The Reserve bank of Malawi yesterday, the 26th of June 2008, issued a MK5 billion 3 year fixed coupon bond as a monetary policy instrument. Recently Malawi has been experiencing increasing inflationary pressures mainly as a result of both rising oil prices on the international scene as well as the build up of Money supply in the economy. In order to sterilize the increasing levels of inflation, the central bank decided to issue a 3 year bond.
The auction for the bond was conducted on a multiple price bid basis, where each successful bidder paid the price quoted for the price tendered. Winners were then listed from the highest bidder to the lowest until the entire face value was exhausted. The minimum bid amount for the auction was K100, 000.00.
One interesting thing about the bond is that it has been developed with the aim of promoting the capital market. The bond will be listed on the Malawi Stock Exchange(MSE) and will be governed by the rules of the MSE. Trading will commence in a weeks time at which the listing price of the bond will be set according to the weighted average price from the primary auction. Trading of the bond on the MSE may be in multiples of K10, 000.00. This should attract smaller investors to participate and hence increase the liquidity of the instrument.
The bond will also promote the capital market since it will increase the number of products available to investors. Any viable capital market needs a considerable amount of investment opportunities. As such the listing of the bond should help the capital market deal with the problems of diversity, liquidity and investor lethargy that are associated with inadequate listings.
The benefits of the bond not only extend to the capital market but to the money market as well. One other interesting feature of this newly issued bond is that it can be pledged as collateral. This will allow investors to borrow short term funds from the money market using the bond as security for the loan.
If the public responds well to this new development a vibrant secondary market can be created setting stage for further development of the Malawian capital market.
Friday, June 27, 2008
Wednesday, June 18, 2008
Introducing: Santiago Chaher
Dear Friends,
My name is Santiago Chaher. I am from Argentina but I live in Washington DC since February. I am a consultant in Capital Markets Regualtion and I am currently working for the International Finance Corporation - Global Corporate Governance Forum, part of the World Bank Group.
I hope that we can engage in very interesting conversations here at the Blog.
You have been added as "Authors", so I will ask you please to do two things:
1. Introduce yourselves as I have done above,
2. Post or comment whatever you think or find interesting to share and for us to comment.
This is an open Blog so if you feel like inviting someone else to be an Author, please email me and I will send the invitation. We are the ones that will create the sinergy, so let's get it on!
Cheers,
My name is Santiago Chaher. I am from Argentina but I live in Washington DC since February. I am a consultant in Capital Markets Regualtion and I am currently working for the International Finance Corporation - Global Corporate Governance Forum, part of the World Bank Group.
I hope that we can engage in very interesting conversations here at the Blog.
You have been added as "Authors", so I will ask you please to do two things:
1. Introduce yourselves as I have done above,
2. Post or comment whatever you think or find interesting to share and for us to comment.
This is an open Blog so if you feel like inviting someone else to be an Author, please email me and I will send the invitation. We are the ones that will create the sinergy, so let's get it on!
Cheers,
Friday, June 13, 2008
Cayman Islands: A Pioneer For Globalised Regulation
12 June 2008 - Article by Michael L. Alberga at Mondaq News
With the growing recognition by various non-G7 governments that there are significant economic benefits to be gained by implementing effective governmental governance procedures and a system that is recognised by the international community as adhering to the law, cross-continental capital flows for investment and the creation of private wealth have increased significantly.
The refocusing of large portions of investment capital to the emerging markets of Asia and Africa have presented challenges to financial institutions, banks, non-financial business and regulators as to how best to implement balanced regulatory mechanisms across continental borders. The recognition of a universal regulatory system is gaining worldwide acceptance.
Previous Examples
Precedents of how best to achieve this difficult task can be found by an examination of international banking regulations (Basel 1 and Basel 2), various pieces of legislation such as the Sarbanes Oxley Act, the US Patriot Act, the Foreign Corrupt Practices Act of the US and the Application of the US Office of Foreign Asset Control, and other pieces of legislation implemented by various G7 governments. Not all have been successful.
The Sarbanes Oxley Act has adversely affected the US, shifting large parts of its worldwide capital markets function from New York to London and causing the loss of the international prestige that New York enjoyed as a premier jurisdiction for public issues. Other efforts, such as the OECD attempt to implement worldwide excessive taxation systems, have been met with scepticism and failure.
Successful Regulation
One of the most successful internationally accepted regulatory regimes has been the implementation of "Know Your Customer Rules", anti-money laundering and anti-terrorism legislation. The Cayman Islands, as one of the worlds leading financial centres, has been a leader in the implementation of this type of legislation. This has helped identify undesirable use of its financial systems. Sadly, the leading role of the Cayman Islands has been given little international recognition and few G7 countries (if any) have followed its lead.
"The Cayman Islands, as one of the worlds leading financial centres, has been a leader in the implementation of this type of legislation"
One of the difficulties experienced in the implementation of a globalised regulatory system has been the continuing efforts by many high-tax developed countries and international NGO’s controlled by them to force emerging market economies to collect tax and/or report tax information back to them. This has been a serious stumbling block to the implementation of a globalised regulatory system.
