Securities Industry

BFSB News, Industry News, Securities Industry

The Bahamas Securities Industry Reforms Near Completion

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By: Christina Rolle, Executive Director, Securities Commission Of The Bahamas A complete overhaul of legislation governing The Bahamas’ investment funds industry is nearing completion, announced Christina Rolle, executive director of the Securities Commission of the Bahamas (SCB) at the annual briefing for the Bahamian securities and investment funds industries earlier this month. The overhaul includes an updated Investment Funds Act (IFA) as well as some forthcoming changes to the overall securities industry legislative framework. Investment funds overhaul The Investment Funds Act 2003 was largely structured to be in line with the operations of fiduciary administrators and did not necessarily account for the appropriate regulation of the various roles within a fund structure. Consequently, the SCB’s mission has been to address those gaps that would help support institutional, as well as private wealth business. “In launching the overhaul, it was important to the Commission that we develop best in class legislation from a regulatory point of view and to enable the jurisdiction to gain ground in the investment funds space, particularly with respect to institutional funds,” said Rolle. It is anticipated that overhauling the IFA “will accomplish key improvements to the regulatory structure which will enhance The Bahamas’ competitive appeal”. The Bill contains key changes related to: – Changes in the definitions of Bahamas versus non-Bahamas based funds; – Changes in the triggers for licensing of funds; – The ability to appoint international administrators without requiring that they be licensed; – The introduction of licensing requirements for fund managers and regulatory oversight of custodians, as well as; – The establishment of an AIFMD Regime with a view to The Bahamas qualifying for an EU Passport. Update to Rules Rolle at a recent industry briefing session outlined that there are other Rules impacting the securities industry that are near completion or in various stages of development. The Securities Industry (Business Capital) Rules, 2018, which were developed by the Commission to specifically address funding for small and medium businesses are now being finalized. Some of the other key securities laws being developed include the compliance officer rules, takeover code, and corporate governance rules. The Compliance Officers Rules will establish and clarify requirements and related qualifications and obligations of compliance officers, as well as create standards that must be met in the outsourcing of the compliance function. The takeover codes will provide a framework for how takeovers will occur, and will ensure the protection of minority shareholders in takeover circumstances. The proposed corporate governance rules will create standards that all public issuers are expected to adopt and will form the basis by which the Commission will assess the effectiveness of the corporate governance framework for public companies, including state owned enterprises. The Commission is looking to have both the Takeover Code and Corporate Governance Rules concluded by end of year. Rolle said SCB’s application to become a signatory to IOSCO’s Enhanced Multilateral Memorandum of Understanding (EMMoU) is receiving favorable consideration and is awaiting formal response from the IOSCO Screening Group on whether the application has been approved. The EMMoU includes additional powers which regulators must be able to exercise. These powers are referred to by the acronym ACFIT and they include: • The power to obtain Audit Papers • Powers by the regulator to Compel Attendance for testimony • The ability of a regulator in one jurisdiction to assist or provide information to another regulator on the freezing of assets • The power and ability of a regulator to obtain existing records and logs from internet service providers • As well as the power and ability to obtain and share existing telephone records and logs. “These enhanced ACFIT powers will go a long way to improve cross- border enforcement cooperation and assistance among securities regulators,” said Rolle. “IOSCO has stipulated that Members will have ten years within which to become compliant with and sign on to the EMMoU. In the meantime, both the current MMoU and the EMMoU will co-exist so that Members have a choice as to when to sign onto the Enhanced version.” Fintech Noting the growing interest in the jurisdiction as it relates to initial coin offerings (ICOs), crypto exchanges, and other digital token arrangements, Ms. Rolle said the Commission has initiated discussions for the development of a regulatory framework aimed at providing clarity to participants in the crypto space. Risk-based supervision Rolle also addressed why Risk-Based Supervision (RBS) has become the dominant approach to regulatory supervision of financial institutions around the world. “As the focus of global regulators shifts towards ensuring financial stability and managing contagion risk in an increasingly inter-connected marketplace, the approach towards supervision is expected to become more inclusive, risk based and data centric,” she said. “Stability of the financial system has become a central challenge to regulators worldwide and the financial crisis has taught us that financial regulators must evaluate and constantly improve on their supervisory frameworks to keep up with the rapid development within the financial sector.” In this regard the Commission has designed a risk-based supervisory framework, which includes continuous AML/CFT risk identification and monitoring, along with supporting templates.

