THE PANAMANIAN SECURITIES MARKET

Transcription

1 THE PANAMANIAN SECURITIES MARKET ACSDA X General Assembly Panama, February 22, 2008 Carlos A. Barsallo P. Chairman Panamanian Securities Commission (CNV) Chairman Iberoamerican Securities Markets Institute

2 PLAN Statistics CNV`s vision: Following best international standards Integration: The Future Institution Building: Key piece Conclusion

3 PANAMANIAN SECURITIES MARKET IN NUMBERS 2007 ISSUERS REGISTERED AT THE CNV ISSUERS REGISTERED AT THE CNV EQUITY MUTUAL FUNDS 15 AMOUNT NEGOTIATED BY SECURITIES FIRM IN OR FROM PANAMA TOTAL AMOUNT IN US$ OF SECURITIES REGISTERED AT THE CNV IN 2007 NUMBER OF ISSUES REGISTERED AT THE CNV IN 2007 US$27,894,698, (US$16,449,252, in year 2006) US$1, (US$1,331.6 in process. February 2008) 25

4 THE MAIN MOTIVATOR TO PARTICIPATE: TAX PURPOSES COMISION NACIONAL DE VALORES (CNV) MONTO TOTAL DE OFERTAS PUBLICAS AUTORIZADAS 1 Y NEGOCIADAS 2 DE 1970 AL ,050,000 1,000, , , , ,000 Incentivos fiscales Decreto Ley 1 del 8 de julio de , ,000 MILES DE BALBOAS 650, , , , , , , , , , , ,000 50, Incentivos fiscales Ley 31 del 30 de diciembre de

5 PANAMANIAN SECURITIES MARKET IN NUMBERS 2007 SECURITIES FIRMS 40 (4 in process 2008) INVESTMENT MANAGERS INVESTMENT ADVISORS 15 companies 21 individuals 14 companies 1 individual (3 in process 2008) BROKERS 321 ANALISTS 56 PRINCIPAL EXECUTIVES 157 RATING AGENCIES 5 (1 in process 2008)

6 CNV`s VISION IOSCO PRINCIPLES FOR SECURITIES REGULATION IOSCO principles for securities regulation Ensuring that markets are fair, efficient and transparent. Reducing systemic risk Investor protection CNV`s vision To promote and strengthen the favorable conditions for the development of the securities market in Panama. Modernization of the market Regionalization of the Panamanian securities center.

7 IMF 2006 ASSESSMENT PANAMA COMPLIANCE WITH IOSCO PRINCIPLES

8 REGULATION AND SUPERVISION Importance for integration An equitable, transparent and efficient regulatory and supervisory framework Regulation and Supervision are not ends, they are means Promotes competition Promotes investments Economic growth An efficient securities market Better assignment of savings Option for financing the enterprises

9 REGULATION AND SUPERVISION IMPORTANCE FOR INTEGRATION Good regulation and supervision open doors for integration. Weak regulation and supervision and a regulator without powers produce social ad financial alienation and limit economic development. Regulation is a necessary precondition, however it is not enough. THE REGULATORY AND SUPERVISORY FRAMEWORK ARE CRITICAL FACTORS IT IS NECESSARY TO WORK WITH THE REGULATORS

10 MOU SIGNED BY PANAMA TO INTEGRATE IT IS NECESSARY TO COMMUNICATE El Salvador República Dominicana Honduras Chile Puerto Rico España México Costa Rica Argentina Colombia Regional Guatemala, Costa Rica, El Salvador, Honduras, Nicaragua y Repùblica Dominicana Memorándum of Understanding (MOU) in negotiation with Ukraine Not succesful with China IOSCO MMOU. Panamá Appendix B since Need for international cooperation. Current weakness of the Panamanian regime. NO compliance with principles 11 and 13 of IOSCO.

