Key Activities of the
WB/IFC Securities Markets Group
Global Capital Markets Development Department
WB-IFC Securities Market Group (GCMSM)
WBG Global Product Group for local securities market development
• Joint WB/IFC Group
• 30+ years of WB/IFC experience in
securities markets, products, and
institutions -- development and
operations
• Specialists include former securities
regulators, central bankers, exchange
officials, investment bankers, debt
managers from developed and
emerging markets
• Team has extensive field-based
experience in emerging market
countries in every region around the
world—Asia, Africa, Middle East,
Europe, Latin America
Latin America &
the Caribbean
Ecuador
El Salvador
Brazil
Chile
Colombia
Costa Rica
Dominican Rep.
Guatemala
Honduras
Jamaica
Mexico
Panama
Uruguay
Middle East &
North Africa
Bahrain
Egypt
Jordan
Morocco
Oman
Qatar
Saudi Arabia
UAE
Sub-Saharan
Africa
Kenya
Mozambique
Nigeria
Rwanda
Tanzania
Uganda
Zambia
Europe &
Central Asia
Armenia
Croatia
Georgia
Kazakhstan
Lithuania
Poland
Romania
Russia
Serbia
Ukraine
South Asia
Bangladesh
India
Nepal
Pakistan
Sri Lanka
East Asia &
Pacific
China
Indonesia
Mongolia
Philippines
South Korea
Thailand
Vietnam
Past and Current Projects
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Developing Securities Markets
Develop Domestic Securities Markets, Mainly Debt
-
Provide long term, local currency instruments
Diversify financial systems
Reduce financing and investment risks
Create new investment vehicles
2 Main Product Areas
Government
Bond Markets
• Reduce government financing
risks
• Create market-based pricing
and pricing benchmarks,
market-oriented monetary
policy
GEMLOC
IFC Product:
Non-Government
Development
of non-governm
Bond Markets
• Support financing for housing,
infrastructure, and private
sector investment
• Mobilize savings; provide
investments for rapidly growing
institutional investors
(pensions, insurance)
ESMID
3
Crisis Impact
The global crisis has increased the demand for domestic
securities markets:
• The outflow of foreign investors increased the need to rely on local
investors and markets
• The banking sector downturn and bank reluctance to meet extensive
financing requirements raised the need for financing alternatives
• Maturing outstanding bonds need to be replenished
• The need by companies to deleverage and obtain financing without
periodic and maturity payments increased the demand for equity
For our operations:
• Continue medium/long term development programs, with a shift in
emphasis as required to address crisis-related needs (ie liquidity)
• Help understand the impact for instruments like securitization
• Expect going forward substantive changes as new regulatory
frameworks emerge
4
GCMSM Program Design
Programs draw on full range of WB/IFC tools:
• Global product expertise + in-country knowledge/presence
• Public and private engagements
• Enabling environment plus transaction support
Enabling Environment
Assistance to
Regulators
Strengthening the
Marketplace
Transaction Support
Capacity Building
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Unique Role of Transactions Component
Facilitate
Transactions
Improve Enabling
Environment
Regulations, market
infrastructure, market
participants
Technical
Assistance
Hands-on support
to issuers/
intermediaries
Transactions Knowledge of
specific challenges
on the ground
Yardstick for
program success
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Gemloc Program
• World Bank Group initiative to develop mainly local government
bond markets
• Combines comparative advantages of WBG and private sector
• 3 separate but synergistic pillars with 3 commercial partners:
– Investment management (PIMCO)
– Index/investability indicators (Markit + Crisil)
– Advisory services (World Bank)
• Creates market-based incentives for policy reforms
– Strengthen market operations
– Increase investability score/GEMX weight
– Attract more foreign/domestic investment
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GEMX Index: Investability Indicators
Category
Indicator
A. Access
Access to securities markets
Access to money markets
Access to derivative markets
Effective rate of taxation for fund
B. Liquidity
Turnover ratio
Bid-Ask Spread
Benchmark yield curve
Centralized bond pricing
Institutional investor base
C. Infrastructure
Regulatory quality
Creditor rights
Asset servicing
Clearing and settlement
Safekeeping safety/soundness
Weight
35%
13%
8%
4%
10%
35%
9%
11%
2.5%
2.5%
10%
30%
10%
5%
7.5%
5%
2.5%
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Gemloc Advisory Services: Program Scope
Broad topics
Specific agenda
Macro and Micro interactions
and trade-offs
- Capital controls, international excess liquidity and
convertibility
- Financial markets taxation structure
Primary Markets
- Debt management strategy and issuance policy
- Placement mechanisms and organization
Money Markets
- Repo markets
- Operational liquidity management
Secondary and Derivatives
Markets
- Exchange and OTC markets
- Interactions between markets and development sequence
- Valuation schemes
Participants and Investor Base
- Foreign and local investor base
- Strategies for diversification
- Prudential regulations
Custody, Clearance, and
Settlement
- Local and International Central Securities Depositories
(CSD)
- Risk management upgrades
Regulations for Debt Markets
- Systemic risk and investor protection
- Enforcement capabilities
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Gemloc Advisory Services
Leveraging country-led market development reforms through:
Country-specific work, Cross-country (peer group) dialogue, and
Applied research
Country
Work
Country
led
Market
Reforms
Applied
Research
Cross-country
Dialogue
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Gemloc: Selected Advisory Services Operations
Country Specific Programs
•
•
•
Egypt, Nigeria, Costa Rica – ongoing
Brazil, Morocco – being assessed
Additional TBD
•
Pilot Peer Group: consists of 10 largest
emerging bond markets; meets via
teleconference.
