Initiatives to transform the capital markets in Ghana
WEST AFRICAINVESTMENT CONFERENCE Initiatives to Develop the Capital Markets in Ghana Adu Anane Antwi – Director-General, Securities & Exchange Commission, Ghana MOEVENPICK AMBASSADOR HOTEL IN ACCRA, GHANA MONDAY-WEDNESDAY, 7-9 MAY 2012 www.ObjectiveCapitalConferences.com
FAIRNESS | INTEGRITY | PROTECTION “Promoting the orderly growth and development of an efficient, fair and transparentsecurities market in which investors and the integrity of the market are protected through the proactive implementation of the Securities Laws”
INITIATIVES TO DEVELOP THE CAPITAL MARKETS IN GHANA PRESENTED BY ADU ANANE ANTWI DIRECTOR-GENERAL SECURITIES AND EXCHANGE COMMISSION, GHANA AT WEST AFRICA INVESTMENT CONFERENCE ACCRA, GHANA 9TH MAY, 2012
SEC’s MANDATEThe SEC , the apex regulatory body of the securitiesmarket is given both regulatory and marketdevelopment mandates under the Securities IndustryLaw, 1993 (PNDCL 333) as amended.Section 9 (i) of the SIL requires the SEC to create thenecessary atmosphere for the orderly growth anddevelopment of the capital market.The SEC is currently pursuing various initiatives aimedat developing the capital market.
Government PoliciesThese include: The use of the GSE for privatisation (not fully) Removal of Investment Restrictions on Foreign Investors Pension Reforms Capital Gains Tax Exemption on Listed Securities VAT Exemption for Mutual Funds & Unit Trusts Tax Rebate for Listed Companies for the first 3 years Tax Exemption for the GSE Institution of Financial Literacy Week Establishment of National Bond Market Working Committee.
Review of the Securities Industry LawThe SIL is being amended to make it be of internationalstandards to enable SEC Ghana become an IOSCO ‘’Signatory A’’country to be able to sign IOSCO’s MMoU.Ghana has been given up to the end of this year to bring itssecurities laws to international standards determined by IOSCO.The amendment will bring new operators like commodityexchanges, credit rating agencies, nominee accountsoperators, hedge funds, private equity funds, and venture capitalfunds under regulations.The amendment will also bring to the market new activitieslike market making, securities lending & borrowing, margintrading & financing and trading of derivative instruments.
Installation of an Electronic Market Surveillance SystemThe SEC has installed an electronic market surveillance system to ensure efficient and effective market surveillance.The Commission is to upgrade the system to link up back room operations of market operators.
Establishment of a Market Development Committee The Committee with representatives from the SEC, GSE and theGhana Securities Industry Association is to facilitate marketdevelopment. It is mandated among other things to:•Facilitate more listings on the Ghana Stock Exchange•Explore the introduction of new products•Promote the development of the Bond Market (working with theNBMWC)•Develop strategies to improve liquidity on the stock exchangeContacts made with Agricultural Development Bank, GhanaRe, GT Bank, Ghana Water Company, State HousingCompany, Electricity Company of Ghana, Ghana AirportsAuthority, Volta River Authority, Ghana Grid Company andCocobod.Plans to meet with all the un-listed banks in the country as wellas the un-listed companies under the Club 100 list to encouragethem to use the GSE to raise funds for their operations throughthe issue of either equity or bonds.
Establishment of Ghana Alternative Investment MarketThe Commission is working together with the GSE toestablish the Ghana Alternative Investment Market. Weare currently working on the rules of the GAIM.The Government has given its full support for this.
Establishment of Commodity ExchangeThe Commission in 2010 commissioned a feasibilitystudies into the establishment of a commodityexchange in Ghana. SEC is currently working togetherwith the Ministry of Trade to establish the GhanaCommodity Exchange.
Promotion of Exchange Traded FundsThe SEC is working with the Ghana Stock Exchangefor the introduction of Exchange Traded Funds (ETFs)on the exchange.The Rules for ETFs have been approved by the SEC.We are currently working on the listing of the firstEFT on the GSE.
Promotion of Real Estate Investment TrustsThe SEC is currently developing rules for theoperation of REITs. The development of REIT will createa strong link between the capital market and the realestate sector to help solve the housing deficit in theCountry.
Promotion of Investment ClubsThe SEC is working to promote Investment Clubs in the country and educate their members on investment and securities.The SEC will develop and publish guidelines for Investment Clubs
Adoption of Risk Based SupervisionThe SEC will be commissioning a consultant toconduct a risk assessment of the Securities Industryand assist the SEC to adopt a risk based methodologyfor supervision.