11 ACKNOWLEDGED JURISDICTION CONCEPT Every jurisdiction which the CNV acknowledges as having laws and regulations which, though not equal to the national ones, generally offer, in the judgment of the CNV, a level of protection as a whole substantially equal or better than that offered by the national legislation and which has a regulatory entity which, to the satisfaction of the CNV, supervises appropriately the compliance with said statutes and regulations

12 ACKNOWLEDGED JURISDICTIONS THE LIST ACKNOWLEDGED JURISDICTIONS United States of America France Spain United Kingdom (it does not include dependencies) Japon Switzerland Provinces of Québec and Ontario (Canada) Hong Kong Holland Mexico Australia Italia El Salvador (2003) Costa Rica (2005) The CNV can recognize the validity of securities registered in acknowledged jurisdictions and allow the public offering of said securities in the stock exchange in Panama Additionally the CNV has declared exempted from registration the securities issued by a State or jurisdiction that have been declared acknowledged jurisdictions In public consultation: BRITISH COLUMBIA In study: COLOMBIA.

13 ACKNOWLEDGED JURISDICTION IMPLICATIONS It is not mutual recognition nor it is necessarily reciprocal. It generates obligations for the issuers such as reporting and press releases It is an initial stage. It is based on the securities/issuer. In next stages it will have to deal with intermediaries and their services.

14 ACKNOWLEDGED JURISDICTION IN PRACTICE

15 THE MAIN CHALLANGE FOR INTEGRATION: CURRENT REGIONAL SITUATION OF THE SECURITIES MARKETS Small size of regional businesses, pervasive family ownership, and aversion to minority investors, tax avoidance, and the loss of confidence caused by past financial crises, and weak development of institutional investors. Basic securities laws and regulation have significant gaps in many countries. International Monetary Fund (IMF) Working Paper: Equity and Private Debt Markets in Central America, Panama, and the Dominican Republic prepared by Hemant Shah, Ana Carvajal, Geoffrey Bannister, Jorge Chan-lau, and Ivan Guerra ( July 2007)

16 INSTITUTION BUILDING Problems encountered with regulators and supervisors of securities markets (not developped markets) Panama was, and is not, an exception,despite the important improvements. Institutional weakness No real and practical autonomy Lack of resources Lack of public and private support Panama s Comisión Nacional de Valores has evolved into a credible securities supervisory authority with a better degree of independence from the Ministry of Finance. The CNV is now an active participant in the international struggle against money laundering in that country s offshore banking center. The CNV has achieved sustainability. Interamerican Development Bank (IDB) evaluation.

17 INSTITUTION BUILDING ASSESSMENTS AND RECOGNITIONS In law and in practice, this is one of the most politically independent organizations. Consequently, it enjoys a high level of trust by Panamanians and foreigners interested in the national financial industry. The CNV is known for active supervision of stock broker activity in Panama. PANAMA INTEGRITY ASSESSMENT 2005 Assessments: International Monetary Fund (IMF) evaluation using IOSCO and Financial Action Task Force FATF methodologies. World Bank Report on observance of standards and codes ROSC (Corporate Governance) Awards and recognitions: One of the 5 public agencies awarded for its integrity and transparency. Commissioner: Public figure Elected by regional financial press. Presidency of the Iberoamerican Securities Market Institute. Regulators from Latinamerica, Spain and Portugal.

18 PANAMANIAN CASE IN NUMBERS 8 YEARS OF INSTITUTION BUILDING 1999 Securities firms: 0 Market cap (equity):us$ 2,974 billions 29% of GDP Anual trading at the stock exchange: US$842 millions Transactions conducted by securities firms: US$7,283 billions (year 2004) Number of affiliates to private pension funds: 12, Securities firms: 40 (4 licenses pending 2008) Market cap (equity): US$6,819 billions 45% of GDP Anual trading at the stock exchange: US$2,284.1 billions Transactions conducted by securities firms: US$27, Number of affiliates to private pension funds: 25,000

19 CONCLUSION In some emerging markets, and Panama is no exception, there is a significant and influential group that has vested interest in mantaining the status quo, even though the majority participants agree that it is imperative to adopt new and revised approaches to improve the efficency and the development of the capital market. The securities markets in an emerging market such as Panama, can be the driving force for change. Securities market principles such as transparency, free market competition, investor protection, free and proper setting of prices, adoption of high accounting and auditing standards, good governanc are important and its necessary that they are embedded in the Panamanian financial system.

20 COMISIÓN NACIONAL DE VALORES PHONE (507) FAX:(507) P.O. BOX: WTC PANAMA, PANAMA WORKING FOR AN EFFICIENT AND MODERN SECURITIES MARKET ADDRESS: BALBOA AVENUE, BAY MALL BUILDING, 2ND FLOOR