THE FSC’S ROLE IN FACILITATING
CAPITAL MARKET DEVELOPMENT IN
JAMAICA
Mr Lyndon Martin, CFA
Senior Technical Analyst
Financial Services Commission
Outline
• The FSC
• Overview of Capital Markets
• Selective Data on Jamaica’s Capital Markets
• Overview of the Role of the FSC in Capital Market Development
• Recent FSC Initiatives
• Capital Market Challenges
• The FSC’s Future Role
The FSC
• Mission: “To regulate and supervise the securities, insurance and pensions industries for the
protection of their users thereby enhancing public confidence through the efforts of a
competent workforce.”
• Self-financing regulatory body
• Guided by statutes and regulations
• The FSC, is committed to IOSCO’s 3 core objectives:
• The protection of investors;
• Ensuring that markets are fair, efficient and transparent; and
• The reduction of systemic risk.
Overview of Capital Markets
Capital Markets:
• Channel savings and investments between the suppliers of capital and the users of capital
• Facilitates the accumulation of long-term finance
• Transfer financial resources of savers to those who have promising productive areas
• Spur economic growth
Data on Jamaica’s Capital Markets –
Funds under Management
Trend in Funds under Management (FUM): 2005 - 2014
J$' Billions
1,200
1,000
800
600
400
200
Sep '05
Sep-06
Sep-07
Sep-08
Sep-09
FUM
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Data on Jamaica’s Capital Markets –
Repos
Trend in Total Repos: 2005 - 2014
J$' Billions
450
400
350
300
250
200
150
100
50
Sep '05
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Total Repos
Sep-11
Sep-12
Sep-13
Sep-14
Data on Jamaica’s Capital Markets –
Exempt Distribution Issuance
Overview of the FSC’s Role in Capital Market
Development
The FSC:
• Aims to ensure strength and stability in the capital markets
• Promotes capital market integrity
• Ensures that its regulations emphasize disclosure
• Promotes investor education
• Takes steps to reduce systemic risk
Recent FSC Initiatives
•
Steps taken to improve financial inclusion and towards a National Financial Literacy
Program
•
Collaboration with other entities in order to create a conducive environment for the venture
capital industry
•
Recent legislation
• Securities (Prudential) Regulations
• Securities (Collective Investment Schemes) Regulations
• Securities (Retail Repurchase Agreement) Regulations
•
Retail Repo Reform
Capital Market Challenges
•
Demand Constraints
•
•
•
Lack of financial inclusion
Low levels of savings
Supply Constraints:
•
•
•
Lack of adequate capital
Lack of good corporate governance and proper financial management
Absence of deep and liquid secondary markets
FSC’s Future Role in Capital Market
Development
The FSC must continue to:
• Facilitate the development of a conducive capital market environment
• Establish regulatory frameworks and policies that facilitate an environment where new
products are created and properly regulated
• Work towards harmonization of the Caribbean regulatory framework
• Promote better disclosure of financial products to improve transparency and integrity and to
build investor confidence
• Take steps to increase the level of financial education and sophistication of investors
Conclusion
The FSC will continue to develop a robust framework of oversight and supervision, which
emphasizes:
• Greater transparency and disclosure
• An approach that seeks to better understand the potential risks associated with financial
innovation and find the right balance between unrestrained innovation and overregulation
• Increased internal processes for monitoring market developments and identifying emerging
risks
• Engagement with other regulators and supervisors, both locally and internationally