Issue of Anti-Money Laundry, Combating Financing of Terrorism (AML/CFT) ManualThe SEC has issued an Anti Money Laundering andCombating the Financing of Terrorism (AML/CFT)Compliance Manual for Capital Market Operators.The manual covers policies and procedures onconducting customer due diligence, recordkeeping, internal control, compliance and audit.Capital Market Operators are obligated to establishan anti-money laundering program and reportsuspicious activities.
Promotion of Market Association The SEC is working to ensure that the Ghana Securities Industry Association becomes a vibrant market association to help champion the concerns of the market and contribute to policy making to boost market development. Effective July 2012 the SEC will require a licence renewal application to be accompanied by a letter from the GSIA that the operator is a member in good standing.
Advocating for Additional Incentives for Issuers and InvestorsThe SEC is preparing analysis for the proposal of further tax incentives for issuers and investors, eg:• Tax Exemption on Interest paid to Individuals on Listed Bonds• Tax Exemption on Dividends earned by Individuals from Listed Equities
Introduction of an enhanced Corporate Governance standards for the marketThe current corporate governance manual is to be reviewed and improved.The SEC will adopt measures to ensure compliance with the enhanced corporate governance standards by the industry.
Establishment of Securities Institute and Resource Centre The SEC is working with the market to establish the Ghana Investment and Securities Institute (GISI). A committee is currently working a plan to convert the current securities courses run by the GSE into courses of the Institute. The courses are to be developed further into what is recommended in a feasibility report on the institute when funding it available and physical structures for the Institute developed. GISI will be the training and certification institution for all capital market operators. The SEC is also to set up an Information Resource Centre (IRC), which provides a comprehensive range of services including those utilising the latest downstream applications in IT
Capital Market and Compliance Officers’ ForaThe SEC has introduced semi-annual meetings withcapital market operators, called Capital Market Forumand with Compliance Officers of regulated entitiescalled Compliance Officers’ Forum to help bridge thegap between the regulator and the regulated entitiesand discuss issues of concern to the SEC and CMO’s forthe development of the market.
Institution of Capital Market Week and Other Investor Education ProgrammesAnnual Capital Market Week (formally Securities Week)Designing and Printing of Investor Education MaterialsDevelopment of Computer Based Investor Education ProgramsThe publication of a quarterly newsletter for the Commissionto increase the knowledge and awareness of the capital marketin Ghana by providing information to readers.Partnership with a private sector institution to organise a YouthInvestment Programme. The first was held in Accra in November2011. Subsequent ones are to held in Kumasi, Takoradi and CapeCoast this year.Establishment of tips, complaints and referrals ("TCRs") systemwith a toll free telephone line to improve the SEC’s ability toobtain information from the public and educate the public.
Institution of Annual Capital Market ConferenceThe SEC will organise the first Annual CapitalMarket Conference in Ghana in October this year. Thisconference is to bring together all capital marketoperators, policy makers, and law maker tobrainstorm about issues concerning the capitalmarket.Some regulators, policy makers, and operators fromother African markets will be invited to share theirexperiences with us during the conference.
Establishment of an Investor Education FundThe SEC is planning for the establishment of anInvestor Education Fund to ensure a sustained investoreducation in the country.The SEC has the duty to help investors to investwisely and avoid fraud.We believe a well informed investor is usually a wellprotected investor. Investor education can be aneffective deterrent against investment scams and helpthe SEC achieve its investor protection goal.
Advocating for a Capital Market Local Content PolicyThe SEC believes that there is the need forGovernment to get companies liketelecoms, banks, mining and other oil and gascompanies to list on the GSE.We are advocating for a Government policy that willcompel foreign companies in selected industries tofloat part of their shares on the GSE after operating for5 years. This should be part of licensing conditions forsuch companies.
Establishment of Investor Protection FundThe SEC is to commission a study into the setting upof an investor protection fund for investors not coveredby the fidelity fund of the stock exchange and worktowards its establishment.The fund will ensure investor protection and marketstability.
Regional Integration The SEC is to work with securities regulators, exchanges and other stakeholders in the ECOWAS region towards the harmonisation of rules and regulatory frameworks to ensure the integration of our markets. The SEC has already signed an MOU with Nigeria SEC and plans to sign an MOU with Conseil Regional De L’epargne Publique Et Des Marches Financiers (CREPMF) before the end of June this year. The SEC has also held discussions with WAMI on ways to facilitate the integration of ECOWAS capital markets.
INITIATIVES TO DEVELOP THE CAPITAL MARKETS IN GHANA END THANK YOU