BISX, Education & Training, Industry News, Securities Industry

BISX Engages With Listed Issuers

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The Bahamas International Securities Exchange (BISX) recently hosted a closed-session Conclave with its Listed Issuers. BISX says the intent was to meet with senior representatives of Listed Issuers to discuss their duties and responsibilities to the market, as well as to discuss the fundamental regulatory principles and overall mission of the Exchange BISX Chief Executive Keith Davies points out, *”The Exchange communicates and meets with its Issuers one-on-one on a regular basis. The reasoning behind this Conclave, however, was to bring as many of our Issuers as possible into one room at the same time. The goal being, of course, to facilitate the exchange of ideas and information not just from the Exchange to its Issuers, but also from the Issuers with each other. The attendance at our meeting was outstanding and it was good to receive the overwhelming positive feedback from our Listed Issuers regarding their participation and depth of learning.”* The Conclave featured four modules intended to provide issuers with the principles regarding how the Exchange’s rules are enforced and more importantly, why the rules are in place. The purpose of each module was to provide issuers with a deeper understanding of the Exchange’s regulatory regime. These Modules were: * Listing on BISX – This session was presented by BISX Chief Operating Officer, Holland Grant, who identified the guiding principles of these BISX Rules as: Capital Formation, Market Development and Suitability. * Issuer’s Continuing Obligations – This session was presented by BISX CEO, Keith Davies, who identified the guiding principles of these BISX Rules as: Transparency, Confidence and Security. * Trading on BISX – This session was presented by Mr. Davies and Mr. Grant jointly, the guiding principles identified for this session were: Transparency, Price Discovery and Equitable Access. * Corporate Governance – This session was presented by Miss Odecca Gibson from the Securities Commission of The Bahamas, who spoke about the existing Corporate Governance Framework in Bahamian law, International Standards related to Corporate Governance, as well as considerations for Company’s Boards and Senior Management. BISX was also pleased to thank the Securities Commission of The Bahamas for their role in the Conclave. Mr. Davies noted, *”We are grateful to the Commission’s Executive Director Christina Rolle for agreeing to participate in this conclave. We wish to thank Ms. Odecca Gibson for speaking on Corporate Governance and Ms. Sandra Duncombe and her Market Surveillance team for participating as well. The relationship between BISX and the Securities Commission is a necessary strong pillar to the effective regulation of the Bahamian capital markets, and we look forward to many more collaborations of this nature.”*

Business, Securities Industry, The Economy

Securities Commission Rules to Facilitate Small Business Funding

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New Rules under development by the [Securities Commission of The Bahamas](http://www.scb.gov.bs) would allow entrepreneurs to use crowdfunding to raise up to $1,000,000 and make it easier for small businesses to raise up to $3,000,000 per year. Crowdfunding Rules as well as Micro, Small and Medium Enterprise (MSME) Rules are being developed to introduce specific regulations for entrepreneurs to use crowdfunding to raise capital, and to ease access to capital market funding by MSMEs. The Rules are anticipated to facilitate much-needed funding for MSMEs via the capital markets while introducing appropriate mechanisms to protect investors. The proposed Crowdfunding Rules would allow the general public to participate in crowdfund investment offerings within limitations. They would also require that all equity crowdfund activities are conducted on a platform which is registered with the Commission. Over the next month, the Commission will engage local broker dealers and other industry experts for input on the draft Rules. The Commission is aiming to submit the Rules to the general public for consultation in early 2017, with a view to having the final Rules come into effect shortly after. To help protect retail (small and/or unsophisticated) investors, the Crowdfunding Rules would limit the amount such persons could invest to $500 per crowdfund arrangement, and $2,500 per year. ‘Accredited’ investors (investors who meet certain wealth, income, institutional or other requirements as defined in securities laws) would not be limited in the amount they can invest via crowdfunding. Other investor protection features of the draft Rules include capital requirements for registered platforms and defined disclosure requirements for crowdfunding projects and their initiators, including the amount of capital raised and progress reports on initiatives funded using the crowdfund method. The Rules being developed and proposed for MSMEs would allow small business operators to raise up to $3,000,000 per year in the ‘Over-the-Counter’ (OTC) market without having to file a prospectus with the Commission. Rather, they would be required to file an offering memorandum, which would provide comprehensive information to allow investors to make informed investment decisions. One of the main purposes behind the MSME Rules would be to significantly reduce the costs for small business operators who wish to raise funding for their ventures by directly accessing the capital markets. To help protect retail investors in MSME offers, the draft Rules would limit the amount of money that such persons could invest to $1,000 per offering and $5,000 per year. As is the case for crowdfunding, accredited investors would not be subject to investment limitations under the draft Rules. MSMEs spur growth, development, and innovation in an economy, and they account for 60% to 70% of jobs in most Organisation for Economic Co-operation and Development (“OECD”) countries. However, despite the many benefits MSMEs can bring, they suffer from insufficient funding, with commercial bank options unavailable or very costly, and traditional capital market alternatives also often cost-prohibitive. With the development of these new Rules, the Securities Commission is seeking to facilitate capital access in order to address this funding gap.

