The legal and regulatory framework governing the operation of the securities sector has not kept pace with developments in the country and global best practices. This has created an impediment to the development and expansion of the securities market.
According to Finance Minister, Winston Jordan, a modern and comprehensive legislative framework will enable the diversification of the capital market in Guyana, facilitate the mobilization of financial resources, and broaden market participation.
It will also enhance investor protection and strengthen cross-border supervision and cooperation among financial regulators, in order to reduce systemic risk. To correct this deficiency, Jordan recently revealed that the Guyana Securities Council has begun re-writing the Securities Industry Act.
Key elements of the new legislation will include improved licensing regimes for self-regulatory organisations, securities exchanges and securities intermediaries; extension of regulatory authority over the entire securities marketplace, including quotation and trade reporting systems and alternative trading schemes; and the institution of a licensing regime for collective investment schemes.
The updated Act will seek to address the establishment of a Central Securities Depository to record, maintain securities and register the transfer of ownership of securities. It would also feature a conferral on the regulator (to be renamed the Securities Commission) of such powers and duties as would enable it to promote the orderly development of the securities market and to protect the integrity of the market from abuse.
A securities market is fundamental to the expansion, improvement and vigour of a nation’s economy. It supports commercial initiatives, funds the use of new thoughts and assists the management of financial risk.
Since retail investors are placing an ever-increasing amount of their cash in reciprocated finances and other combined asset schemes, it is therefore understandable that securities markets would evolve to such a state that it has become indispensible to individual wealth and retirement planning.
But confidence and integrity in this process must be maintained at all times, and it is here one sees the need for the securities council.
Guyana’s Council is an autonomous body which was established through the Securities Industry Act 1998. This piece of legislation provides for the registration of securities brokers and dealers, self regulatory organizations, and issuers of securities.
It also paves the way for the regulation of securities issuances; with the purpose of encouraging capital formation and the growth of efficient securities markets, while protecting purchasers of securities and promoting ethical behaviour in the securities industry. The functions of the Council in Guyana are many. They include advising the Minister of Finance on all matters relating to securities; maintaining surveillance over the securities market and ensuring orderly, fair and equitable dealings in securities.
The Council also has a secondary mandate as a Supervisory Authority under the Anti-Money Laundering and Countering the Financing of Terrorism (AML.CFT) Act 2009.
Section 22 (c) of the AML/CFT Act 2009 gives the Council the responsibility as a Supervisory Authority for reporting entities which perform the business activities specified in the Fourth Schedule of the Act, which include trading for own account or for account of customers in money market instruments (such as cheques, bills, certificates of deposit), foreign exchange, financial futures and options, exchange and interest rate instruments, and transferable securities.
The Council conducts annual training sessions for its Market Participants under the Securities Industry Act and its reporting entities under the AML/CFT Act annually.
These training programmes are highly beneficial to the stakeholders involved, as they increase the awareness of the requirements to ensure compliance with the various pieces of legislation, as well as to identify any risks that may be existing in their operations, and how they can mitigate those risks.
The agencies which benefit from the Council’s training are all the stakeholders of the Securities Industry, including all Market Participants. The Reporting Issuers are also invited to attend. Other agencies that are invited are the Bank of Guyana, Guyana Police Force, Special Organized Crime Unit and the State Asset Recovery Unit.
The Council is also a member of several organizations within the region, namely the Caribbean Group of Securities Regulators (CGSR), the Council of Securities Regulators of the Americas (COSRA) and the Caribbean Regional Technical Assistance Centre (CARTAC).
These organizations host several meetings and workshops annually which the Council is required to participate in. Among the issues being discussed at this point is the Regional Choice of Law and Rule of Law Guidelines.
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