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PALESTINE CAPITAL MARKETS AUTHORITY Financial Sectors

PALESTINE CAPITAL MARKETS AUTHORITY Financial Sectors. Palestine Capital Market Authority (PCMA). PCMA has been established in 2005 to be the REGULATOR for the non- banking financial sectors Sectors under the mandate of the PCMA are: - Securities - Insurance - Mortgage

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PALESTINE CAPITAL MARKETS AUTHORITY Financial Sectors

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  1. PALESTINE CAPITAL MARKETS AUTHORITYFinancial Sectors Palestine Capital Markets Authority

  2. Palestine Capital Market Authority (PCMA) • PCMA has been established in 2005 to be the REGULATOR for the non- banking financial sectors • Sectors under the mandate of the PCMA are: - Securities - Insurance - Mortgage - and Leasing Finance Palestine Capital Markets Authority

  3. PCMA Structure • Board of Directors - Chairman of the board - Members of the board - 3 members from Private Sectors - 3 members from Public Sectors ( MOF, MONE, PMA). • Management - CEO, Directorates head Palestine Capital Markets Authority

  4. PCMA Strategy VISION • Being the proficient regulator and the safeguard of strong and transparent capital market in Palestine. MISSION • Implementing modern, robust, transparent and fair regulatory framework for the securities, insurance, mortgage and leasing sectors. Palestine Capital Markets Authority

  5. PCMA Strategy Goal • To maintain an orderly capital market, with the institutional capability to conduct effective and responsible market oversight and supervision that supports capital investment and economic growth in Palestine Palestine Capital Markets Authority

  6. PCMA Securities Directorate Structure • General Manager • Market Supervision Department - Trading Surveillance - On site inspection - Off-site analysis • Corporate and Investors Affairs - Disclosure - Corporate governance - Issuance and licensing • Licensing Committee • Investigation Committee Palestine Capital Markets Authority

  7. PCMASecurities Directorate Palestine Capital Markets Authority

  8. PCMA Securities Strategy Mission • Regulate and develop the securities sector Goal • Build a strong securities sector overseen by a competent and effective capital market authority Palestine Capital Markets Authority

  9. Objectives of Securities Directorate • Strengthen institutional framework • Protect investors and integrity of the market • Provide confidence to prospective investors • Simplify regulation of securities business Palestine Capital Markets Authority

  10. Core Entities in the Securities Market • Palestine Stock Exchange • Central Depositary of Securities • Custodians • Securities Companies - Securities brokerage - Securities dealing - Investment advisory services - Investment portfolio management - Underwriting of securities issues - Investment fund management Palestine Capital Markets Authority

  11. Conduct of Business Rules • Objectives - Provide confidence to actual and prospective investors - Protect investors - Protect securities brokers - Protect investment advisors - Standardize required disclosure Palestine Capital Markets Authority

  12. Conduct of Business Rules • Fair dealing; fiduciary duty • Truth in advertising • Disclosure: providers, services and costs • Stability of investment • Documentation of client relationship • Confirmation of trades • Custodian’s statement • Periodic reporting to client (transactions, cost, value of portfolio, performance) Palestine Capital Markets Authority

  13. Supervision ToolsMarket Supervision Department The Securities Directorate developed a risk-based supervisory methodology based on three supervisory tools: • Trading Surveillance system: electronic surveillance system (SMARTS Online) • On-site Inspection. • Off-site Inspection. Palestine Capital Markets Authority

  14. Supervision ToolsCorporate & Investors Affairs • New Corporate Governance Division to oversee compliance and promote awareness. • New disclosure regulations and arrangements during 2010. • Simple issuance licensing process, and clear comprehensive prospectus forms. Palestine Capital Markets Authority

  15. Financial Sectors(Banking and non banking) Palestine Capital Markets Authority

  16. Banking Financial Sector • 20 Banking Institutions: • 10 Local banks and 10 Foreign. • Foreign Banks- (9 Regional banks and1 International Bank). • Out of the 20, 3 Islamic banks & 1 Micro-Finance bank. Palestine Capital Markets Authority

  17. Banking Sector Growth2005 - 2009 • Assets: 45.96% • Customer Deposits: 50.05% • Total Deposits: 44.33% • Equity: 73.99% • Non Performing Loans: -40.64% • No. Of branches: 51.08% • Equity/Assets Ratio: from 10.30% to 12.28%. Palestine Capital Markets Authority

  18. Effects of Global Crisis on the Financial Sectors • Minor direct effects on earning and no effect on soundness. • No failures. • Indirect effects were through Interests rates, foreign exchange prices and commodities prices, along with liquidity shortages in the international and regional markets. Palestine Capital Markets Authority

  19. Financial SectorLegal Framework – Banking Institutions Palestine Capital Markets Authority

  20. Legal Framework – Non Banking Financial Sectors Palestine Capital Markets Authority

  21. Legal Framework- PCMA Securities Instructions • Securities Issuance: IPOs, Secondary offerings, Prospectus. • Licensing: Securities Exchange, Securities Firms, Custodians, Investment Funds, Brokers, Advisors ….etc. • Capital Adequacy. • Disclosure. Palestine Capital Markets Authority

  22. Financial Sectors Legal Framework • Independent regulatory institutions • Prudential supervision, corporate governance and ethical conduct. • Adoption of international standards: IFRS and Basel standards. • Open for foreign investment; - No capital controls, - No limits on foreign ownership, - Multi currency System. Palestine Capital Markets Authority

  23. Financial Sector Institutional Regulatory Framework Palestine Capital Markets Authority

  24. Institutional Regulatory FrameworkPolicy Formulation Level Palestine Capital Markets Authority

  25. Institutional Regulatory FrameworkTechnical Level Palestine Capital Markets Authority

  26. Financial Follow-Up Unit Palestine Capital Markets Authority

  27. Corporate Governance • Two corporate Governance Codes have been approved. • Hard and soft codes were combined in one document. • OECD principles were adopted. Palestine Capital Markets Authority

  28. PCMA Major Tasks • New structure for the Stock Exchange. • International Certification arrangement Securities and Investment Institute (SII). • Full IOSCO membership. • T +0 settlement (in coordination with PMA’s Real Time Gross Settlement System (RTGS) project). Palestine Capital Markets Authority

  29. PCMA International Partners • World Bank • USAID • First Initiative • Union Of Arab Securities Authorities • Securities & Commodities Authorities/ UAE Palestine Capital Markets Authority

  30. Technical Assistance & Capacity Building • PCMA is currently working with its local and international partners on several projects. • Advisors and consultants experience background from several leading international institutions: IMF, World Bank, IFC, SEC and others. Palestine Capital Markets Authority

  31. THANK YOU Palestine Capital Markets Authority

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