Perhaps this will change in the future as international financial institutions and global manufacturing entities move into the emerging markets and their dependency on earnings from these areas increase. The stark reality of the global shift of the world’s economic engines may dawn upon some of G7 politicians prior to redomiciliation out of their jurisdictions, permitting debate and eventual resolution of this issue.
While governments stall, global leaders in private industry have implemented policies across borders and these are having a profound effect on the implementation of worldwide standards in the regulation and operation of various market functions. These policies appear to have gained wide acceptance despite cultural differences. This may provide the starting point for a globally acceptable system capable of providing market regulation without sovereignty issues.
Cayman Leads The Way
Cayman continues to lead in this field and regularly reviews and adjusts its laws, policies and procedures to meet new international challenges. This sensible balance has continued to attract a multitude of international business institutions.
Regulation for the sake of regulation imposes unnecessary costs and bureaucratic procedures, and impedes markets – usually forcing them to move to friendlier homes.
Failure by leading western democracies to sensibly engage on these issues may result in the process proceeding without them taking the leading role. Not exactly what they envisage at the present time.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Specific Questions relating to this article should be addressed directly to the author.
malberga@myersandalberga.com
With the growing recognition by various non-G7 governments that there are significant economic benefits to be gained by implementing effective governmental governance procedures and a system that is recognised by the international community as adhering to the law, cross-continental capital flows for investment and the creation of private wealth have increased significantly.
The refocusing of large portions of investment capital to the emerging markets of Asia and Africa have presented challenges to financial institutions, banks, non-financial business and regulators as to how best to implement balanced regulatory mechanisms across continental borders. The recognition of a universal regulatory system is gaining worldwide acceptance.
Previous Examples
Precedents of how best to achieve this difficult task can be found by an examination of international banking regulations (Basel 1 and Basel 2), various pieces of legislation such as the Sarbanes Oxley Act, the US Patriot Act, the Foreign Corrupt Practices Act of the US and the Application of the US Office of Foreign Asset Control, and other pieces of legislation implemented by various G7 governments. Not all have been successful.
The Sarbanes Oxley Act has adversely affected the US, shifting large parts of its worldwide capital markets function from New York to London and causing the loss of the international prestige that New York enjoyed as a premier jurisdiction for public issues. Other efforts, such as the OECD attempt to implement worldwide excessive taxation systems, have been met with scepticism and failure.
Successful Regulation
One of the most successful internationally accepted regulatory regimes has been the implementation of "Know Your Customer Rules", anti-money laundering and anti-terrorism legislation. The Cayman Islands, as one of the worlds leading financial centres, has been a leader in the implementation of this type of legislation. This has helped identify undesirable use of its financial systems. Sadly, the leading role of the Cayman Islands has been given little international recognition and few G7 countries (if any) have followed its lead.
"The Cayman Islands, as one of the worlds leading financial centres, has been a leader in the implementation of this type of legislation"
One of the difficulties experienced in the implementation of a globalised regulatory system has been the continuing efforts by many high-tax developed countries and international NGO’s controlled by them to force emerging market economies to collect tax and/or report tax information back to them. This has been a serious stumbling block to the implementation of a globalised regulatory system.
Perhaps this will change in the future as international financial institutions and global manufacturing entities move into the emerging markets and their dependency on earnings from these areas increase. The stark reality of the global shift of the world’s economic engines may dawn upon some of G7 politicians prior to redomiciliation out of their jurisdictions, permitting debate and eventual resolution of this issue.
While governments stall, global leaders in private industry have implemented policies across borders and these are having a profound effect on the implementation of worldwide standards in the regulation and operation of various market functions. These policies appear to have gained wide acceptance despite cultural differences. This may provide the starting point for a globally acceptable system capable of providing market regulation without sovereignty issues.
Cayman Leads The Way
Cayman continues to lead in this field and regularly reviews and adjusts its laws, policies and procedures to meet new international challenges. This sensible balance has continued to attract a multitude of international business institutions.
Regulation for the sake of regulation imposes unnecessary costs and bureaucratic procedures, and impedes markets – usually forcing them to move to friendlier homes.
Failure by leading western democracies to sensibly engage on these issues may result in the process proceeding without them taking the leading role. Not exactly what they envisage at the present time.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Specific Questions relating to this article should be addressed directly to the author.
malberga@myersandalberga.com
Sunday, June 1, 2008
Welcome to the Blog!
Dear colleagues,
It is a pleasure to have you participating in this blog to discuss everything related to the development of Capital Markets. Let's hope we can engage in very interesting conversations, experiences, discussions, events, news, ideas ... and even better, get to implement them through our knowledge, contacts and incredible synergy that we can generate. Keep posting and checking the blog regularly since the success of it is directly related to YOUR (and my) interest for this to develop in an exciting way!
Cheers,
Santiago Chaher
(Living in D.C.)
It is a pleasure to have you participating in this blog to discuss everything related to the development of Capital Markets. Let's hope we can engage in very interesting conversations, experiences, discussions, events, news, ideas ... and even better, get to implement them through our knowledge, contacts and incredible synergy that we can generate. Keep posting and checking the blog regularly since the success of it is directly related to YOUR (and my) interest for this to develop in an exciting way!
Cheers,
Santiago Chaher
(Living in D.C.)
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