The initiative is to prop up the commission’s limited funding from the central government and licence renewals, and will enable it intensify its supervision and monitoring role, market development and publicity efforts.

An investment analyst close to the talks told the B&FT: “what we have discussed, and are still negotiating, is that a percentage of the funds under management of entities licenced by SEC should be paid to SEC -- like what is paid to the National Pensions Regulatory Authority (NPRA), which gets a percentage of the funds being administered by the pension trustees.

“That constitutes income to the NPRA to do their work. So why can’t SEC also have a similar thing?”

The Securities and Exchange Commission (SEC) is the apex regulatory body for the Ghanaian capital market. Established by the Securities Industry Act, 1993 (PNDCL 333), as amended by the Securities Industry (Amendment) Act, 2000 (Act 590), the SEC is given regulatory, investor protection and market development mandates.

The various functions provided for the SEC by PNDCL 333 as amended are all geared towards the development of the market. Section 9 (i) of PNDCL 333 as amended specifically charges the SEC to create the necessary atmosphere for the development of the capital market.

Among the key initiatives and policies advocated by the commission is the setting up of an infrastructure fund to address the country’s widening infrastructure gap. The government has in the 2014 budget incorporated this suggestion and is to establish the Ghana Infrastructure Fund (GIF) to address the infrastructural needs of the country -- mainly in the power, housing, roads, and utility sectors.

The commission is currently reviewing the unit and mutual trust fund regulations of the securities industries law to allow fund managers invest more than 10 percent of their funds in the real estate sector.

“The reviewing of the law is crucial, as the real estate sector is one of the key areas where a lot of opportunities exist for investment in order to bridge the growing housing deficit,” Mr. Kwesi Livingstone, the Chief Executive Officer of McOttley Holdings, told the B&FT.

The current housing deficit in the country is estimated at 1.7 million units, with an annual growth of 70,000 units. About 50 % of Ghanaians are also said to live in sub-standard housing and other unsuitable structures.

“SEC is changing the current laws of the securities industry. Under the unit trust funds and mutual funds regulation, collective schemes cannot hold more than 10 percent of the value of funds under management in the real estate sector. When the law is amended, there will be no ceiling as to how much a fund manager can use to promote the real estate business,” Mr. Alexander Williams, the Deputy Director-General of SEC, told B&FT in an interview.