The regulatory framework of the securities and capital markets in The Bahamas is drawing closer to achieving higher international standards, according to the Securities Commission of The Bahamas.
A statement released by the agency noted that standards will be improved through the implementation of the Securities Industry Act, 2011 (SIA), and with the closing of the industry consultation period on six key proposed rules and guidelines.
The statement comes as an International Monetary Fund mission wrapped up its Financial Sector Assessment Programme (FSAP) review of the jurisdiction last week. Without commenting on any results coming out of that review, the commission's Executive Director Dave Smith said the promulgation of the well-crafted SIA, along with the ongoing development of key Rules and Guidelines needed for its full implementation, are achieving the goal of demonstrably improving the regulatory regime for the securities and capital markets.
"A significant number of issues related to the legislative framework of the securities and capital markets have been addressed with the passing of the SIA," according to Smith. "The way the SIA is structured, there are a number of critical Rules and Guidelines which are imperative to fully implement the new law."
Releasing papers for consultation to industry participants is integral to the process the commission employs to develop legislation, regulations, rules and guidelines. A total of 1980 copies of papers were forwarded to registrants (based on governing legislation) and industry associations, and valuable feedback has been received, ultimately assisting in shaping the regulatory landscape.
Smith admits that while the pace of change has been rapid, this should be understandable given the necessity and urgency of the implementation of the SIA.
According to Smith, the number and content of the formal responses returned on these important regulatory matters suggests an industry by-and-large supportive of the many changes being brought about through the various proposals forwarded in the consultative papers. He emphasized that the necessary development of the regulatory framework yields the best result with full engagement by all stakeholders.
Four papers concluded the industry consultation phase on July 31, covering areas including a proposed fee regime for investment fund administrators and financial and corporate services providers; a proposed regulatory capital framework; the outsourcing of material functions, and the licensing of compliance officers. Two additional papers governing the fitness and propriety criteria of applicants for regulated activities, and proposed liquidity risk guidelines for licensees and registrants, will conclude consultation on September 1, 2012.

It is also anticipated that a further three papers will be issued for consultation in the first week of August, 2012. Papers are released for consultation for a period of no less than 45 days.
During 2011, consultation on proposed physical presence and fees rules was concluded and the relevant rules established.
Smith said the commission has a clear understanding of the 38 principles for good financial regulation prescribed by the International Organization of Securities Commissions (IOSCO), the international standards setter for securities and capital markets regulation.
The process the commission uses to move the regulatory framework to the international standards espoused by IOSCO considers benchmarking against appropriate jurisdictional contemporaries, primary research and initial screening by small focus groups, followed by broad industry consultation prior to implementation.
The Bahamas is seeking to achieve signatory status to Appendix A of a key international benchmark for cross-border cooperation and combating securities and derivatives law violations, for which the implementation of the SIA is essential. The benchmark is IOSCO's Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (MMoU).

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