Securities markets regulators look ahead

Experts in the securities markets in Africa and the Middle East have proposed a set of actions for the development and deepening of the securities market in Africa and Middle East.

The experts at a two-day meeting that ended yesterday identified that macroeconomic environment and sufficiently high income levels, transparent and accountable institutions are foundational necessities for a thriving securities industry.

Others primary factors mentioned were adequate shareholder protection, and a well-developed banking system that will encourage private capital flows.

Professor Victor Murinde of University of Birmingham presenting a paper noted that the above factors are primary, before other factors as securities regulation can be considered.

He said regulation is meant to ensure the smooth functioning of trading and clearing and settlement mechanisms to prevent disruption and foster investor confidence.

“The key objectives of securities market regulation are to protect investors, ensure that markets are fair, efficient, and transparent and reduce systematic risk,” he emphasized.

According to him, serious gaps in securities regulations have become a world wide phenomenon and the inability of securities market regulators to enforce compliance with existing rules and regulations has tended to hinder the healthy development of the market.

“A critical review of the strengths and weaknesses of securities regulatory systems world wide is required to provide a better understanding of common problems and areas of global concern and action,” he stated, adding that Africa and the Middle East must face theirs squarely.

In a speech read on his behalf, Dr. Kwabena Duffuor, Minister of Finance and Economic Planning reiterated the need for the regional integration of stock exchanges in Africa, automation of the trading systems, involvement of institutional investors and regular disclosure and transparency as the major drivers for a vibrant capital market in Africa.

“Expanding securities market development in Africa and the Middle East would also require policies to address institutional and infrastructural bottlenecks to improve liquidity.

“Africa’s capital markets have generally been high compared to those operated in the Latin America, Asia and the Middle East, even when the result are converted into dollars,” he pointed out.

The number of stock and bond markets in Africa’s financial landscape has changed with growth recording from five in 1990 to 18 currently with assets and listings recording considerable .Total market capitalization increased by 113 percent between 1995 and 2005.

The region’s markets have helped to finance the growth of African companies but need to develop further to offer broader economic benefits.

The 24th International Organisation of Securities Commissions –Africa and Middle East Regional Committee Meeting held in Accra was under the theme: ‘Information and Capital Market Development in Emerging Countries.’