Industry News, Securities Industry

Americas Securities Regulators Meet in The Bahamas

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The [Securities Commission of The Bahamas](http://www.scb.gov.bs) last week hosted securities regulators from 18 jurisdictions across the Americas to discuss cross-cutting securities regulatory matters, further developing the capital markets regulator’s regional and international profile. The meeting, held 3-4 November at the Atlantis Resort on Paradise Island, was the second of two general meetings of the Inter-American Regional Committee (IARC) of [IOSCO](http://www.iosco.org/) and the Council of Securities Regulators of the Americas (COSRA) held in 2016. Mrs. Tonya Bastian Galanis, Commission Chairman, welcomed the group to The Bahamas at the commencement of the meeting. She noted, *“Meetings such as these ultimately help us to increase the effectiveness of our regulation in this ever changing global landscape but importantly they also demonstrate locally the importance of the financial services sector to our country and that we are committed to sound regulation and hopefully signals the same to the international community.”* Commission Executive Director Christina Rolle commented that hosting the IARC/COSRA meeting advanced a Commission initiative to enhance its international profile as an engaged regulator committed to best practices. *“The Commission identified increased participation with regional and international securities regulatory bodies as strategically important to better position it to respond to developments in global securities markets and their regulation, and to achieve better representation of local regulatory concerns to international standard setting bodies,”* she said. The Chair of IARC is the Comisión Nacional Bancaria y de Valores de México (National Banking and Securities Commission of Mexico/CNBV). CNBV’s Vice President, Securities Supervision, Mr. Eduardo Flores Herrera, moderated the meeting. *“We took away a lot of challenges. I think the idea of this sort of meeting is that we all end up having markets that are equally developed to our own economies,”* Mr. Flores said. *“So there is a lot of room to grow and a lot of room to work and to promote more engagement by all the countries.”* In addition to securities regulators, various international bodies were represented at the meeting. For example, te IOSCO General Secretariat was represented by Mr. Tim Pinkowski, Policy Advisor, while the Inter-American Bank (IDB) was represented by Ms. Florencia Attademo-Hirt, Representative for The Bahamas.

BISX, Education & Training, Members in the News, Securities Industry

BISX’s Ongoing Investor Education Programme

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Students from the Corporate Governance class of The College of The Bahamas’s (COB) LL.B. Programme recently were treated to a special session at the Bahamas International Securities Exchange (BISX) with CEO Keith Davies and COO Holland Grant. The Exchange Executives spoke not only about BISX but generally about domestic securities law, and the listing and trading of securities. CEO Davies welcomed the opportunity to meet with the next generation of legal professionals saying,*“These young lawyers in training will be the generation that writes the next iteration of the BISX Rules and the Securities Industry Act. It is important to ensure that they are familiar with what went into previous versions of these documents.”* While at BISX, the students also were able to hear about the direct application of corporate governance principles, including the role of directors’ duties, with the application of theoretical principles to real world scenarios bringing alive the issues discussed in the classroom setting. COO Grant noted that BISX has a long history with the College, acknowledging that the education and orientation initiatives represent some of the best ways *”to invest in those persons that will become future employees, future investors and future business partners.”*

