“ENSURING INVESTOR PROTECTION” SECURITIES AND EXCHANGESEC COMMISSION GHANA QUARTERLY NEWS Vol. #6 Issue 3 July - Sept. 2016 Public Advice 3 Ds of Capital Market News• Don’t lie Members of the general public are advised to use the • Disclose fully Commission’s Toll Free Line 080010065 or Main Line • Deal fairly 030768970-2 to contact the Commission on any issue they may have relating to the securities market and Difference between Derivative investments, including: Contract and Security. • Seeking general information about the Derivatives can be used in financial risk management to securities market and products. efficiently hedge and /or manage financial risk. A derivative contract is a contract that derives its value • Seeking information about licensed capital from an underlying security. Derivatives have a finite, market operators. predefined life, a predefined reference rate or price and a predefined notional amount. • Reporting persons suspected to be operating in the securities market without a license. Securities (i.e., stocks and bonds) are issued to raise capi- tal in order to support projects that will earn a return • Reporting fraudulent investment schemes greater than the cost of those securities. (e.g. ponzi schemes). Derivatives on the other hand are not issued to raise capi- • Reporting fraudulent activities of capital tal and are considered zero-sum game. This means that in market operators. a derivative contract, the losses from one side of the transaction will equal the other side’s gain. Securities are • Making complaints against capital market considered non-zero-sum games. Written by Frank B Donkor. operators. Commodity Spot Markets: Parliament passes As the Ghana prepare for its first Commodity Exchange in the days ahead, it is of imperative to know some of the Security Industry Bill major risk involved in commodity spot transactions. On Friday 15th July, 2016, Parliament passed the Security These risk as follows; Industry Bill (SIB) and was assented to by the president on 1) Price risk: Owner of actuals (i.e. the underlying com- the 14th September 2016. The new Securities Industry modity) bears the risk of the commodity falling in value. Act referred to as Securities Industry Act 2016 (Act 929) This risk may be largely reduced by trading in forwards or seeks to revise and consolidate the Securities Industry Act, futures contracts. 1993(PNDCL333) and to provide for related purposes. 2) Delivery risk: Parties may renege on delivery. This risk The Act will among other things give the Securities and in modern times has been greatly diminished due to Exchange Commission (SEC), the mandate to sanction clearinghouses and robust contracts. illegal operators in the capital market. The basic function of the law (Act 929) is to help share information and be 3) Credit risk: This refers to a default by counterparty. An co-operative with other regulatory bodies across the unreliable counterparty makes this an issue primarily for world. Also added to the new law are new provisions that the spot market. should improve the industry. These include derivatives like the commodity exchanges, nominee account to be oper- 4) Transportation risk: This risk is divided into two areas; ated as well as other issues like lending and borrowing. ordinary (deterioration, spoilage, accident) and extraor- dinary (acts of God, wars, riots, strikes). For example, transportation risk could result from ships lost at sea etc. Launch of 2nd Edition Of Capital Market Quiz Competition The 2nd edition of the Capital Market Quiz for senior high to Dr. Adu Anane Antwi, the rationale behind the forma- schools was launched at the GNAT Teachers Hall, in Accra tion of the Investment clubs in schools was to “catch the by the Securities and Exchange Commission (SEC) .The youth young at this very age to understand and accept the initiative was aimed to broaden students’ knowledge on concept of investment because investment leads to great- capital market, entrepreneurship and investment. The ness, investment is the first step to fight poverty”. main competition which was planned to commence in Launching the Capital Market Quiz, the Director of Public September 2016 with 32 schools in the preliminary round Investment Division of the Ministry of Finance, Mrs. Mag- would be climaxed with only four finalists competing for dalene Appenteng, said delivering sound financial knowl- the ultimate prize. In the maiden competition which was edge to the youth will improve their understanding about held two years ago, Presbyterian Senior High School, investment and savings. ‘’One of the main objectives of Legon emerged winner whilst, West Africa Senior High this event is to ascertain the level of appreciation and School, Odogonno Senior High and St Johns Grammar knowledge