3 weeks ago
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The Financial Services Commission, FSC, will conduct a review of the stock market to see whether its rules adequately protect investors, and better align its oversight with international standards.
It comes within the transition to the ‘twin peaks’ model which will consolidate regulation of the financial sector, inclusive of banks and non-bank firms, under the umbrella of the central bank.
“The transition to the twin peaks model will involve significant legal reform and institutional restructuring. As Jamaica proceeds to undertake these significant reforms, it is considered timely to evaluate the efficacy of the regulatory arrangement of the stock market in an effort to incorporate any legislative and regulatory adjustments needed to maintain investor protection, market integrity, and efficiency of the capital market,” said the FSC in a tender document seeking a technical expert to do the assessment.
FSC currently regulates securities dealers, insurance businesses and pension funds, as well as the JSE, but that will change once the new regulatory model takes effect. Its remit also includes oversight of the stock market, while the Jamaica Stock Exchange, JSE, regulates the stock exchange and its listed companies.
“The JSE cannot at this time provide a fulsome response,” said JSE Group Managing Director Marlene Street Forrest, regarding the review to come.
She said the JSE would review the public documents on the matter.
The twin peaks model will transfer the FSC’s regulatory functions to the Bank of Jamaica, BOJ, while the FSC’s role will be recast to oversight of market conduct and delivery of services across the financial system.
The BOJ currently regulates banks, microlenders, credit unions, money service providers and credit bureaus; and soon insurance companies, investment firms and pension funds will be added to its portfolio.
The Jamaica Stock Exchange and Financial Services Commission collaborate monthly, with the FSC’s capital market and surveillance units interacting with the JSE’s Regulatory and Market Oversight Division, RMOD, to share information on conduct, rule changes, and monitoring.
It’s also the FSC’s job to review and approve technical aspects of market offers, such as initial public offerings or debt issuances, prior to the JSE approving them for listing.
Bidders for the stock market review consultancy have until this month to apply. The selected consultant will have three months to do its work and provide a report to the FSC.
The technical expert is expected to “recommend the necessary amendments to strengthen the stock market regulations, aligning them to international standards,” the FSC said.
“While the JSE has made efforts to align its regulatory framework with international standards, there are still gaps that need to be addressed. Given the evolution of capital markets, there is also the need to review the regulatory arrangement employed in Jamaica against international standards, as well as to ascertain whether it is fit for purpose to supervise and regulate the current market participants and activities,” the tender document noted.
The FSC did not immediately respond to requests for comment.
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