Business, Industry News, Securities Industry

Enhancements to Bahamas Securities Legislation

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The Government has tabled in the House of Assembly amendment legislation designed to enhance and clarify the Securities Commission’s structure and responsibilities. Minister of Financial Services the Hon. C.V. Hope Strachan, M.P. said the Securities Industry (Amendment) Bill also is a step towards improving the ease of doing business in The Bahamas. *“The legislation is meant to make the hearing and settlement of matters more transparent. It removes the situation where the Securities Commission was involved in every aspect of hearing and settlement, and it will create an independent hearing panel now to be involved in that process.”* The Bill provides for the finality of an approved settlement agreement as well, although judicial review of the panel’s approval of a settlement will still be available. It also allows the commission, inter alia, to apply to the courts for orders to enforce its directives and orders and to commence supervisory liquidations under securities laws. The Minister pointed out that legislation affecting the financial services industry must be reviewed regularly if The Bahamas is to remain competitive. *“We believe that as we move forward in the financial services industry that it is important for us to keep looking at these different aspects of how we operate as a jurisdiction. A comprehensive overview of all of the legislation as it relates to financial services has to be done on almost a yearly basis for us in order to really remain competitive in financial services.”* Also taking the opportunity to address challenges faced by the financial services industry generally, Minister Strachan said these challenges are part of an increasingly dynamic environment where the demands placed on countries involved in financial services are required to police the financial activities of citizens of other countries. *“On a global level, The Bahamas, consistent with every jurisdiction involved in the financial services industry, has critical responsibilities associated with counter-terrorism financing and anti-money laundering initiatives. On a regional level we face challenges to our reputation wherein all of us and each of us in the Caribbean are fighting the label of being described as ‘tax havens’, despite our compliance with international regulatory obligations,”* she said.

Asset Management, BISX, Industry News, Securities Industry

New Funds Listings for BISX

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The [Bahamas International Securities Exchange](http://www.bisxbahamas.com) (BISX) has announced the listing of the following open-ended funds: * Lewisham Investment Fund Ltd, (Lewisham) * 3Ps Investment Fund IC Commons Quotas (“The 3Ps Common Quotas”) * 3Ps Investment Fund IC Preferred Quotas (“The 3Ps Preferred Quotas”), and * Delmonte Fund Limited SAC (Delmonte) Lewisham and Delmonte are incorporated as International Business Companies under the laws of the Commonwealth of The Bahamas. Lewisham is registered as a Smart Fund Model SFM007 and Delmonte is registered as a Professional Investment Fund. The 3Ps Common Quotas and 3Ps Preferred Quotas are sub-funds of the 3Ps Investment Fund IC, this is the second Investment Condominium (ICON) to be listed on BISX pursuant to the Investment Condominium Act, 2014. BISX Chief Executive Officer, Keith Davies commented on the listing of the Mutual Funds, *“We continue to be pleased with the traction being experienced by our Mutual Fund Listing Facility, with total assets under management of funds listed on the Exchange passing $2.3 Billion at December 31, 2015. We are also pleased that 3Ps Investment Fund IC becomes the second ICON to be listed on the exchange. We intend to continue to enhance the market with our commitment to development through innovation.”* Credit Suisse AG, Nassau Branch – Wealth Management served as the BISX Sponsor Member that brought these Funds to the Exchange.

Asset Management, BISX, Industry News, Securities Industry

Star Capital – First ICON Listed on BISX

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The Bahamas International Securities Exchange (BISX) has announced that open-ended investment Fund Star Capital Fund ICON (Star Capital) has been added to the roster of funds listed on the Exchange. Star Capital is established as an Investment Condominium under the Investment Condominium Act, 2014 and is registered as a Smart Fund 007 under the Investment Funds Act, 2003. It is the first [Investment Condominium (ICON)](https://bfsb-bahamas.com/guide-icon.php) listed on The Bahamas International Securities Exchange. BISX Chief Executive Officer Keith Davies says *“We are pleased to have listed our very first ICON on BISX. The innovation of the Bahamian Financial Services sector continues to be demonstrated through the value added products such as ICONs that are being created.”* CFAL securities served as the BISX Sponsor Member that brought this Fund to the Exchange, while TAG Corporate Services Limited has been appointed as the Administrator for the fund and Swan Capital Limited acts in the capacity of Investment Manager.