–
–
Peer Group Dialogue
–
•
Second Peer Group: consists of Gemloc
countries not included in the pilot peer
group.
–
KM Products
•
•
•
Meeting 1 (Mar 31st): crisis challenges
Meeting 2 (Jul 20th): primary dealer
practices
Meeting 3 (Nov 18th): electronic trading
platforms
Meeting 1 (Jan 25th): primary dealer
practices and preconditions
Gemloc survey on development obstacles
(22 countries)
Research papers, policy notes
Forthcoming handbooks on primary
dealers, liability management and repo
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markets
Gemloc Eligible Countries: Advisory Services
33 countries currently eligible
Gemloc Phase 1
Gemloc Phase 2
Gemloc eligible
Brazil
Chile
China
Colombia
Egypt
Hungary
India
Indonesia
Malaysia
Mexico
Morocco
Nigeria
Peru
Phillipines
Poland
Russia
South Africa
Thailand
Turkey
Costa Rica
Kenya
Romania
Sri Lanka
Uruguay
Argentina
Croatia
Kazakhstan
Lebanon
Pakistan
Tunisia
Ukraine
Venezuela
Vietnam
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ESMID-Africa (Pilot)
A comprehensive and integrated approach
to developing local bond markets
• 3 year, $5.5 million comprehensive program funded by SIDA,
with advisory-investment linkages
• Special focus on long-term funding for critical sectors,
including housing and infrastructure
• Transaction support component acts as catalyst and validates
success in enabling environment work
• Sub-regional program for East Africa (Kenya, Rwanda,
Tanzania, Uganda), to foster a regional market that can be
accessed by smaller IDA countries
• And a country program for Nigeria given its size and its
developmental needs
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ESMID-Africa (Pilot)
A comprehensive and integrated approach to developing local bond markets
Advice on Legal and
Regulatory Framework
• Improve approval process
• Reduce costs
• Framework for new
products
Capacity Building
• Certification/Licensing
• Training
• Develop regional provider
Strengthening Market
Infrastructure
• Market Structure
• Clearing & Settlement
• Transparency &
Information Dissemination
Regionalization
Transactions
Support
• Active support to
issuers and
intermediaries for
replicable
transactions
• Introduce new &
innovative products
• Broadening & deepening
markets
• Minimum common
standards
• Consolidated infrastructure
• Cross border issues
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ESMID Africa: Pilot Program Key Achievements
• Produced recommendations for improving regulatory framework for bond issuance and trading
– Regulatory changes in drafting and/or approval stage
– Preliminary impact: Recent Tanzania bond issue approved in record time
• Developed roadmap for regional integration
– Roadmap in approval stage at East African Community Secretariat
– Process of integrating clearing and settlement infrastructure initiated
• Established regional training institute
– Developed and piloted regional training curriculum
– Trained 557 market participants and 67 local trainers
– Assisted regulators define regional licensing framework for market professionals
• Supporting potential bond transactions
– Supporting 6 transactions of potential issuers in key sectors – infrastructure, housing, MSME
– Monitoring a transactions pipeline of USD 400 million
• Developed partnerships with other programs and close coordination with WB policy work
– PPIAF, FIRST, Making Finance Work for Africa
– WB programs: Kenya FLSTAP, FSAP; Nigeria FSS 2020 Strategy
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ESMID
C O U N T R Y
O P E R A T I O N S
CURRENT
East Africa
Kenya
Rwanda
Tanzania
Uganda
FUTURE
Regional Approach
Implementation
Country Approach
Implementation
Nigeria
Africa
Other
Regions*
Potentially: Ghana,
Zambia, West Africa
Potentially: South Asia,
MENA
*Operations in LAC (Peru and Colombia) to be launched shortly
K N O W L E D G E M A N A G E M E N T
•
•
•
Indicators
Database
Training materials
•
•
Publications
Workshops and
conferences
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Country Specific Project Scope
Country specific programs with project scope based on
level of market development
Market Development
Project Scope
Component Needs
Entry Point
More Developed
Targeted
Implementation
Less Developed
Broader-Based
Diagnostics
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Partnership Programs
For Securities Markets Development
Thank you very much!
Tel: +1 202-473-0006
Email: SecuritiesMarketsGroup@worldbank.org
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