The Securities Act (2001) provides for the licensing, operation and supervision of entities dealing in securities as well as the regulation of the capital markets. Securities regulation has continued to focus 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.
Under the Securities Act and Unit Trust Act, the Financial Services Commission is responsible for the supervision of all securities
The Securities Act requires individuals or companies wishing to enter the securities industry as dealers, investment advisers or their representatives, to be licensed by the Financial Services Commission.
Under Section 2(1) of the Act, a dealer is a person who carries on the business of dealing in securities, whether as principal or agent. Basically, dealing in relation to securities under the Act, means acquiring, disposing of, subscribing for or underwriting securities, or making or offering to make, or inducing or attempting to induce a person to make or offer to make, an agreement regarding securities.
On the other hand, an investment adviser is a person who carries on an investment advice business, which means advising persons regarding investing in or the buying or selling of securities. Under the Act, dealers and investment advisers are licensed, while their representatives are registered. In considering the qualifications to be met by persons applying to be licensed as dealers or investment advisers and to be registered as Representatives, the Commission had to establish educational and financial criteria to be satisfied by all applicants.
These have been formulated and are embodied in the Securities (Licensing and Registration) Regulations, 1996 which were approved by the Honourable Minister of Finance on the 15th May, 1996 and published in the Jamaica Gazette on the 20th May, 1996.
The regulations provide a choice of two (2) methods for individuals to meet the financial requirements for Dealers and Investment Advisers’ Licences. They must either maintain a minimum net worth of $10M or acquire Indemnity Insurance for a minimum of $10M. If the individual chooses to maintain net worth of $10M, Audited Financial Statements establishing this must be submitted. Net Worth is defined as “…. the difference between his assets and his liabilities”.
In applying for a Dealer’s Licence, applicants must satisfy the following requirements before a license will be granted by the Commission:-
i. a. A Bachelor’s or higher degree in Economics, Accounting or business related subjects; or
b. A professional qualification in Law or Accounting; or c. A course in Securities approved by the Commission; and
ii. A minimum of two (2) years’ experience working in the Securities Industry.
Notwithstanding the requirements at (i) & (ii) above, persons engaged in continuous practice in managing or carrying on a business of dealing in securities and giving investment advice in securities for at least five (5) years prior to the 15th May, 1996, being the date appointed by the Minister for enforcement of the licensing requirements under the Act and Regulations, shall be eligible for licensing.
Educational requirements are the same as for dealers.
Dealer’s or Investment Adviser’s Representatives
With respect to persons applying to be registered as Dealers’ or Investment Advisers’ Representatives, in order to be eligible for registration by the Financial Services Commission, they must possess either: –
a. the academic qualifications listed in Category (i) for Dealers or Investment Advisers; or
b. Diploma or Certificate in Economics, Accounting or business related subjects from a tertiary educational institution approved by the Commission.
Notwithstanding the requirements at (a) or (b) above, persons engaged in continuous practice in managing or carrying on a business of dealing in securities and giving investment advice in securities for at least two (2) years prior to the 15th May, 1996, shall be eligible for registration.