Securities Regulation

Securities regulation focuses on monitoring the solvency and market conduct of licensed entities through a programme of routine and special examinations and stock market surveillance. Findings from these examinations sometimes identify areas of potential risk exposure and when these deficiencies are identified the licensee is required to put in place effective corrective measures. Whilst it would not be possible to display here a wide range of indicators, the growth in the capital base of securities dealers is indicative of the improving financial health of this sector.

Amongst the FSC's priorities has been a recently completed project to review and strengthen the framework for issuer registration and prospectus disclosure. Draft regulatory provisions have been prepared and circulated for industry comment. One feature of the new prospectus regulation is the proposal to establish a category of "accredited investor" covering sophisticated or wealthy investors to whom investment products can be sold which do not meet the more stringent issuer registration requirements.

Under the accredited investor concept, investment products can be more flexibly tailored to meet the needs of a more select clientele with the capacity to obtain their own highly skilled professional advice and with sufficient surplus wealth to be able to sustain the loss of their investment. This concept was initially introduced to the local market by the FSC in November 2004 in a consultation paper entitled The Concept of "Qualified Investor" and its Importance to Jamaica's Capital Markets which also can be found on the FSC's website.

Another activity of interest in the area of securities regulation has been the FSC's programme of investigation and enforcement. It is well known that the FSC has been seeking to enforce the requirements of the Securities Act in relation to entities that are perceived to be conducting securities business without a license or issuing unregistered securities to the public. The FSC maintains a vigorous interest in detecting and investigating these operations as they arise.

In accordance with the Securities Act, entities that conduct or that propose to conduct securities business or offer investment advice to the public are required to be licensed and issuers of securities are obliged to apply to have their securities registered by the FSC before they are issued. The licensing and registration process gives the FSC the authority to monitor promoters of investment schemes to see that they meet their statutory obligation to make full disclosures to investors so that they can make informed decisions before investing. There are fundamental principles of fairness and equity that are at stake here.