CMA/World Bank Collaboration - PowerPoint Presentation

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CMA/World Bank CollaborationBeirut, September 17, 2014

ContextLebanon’s reputation in the banking business—enhanced by effective oversight, resilience through turbulence

Securities business regulated by central bank, supervised by banking commission

To develop securities business, need dedicated regulator with different objectives and specialist expertise—Law 161

Balance regulation with development of the market:

e

nsure fair, efficient and transparent markets that protect investors and reduce systemic risk

promote markets that serve the economy’s needs

Vision: build platform of excellence in finance beyond banking, leveraging reputation achieved in banking

Role of World Bank GroupThe Group has a Global Practice “Finance&Markets

”

Long experience with emerging economies in policy and technical work

Awareness of risks and challenges in young markets

Strong public good perspective to market regulation and development

Access to grants for capital market work

CMA Chairman approached us in 2012

May 2013: diagnostic completed, published

Strong CMA law, but implementation challenges:

Review regulatory framework and remedy gaps in well-sequenced manner

Develop staff manuals; licensing, inspection and product approval plans

Develop enforcement capability,

MoUs

with other regulators

CMA and WBG designed advisory program

October 2013: donors approve grant under “FIRST Initiative”

FIRST ProgramGrant from

Luxemb

., Germany, Switzerland to:

Prepare regulations jointly with CMA staff

Assist in obtaining Board approval of drafts, and in consulting with industry

Develop staff manuals, conduct training of CMA staff

Design

masterplan

to develop the market

Joint working group CMA-WBG

December 2013: first expert mission to Beirut

September 2014: launch consultations with industry, begin formal transition to new regime

http://www.firstinitiative.org/

Transition to new regimeNo interruption of capital market activities for institutions already authorized

CMA inspects activities for which institutions are licensed for (advising, arranging, managing, dealing, custody)

C

omply with new regulations over time, under CMA-approved plans, subject to CMA enforcement powers in Law 161

In designing, implementing and enforcing regulations,

observance of IOSCO Objectives and Principles

 membership

Formal process of consultation with industry

Adjustments to framework through periodic formal reviews:

Experience with existing regulations

Global regulatory developments

Market growth and innovation

Regulatory work programLicensing of institutions and registration of professionals—draft with industry

Business conduct—draft with industry

Market conduct—draft with industry

Investment funds—internal draft

Offering and disclosure—internal draft

[Prudential]

[securities exchanges,

MidClear

]

building the capacity

of

CMA to implement

Masterplan for Market Development

Consultations with industry after

regs

in place

World Bank Group can link this FIRST program to specific transactions

 work

with issuers, intermediaries, investors, official sector:

F&M: PPP framework,

new products, innovation

financing, corporate governance, audit standards

IFC: assist private sector issuers/PPP entities, invest in

market

infrastructure

IFC

Treasury: credit

enhancement for private securities

MIGA: credit enhancement to public sector issuers

World Bank Treasury:

invest in public sector

securities, advise on public debt strategy

Implementation of

masterplan

: successor FIRST

Other Engagements of

Finance&Markets

Global

Practice

SME Observatory

Financing of start-ups

Payment system strategy

[Pension reform]