THE FSC’S ROLE IN FACILITATING CAPITAL MARKET DEVELOPMENT IN JAMAICA

1. THE FSC’S ROLE IN FACILITATING CAPITAL MARKET DEVELOPMENT IN JAMAICA Mr Lyndon Martin, CFA Senior Technical Analyst Financial Services Commission

2. 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

3. 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.

4. 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

5. Data on Jamaica’s Capital Markets – Funds under Management

6. Data on Jamaica’s Capital Markets – Repos

7. Data on Jamaica’s Capital Markets – Exempt Distribution Issuance

8. 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

9. 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

10. 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

11. 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

12. 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