skills within second cycle schools of the broad became the first, second and third runners-up respective- range of concepts in capital market activities,” she ly. Datus Senior High School however came fifth. emphasized. In his opening address, Dr. Adu Anane Antwi, Director Mrs. Apenteng said the government is in the process of General of Securities and Exchange Commission (SEC) developing a financial inclusion strategy as a way to urged young students in the country to be committed in increase financial inclusive growth in Ghana. ‘’The finan- learning and practicing of investment so as to keep pover- cial well-being of our citizens is inextricably linked to the ty forever at bay. Dr. Antwi made the call at the launch of economic progress of our country. I encourage all Ghana- the 2nd edition of the Capital Market Quiz Competition ians both the financially literate and the not so literate to for Senior High Schools at the GNAT Hall in Accra on make use of all that will be learnt throughout this Friday, July 15 2016. programme to sharpen their financial decisions, ‘’ She said she is positive the competition will increase financial The Capital Market Quiz Competition is a program initiat- and investment awareness among the youth as well as ed by Young Investors Network, a Ghanaian based NGO create wealth among the people. seeking to promote financial literacy and investment education in students within tertiary institutions and Mr. Joshua Mensah of the Young Investors Network said Senior High Schools in the country. the competition will create the awareness and the excite- ment about the need to invest towards future financial Since the inception of the first edition of the program in security among the youth. He said it will also inculcate the 2014, about thirty-two (32) Senior High Schools within habit of good financial management, personal savings the Greater Accra Region of the country have benefited and investment in students at the second cycle schools. with the formation of Investment clubs giving students’ the opportunity to invest towards their future. According Training and Capacity Building of SEC Staff Mauritius Financial Services Commission Regional Course on Economic and Familiarization & Training Programme Financial Report Writing Skills and Presentation Techniques. Three members of staff attended above the Financial Services Commission training program in Mauritius A member of staff attended the Regional Course on from 11th to 15th July 2016.The objective of the Economic and Financial Report Writing Skills and training was to broaden the knowledge of partici- Presentation Techniques organized by the West Afri- pants on the activities of the Capital Market System in can Institute for Financial and Economic Manage- the Committee of Insurance, Securities & Non-Bank- ment (WAIFEM) from 5th to 14th September, 2016 at ing Financial Authorities region, (CISNA). Participants the Paradise Suit Hotel, Banjul, Gambia. The main were taken through the following thematic areas; objective of the course was to empower participants Financial Services Sector in Mauritius, Licensing Poli- with the capacity to use communication as a power- cies and Procedures, Legal Unit & Regulatory Frame- ful tool for job effectiveness and to enhance their work, Non-Banking Sector for Mauritius, Compliance competencies in economic and financial technical Functions, Development of Collective Investment report writing and presentation techniques. The Schemes in Mauritius, Risk-Based Supervision Frame- broad themes covered by the course included; The work, Capital markets in Mauritius. communication process, Grammar in writing, Spoken continued on page 3 Page 2 continuation from page 2 English, The Five Cs of good communication, Fea- of WASRA and WACMIC tures of Technical Reports;, Guidelines/format in preparing technical reports, Data handling & Analysis in Technical Reports, Executive Summary, Legal b) Discussion on Cooperation framework Issues in Report Writing, Minutes writing, Computer Applications in Report writing, Techniques and skills of report presentation, Hands on exercises on report a) Discussion of the mandates of WASRA and writing. WACMIC The Mandates of WASRA and WACMIC were present- The Consultative Meeing Of Ecowas Com- ed by their respective chairmen as below; mission, West African Securities Regula- WASRA’s goals comprised pooling of forces with tors Association And West African Capital WACMIC to further the integration efforts by playing Markets Integration Council On West Afri- the role of umbrella regulatory body and spearhead- can Capital Markets Integration Regulato- ing enforcement of rules and regulations for regional ry Structure Abuja, 30th August, 2016 capital market operations. WACMIC on the other hand was established