Maintaining The Competitiveness Of The Bahamas’ Financial Services Sector

There are complexities involved in maintaining a well regulated successful jurisdiction, not the least of which is that of combining sufficient regulatory oversight to ensure the systems integrity with sufficient operational freedoms to ensure its responsiveness and viability. As in most of human endeavours, it is a matter of striking a proper balance. We in The Bahamas long ago committed ourselves to seeking this balance because it is a continuous process. It is this same commitment that we will bring to bear on the emerging capital market.

We are aware of the enormous responsibility resting upon the regulators of securities markets, and the critical and delicate responsibility which the market’s institutions discharge in the nations financial intermediation process. We shall be ever mindful of these responsibilities.

An emerging capital market in this technology-driven era brings with it the need for an even stricter regulatory regime. Internet-based transactions have created tremendous opportunities for businesses to reach beyond traditional borders and grow revenues, while at the same time achieving revolutionary business efficiencies. Nevertheless, borderless e-Commerce in this virtual environment can also mean uncertainty and risk, creating new challenges for those charged with regulating the market.

Uncovering valuable opportunities, gaining competitive advantage, and building shareholder value in the cyber marketplace require systems that are aligned and integrated. It will be critical for the establishment of a fraternity of regulatory bodies as I understand is provided for by the Council of Securities Regulators of the Americas (COSRA). IOSCO (International Organisation of Securities Commissions) has already done much to promote compatible securities regulation by creating and adopting principles that commit securities regulators to the development of the fairest and most transparent securities markets.

The Bahamas is seeking to maintain the competitiveness of its financial services sector by ensuring that the regulatory weaknesses which had earlier been identified by the Government are buttressed and not permitted to spill over into the capital markets sector.

In support of these efforts, the Securities Commission of the Bahamas (SCB) has committed to ensuring, inter alia, the provision for prudential vetting of controllers, directors and senior executives of investment businesses as well as capital adequacy provisions for businesses undertaking trading risks. The integrity of the market and the protection of the investor are the objectives of these efforts. In a similar vein, efforts are being made to enhance information sharing with other local regulatory bodies and to establish a supervisory regime for investment businesses that do not have a physical presence in The Bahamas.

It is the intention of the Government to ensure that there is full compliance with all of the principles of IOSCO. To do so will strongly bolster the regulatory efforts of The Bahamas.

The Government has also committed to have The Bahamas’ financial sector undergo the IMF/World Bank Financial Sector Assessment Programme (FSAP) and a programme is already underway to prepare the sector for the review following a self -assessment. The Securities industry will be included in the initial review.

Investor Education, which is a priority of COSRA, is also an important pillar of this jurisdiction’s regulatory efforts. The ultimate objective is to enable the individual investor to become an important force in the market. He then becomes the regulators best ally.

(Extract from an address by the Hon. William C. Allen, Minister of Finance, to the 4th Annual Roundtable Meeting of the Council of Securities Regulators of the Americas – COSRA)

March 1, 2001