BISX, Industry News, Securities Industry

BISX Executive Speaks at CGSR Conference in The Bahamas

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Chief Operating Officer of The Bahamas International Securities Exchange (BISX), Mr. Holland Grant, took part in the 12th Annual Conference and Workshop organised by the Caribbean Group of Securities Regulators and hosted by The Securities Commission of The Bahamas. The conference, which focused on Regional Capital Market Development and Regulation was held at the British Colonial Hilton 20 – 22 April, 2016 and brought together securities regulators from over 20 countries and territories to discuss common issues related to Securities Regulation. Mr. Grant spoke on the panel discussion “View of Regulation of Caribbean Exchanges”. This panel was chaired by Mr. Courtney Christie-Veitch, Financial Sector Supervision Advisor to the Caribbean Regional Technical Assistance Centre (CARTAC). Also on the panel were Ms. Alousia Faisal, Secretary, Eastern Caribbean Securities Regulatory Commission; Laurence Crossley, Senior Director, Securities Division Jamaica Financial Services Commission and Mr. C. Wainright Iton, Chief Executive Officer, Trinidad and Tobago Securities and Exchange Commission. Commenting on his participation on the panel discussion, Mr. Grant noted, *“It was my pleasure to share the views of BISX on the regulation of Exchanges. Speaking as the only representative of a Securities Exchange on a panel discussing the regulation of Securities Exchanges also gave me the opportunity to share our view of how BISX is regulated and how we carry out our regulatory functions. As I noted during my contribution, my job as a regulator is 90% education and communication and only 10% regulation.”* As a part of Mr. Grant’s contribution, he drew particular attention to the following issues that he felt would become increasingly important for Caribbean Exchanges and Caribbean Securities Regulators: * Harmonization of Rules between Caribbean Exchanges and Jurisdictions: Noting the challenges faced by companies seeking to list in multiple jurisdictions, Mr. Grant suggested that the harmonization of stock exchange rules as well as statutory laws related to Securities to the greatest extent possible, as a way to encourage cross border listing and investment. * Combination of Caribbean Exchanges: Noting that this was an excellent idea in principle, Mr. Grant noted that in practice each Exchange had its own strategy and focus that made integration challenging. * Service Level Agreements for Regulators: Noting the importance of timely responses in financial markets, Mr. Grant stated that it would become more important in the future for regulators to specify a time in which practitioners could expect to receive a response to inquiries. * Promotion of Exchanges: Noting the role that exchanges play within each jurisdiction, Mr. Grant suggested that regulators might want to find new ways to make their international market practitioners aware of their national exchanges. The Securities Commission of The Bahamas will also host the 13th Annual Caribbean Group of Securities Regulators Conference in Nassau, The Bahamas in the first half of 2017. On Wednesday, April 20, Minister of Financial Services and Local Government, the Hon. C.V. Hope Strachan, M.P. delivered [welcome remarks](https://bfsb-bahamas.com/news.php?cmd=view&id=3533&pre=y) for the event.

Business, Industry News, Securities Industry

IFIE Americas Working Group Meets in The Bahamas

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The International Forum for Investor Education (IFIE), Americas Chapter held the first meeting of its working group for content development and delivery, in the Bahamas over the period April 22 – 23, 2016. Securities regulators representing fifteen jurisdictions including the host country, The Bahamas, Barbados, the British Virgin Islands, Cayman Islands, Curacao, the Eastern Caribbean (8 territories), Jamaica and Trinidad and Tobago, gathered at the British Colonial Hilton in Nassau to discuss matters pertinent to the promotion of Investor Education throughout the region. On day one the meeting chaired by Kathryn Edmundson, Executive Director of IFIE secretariat, ably supported by the two joint chairs of the working group from Trinidad and Tobago and Curacao, focused the attention of the securities regulators on: * Technical Expertise to Assist in Content Development and Delivery * Ideas for Starting/Setting up Some FC/IE Initiatives * Techniques for Developing Content for FC/IE Initiatives for Different Target Audiences * Using Different Communications Technologies and Strategies to Impact FC/IE Content Delivery including the use of traditional and social media Technical expertise was provided to the participants on day two via Valerie Brokamp – Meza de Leon Americas Senior Program Manager, AFLATOUN International, a non-governmental organization focusing on educating children about their rights and responsibilities and managing financial resources through social and financial education. The session also explored ways for measuring and evaluating success of educational initiatives. The regulators will continue to meet virtually every three weeks to develop toolkits for the deployment of initiatives designed to improve the financial literacy of investors and potential investors within the Caribbean region. A further face to face meeting of the working group is anticipated to take place before the end of the year. **About IFIE** The International Forum for Investor Education is a unique alliance chartered in 2005 that brings together private sector and public sector providers of investor education to improve the effectiveness of investor education programs around the world. The Forum serves as a clearinghouse for the exchange of information and ideas among providers of investor education from different jurisdictions, including organizations that are just developing or planning to develop investor education programs.

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