WB-IFC Securities Market Group (GCMSM)

1. Key Activities of the WB/IFC Securities Markets GroupGlobal Capital Markets Development Department

2. WB-IFC Securities Market Group (GCMSM) WBG Global Product Group for local securities market development Europe & Central Asia Armenia Croatia Georgia Kazakhstan Lithuania Poland Romania Russia Serbia Ukraine • 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 Middle East & North Africa Bahrain Egypt Jordan Morocco Oman Qatar Saudi Arabia UAE East Asia & Pacific China Indonesia Mongolia Philippines South Korea Thailand Vietnam Latin America & the Caribbean Ecuador El Salvador Brazil Chile Colombia Costa Rica Dominican Rep. Guatemala Honduras Jamaica Mexico Panama Uruguay South Asia Bangladesh India Nepal Pakistan Sri Lanka Sub-Saharan Africa Kenya Mozambique Nigeria Rwanda Tanzania Uganda Zambia Past and Current Projects

3. 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 Non-Government Bond Markets • IFC Product: • Development of non-governm • Support financing for housing, infrastructure, and private sector investment • Mobilize savings; provide investments for rapidly growing institutional investors (pensions, insurance) Government Bond Markets • Reduce government financing risks • Create market-based pricing and pricing benchmarks, market-oriented monetary policy GEMLOC ESMID

4. 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

5. 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 Transaction Support Enabling Environment Assistance to Regulators Strengthening the Marketplace Capacity Building

6. Unique Role of Transactions Component Facilitate Transactions Hands-on support to issuers/ intermediaries Knowledge of specific challenges on the ground Yardstick for program success Improve Enabling EnvironmentRegulations, market infrastructure, market participants

7. 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

8. GEMX Index: Investability Indicators Page 8

9. Gemloc Advisory Services: Program Scope

10. Gemloc Advisory Services Leveraging country-led market development reforms through: Country-specific work, Cross-country (peer group) dialogue, and Applied research

11. Gemloc: Selected Advisory Services Operations Country Specific Programs Peer Group Dialogue KM Products Egypt, Nigeria, Costa Rica – ongoing Brazil, Morocco – being assessed Additional TBD Pilot Peer Group: consists of 10 largest emerging bond markets; meets via teleconference. Meeting 1 (Mar 31st): crisis challenges Meeting 2 (Jul 20th): primary dealer practices Meeting 3 (Nov 18th): electronic trading platforms Second Peer Group: consists of Gemloc countries not included in the pilot peer group. 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 markets

12. Gemloc Eligible Countries: Advisory Services 33 countries currently eligible

13. 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

14. ESMID-Africa (Pilot) • Strengthening Market Infrastructure • Market Structure • Clearing & Settlement • Transparency & Information Dissemination • Transactions Support • Active support to issuers and intermediaries for replicable transactions • Introduce new & innovative products • Advice on Legal and Regulatory Framework • Improve approval process • Reduce costs • Framework for new products • Regionalization • Broadening & deepening markets • Minimum common standards • Consolidated infrastructure • Cross border issues • Capacity Building • Certification/Licensing • Training • Develop regional provider A comprehensive and integrated approach to developing local bond markets

15. 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

16. ESMID Indicators Database Training materials C O U N T R Y O P E R A T I O N S CURRENT FUTURE East AfricaKenyaRwandaTanzaniaUganda Potentially: Ghana, Zambia, West Africa Regional ApproachImplementation Africa Other Regions* Potentially: South Asia, MENA Country ApproachImplementation Nigeria *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 • Publications • Workshops and conferences

17. Country specific programs with project scope based on level of market development Country Specific Project Scope Market Development Project Scope Component Needs Entry Point More Developed Targeted Implementation Broader-Based Diagnostics Less Developed

18. Partnership Programs For Securities Markets Development Thank you very much! Tel: +1 202-473-0006 Email: SecuritiesMarketsGroup@worldbank.org