WEST AFRICAINVESTMENT CONFERENCE

MOEVENPICK AMBASSADOR HOTEL IN ACCRA, GHANA ● MONDAY-WEDNESDAY, 7-9 MAY 2012

www.ObjectiveCapitalConferences.com

Initiatives to Develop the Capital Markets in GhanaAdu Anane Antwi – Director-General, Securities & Exchange Commission, Ghana

SECURITIES AND EXCHANGE COMMISSION, GHANA

FAIRNESS | INTEGRITY | PROTECTION

“Promoting the orderly growth and development of an efficient, fair and transparent securities 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 ANTWIDIRECTOR-GENERAL

SECURITIES AND EXCHANGE COMMISSION, GHANA

AT

WEST AFRICA INVESTMENT CONFERENCEACCRA, GHANA

9TH MAY, 2012

SEC’s MANDATE

The SEC , the apex regulatory body of the securities market is given both regulatory and market development mandates under the Securities Industry Law, 1993 (PNDCL 333) as amended.

Section 9 (i) of the SIL requires the SEC to create the necessary atmosphere for the orderly growth and development of the capital market.

The SEC is currently pursuing various initiatives aimed at developing the capital market.

Government Policies

These 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 Law

The SIL is being amended to make it be of international standards 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 its securities laws to international standards determined by IOSCO.

The amendment will bring new operators like commodity exchanges, credit rating agencies, nominee accounts operators, hedge funds, private equity funds, and venture capital funds under regulations.

The amendment will also bring to the market new activities like market making, securities lending & borrowing, margin trading & financing and trading of derivative instruments.

Installation of an Electronic Market Surveillance System

The 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 the Ghana Securities Industry Association is to facilitate market development. 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 the NBMWC)•Develop strategies to improve liquidity on the stock exchangeContacts made with Agricultural Development Bank, Ghana Re, GT Bank, Ghana Water Company, State Housing Company, Electricity Company of Ghana, Ghana Airports Authority, Volta River Authority, Ghana Grid Company and Cocobod. Plans to meet with all the un-listed banks in the country as well as the un-listed companies under the Club 100 list to encourage them to use the GSE to raise funds for their operations through the issue of either equity or bonds.

Establishment of Ghana Alternative Investment Market

The Commission is working together with the GSE to establish the Ghana Alternative Investment Market. We are currently working on the rules of the GAIM.

The Government has given its full support for this.

Establishment of Commodity Exchange

The Commission in 2010 commissioned a feasibility studies into the establishment of a commodity exchange in Ghana. SEC is currently working together with the Ministry of Trade to establish the Ghana Commodity Exchange.

Promotion of Exchange Traded Funds

The SEC is working with the Ghana Stock Exchange for 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 first EFT on the GSE.

Promotion of Real Estate Investment Trusts

The SEC is currently developing rules for the operation of REITs. The development of REIT will create a strong link between the capital market and the real estate sector to help solve the housing deficit in the Country.

Promotion of Investment Clubs

The 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 Supervision

The SEC will be commissioning a consultant to conduct a risk assessment of the Securities Industry and assist the SEC to adopt a risk based methodology for supervision.

Issue of Anti-Money Laundry, Combating Financing of Terrorism (AML/CFT) Manual

The SEC has issued an Anti Money Laundering and Combating the Financing of Terrorism (AML/CFT) Compliance Manual for Capital Market Operators.

The manual covers policies and procedures on conducting customer due diligence, record keeping, internal control, compliance and audit. Capital Market Operators are obligated to establish an anti-money laundering program and report suspicious 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 Investors

The 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 market

The 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’ Fora

The SEC has introduced semi-annual meetings with capital market operators, called Capital Market Forum and with Compliance Officers of regulated entities called Compliance Officers’ Forum to help bridge the gap between the regulator and the regulated entities and discuss issues of concern to the SEC and CMO’s for the development of the market.

Institution of Capital Market Week and Other Investor Education Programmes

Annual 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 Commission to increase the knowledge and awareness of the capital market in Ghana by providing information to readers.Partnership with a private sector institution to organise a Youth Investment Programme. The first was held in Accra in November 2011. Subsequent ones are to held in Kumasi, Takoradi and Cape Coast this year.Establishment of tips, complaints and referrals ("TCRs") system with a toll free telephone line to improve the SEC’s ability to obtain information from the public and educate the public.

Institution of Annual Capital Market Conference

The SEC will organise the first Annual Capital Market Conference in Ghana in October this year. This conference is to bring together all capital market operators, policy makers, and law maker to brainstorm about issues concerning the capital market.

Some regulators, policy makers, and operators from other African markets will be invited to share their experiences with us during the conference.

Establishment of an Investor Education Fund

The SEC is planning for the establishment of an Investor Education Fund to ensure a sustained investor education in the country.

The SEC has the duty to help investors to invest wisely and avoid fraud.

We believe a well informed investor is usually a well protected investor. Investor education can be an effective deterrent against investment scams and help the SEC achieve its investor protection goal.

Advocating for a Capital Market Local Content Policy

The SEC believes that there is the need for Government to get companies like telecoms, banks, mining and other oil and gas companies to list on the GSE.

We are advocating for a Government policy that will compel foreign companies in selected industries to float part of their shares on the GSE after operating for 5 years. This should be part of licensing conditions for such companies.

Establishment of Investor Protection Fund

The SEC is to commission a study into the setting up of an investor protection fund for investors not covered by the fidelity fund of the stock exchange and work towards its establishment.

The fund will ensure investor protection and market stability.

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

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