SEC launches ‘Time with the Commission’ series to improve investor protection

The Securities and Exchange Commission (SEC) launches its maiden engagement series dubbed “Time with the Commission” to drive closer partnerships with the investing public and other market operators in the capital market.

SEC intimated that “the initiative forms part of the Commission’s mandate of regulating, innovating, and promoting the growth and development of an efficient, fair, and transparent securities market in which investors and the integrity of the market are protected”.

The first in the series of engagement programmes focused on highlighting the contents of the following newly issued guidelines for market operators: licensing requirements for market operators, code of business guidelines, regulatory sandbox licensing guidelines, and the corporate governance code. The programme took place in Accra with the Ghana Securities Industry Association (GSIA) and its members.

The Director-General (DG) of SEC, Rev. Daniel Ogbarmey Tetteh, together with his two Deputy Directors-General, Mrs. Deborah Agyemfra, and Mr. Paul Ababio, were present at the maiden event.

Speaking at the presentation, the Director-General opined that the rationale for the new guidelines was to raise the integrity bar for operators in the market and enhance the regulatory oversight of the Commission. 

In addition to ensuring compliance with the new licensing requirements, the SEC shall have regard to the market operators’ ability to carry on the regulated activity competently, honestly, and fairly, Rev. Ogbarmey Tetteh remarked.

The Director-General further emphasized that SEC is expecting existing market operators to be fully compliant with the new Minimum Capital Requirement (MCR) by December 31, 2021. New entrants, however, are obliged to meet the new capital requirements immediately, he mentioned.

The programme included an interactive Question & Answer (Q & A) session, where market operators sought and received clarity on the new licensing requirements. 

New code and guidelines issued by SEC 

The Licensing Requirements for Market Operators contain the guidelines for license application and the grounds for granting it, licensing fees, and capital requirements for the market operators. Also, it tackles additional licensing requirements and applications such as replacement of license; Statutory notifications, and penalties imposed in case of a breach.

The new minimum capital requirements for the market-operators range from GH¢200,000 for an Individual Investment advisor and reaches up to GH¢400 million for Primary Dealers. For Fund Managers, Broker-Dealers, and Credit Rating Agencies, the capital required is GH¢ 2 million, GH¢1.5 million, and GH¢1 million, respectively.

In the Conduct of Business Guidelines, market operators are to apply due care, skill, and diligence in the best interest of their clients and the integrity of the capital market. Also, it addresses issues concerning employee recruitment and training, procedures for whistle-blowing, client relations, maintaining confidentiality and security in business operations, prevention of market abuse, and penalties.

Guidelines on the Regulatory Sandbox Licensing and its objective are to provide a framework “for the conduct of a capital market activity or related services for which there is the absence or no adequate provisions under any laws regulating the business or capital market activity”. An entity can be eligible to receive a Regulatory Sandbox Licence from SEC if it is fully compliant with the applicable laws under incorporation.

The Corporate Governance Code covers areas relating to the composition, role, and responsibilities of the board as well as the establishment of board committees; the appointment, resignation, and remuneration of directors; the preparation of financial statements, maintaining controls and code of ethics; relations with users of financial information and their rights; penalties for breach of requirements.

Finally, SEC announced that the next engagement of the series is scheduled for November 19, 2020, and will involve members of the investing public and other key stakeholders. Also, it will shed light on important developments to be introduced, to further ensure investor protection and also provide important updates on the bailout situation.