“THE PANAMANIAN SECURITIES MARKET”
Carlos A. Barsallo P.
Chairman
Panamanian Securities Commission (CNV)
Chairman Iberoamerican Securities Markets Institute
ACSDA X General AssemblyPanama, February 22, 2008
PLAN
• Statistics
• CNV`s vision: Following best international standards
• Integration: The Future
• Institution Building: Key piece
• Conclusion
PANAMANIAN SECURITIES MARKET IN NUMBERS 2007
ISSUERS REGISTERED AT THE CNV
95
ISSUERS REGISTERED AT THE CNV EQUITY
33
MUTUAL FUNDS 15
AMOUNT NEGOTIATED BY SECURITIES FIRM IN OR FROM
PANAMA
US$27,894,698,342.27
(US$16,449,252,232.43 in year 2006)
TOTAL AMOUNT IN US$ OF SECURITIES REGISTERED AT
THE CNV IN 2007
US$1,143.000.000.00
(US$1,331.6 in process. February 2008)
NUMBER OF ISSUES REGISTERED AT THE CNV IN
2007
25
THE MAIN MOTIVATOR TO PARTICIPATE:TAX PURPOSES
MONTO TOTAL DE OFERTAS PUBLICAS AUTORIZADAS1 Y NEGOCIADAS2 DE 1970 AL 2004
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
600,000
650,000
700,000
750,000
800,000
850,000
900,000
950,000
1,000,000
1,050,000
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
MIL
ES
DE
BA
LB
OA
S
Incentivos fiscales Ley 31 del 30 de diciembre
de 1991
Incentivos fiscales Decreto Ley 1 del 8 de julio
de 1999
COMISION NACIONAL DE VALORES (CNV)
PANAMANIAN SECURITIES MARKET IN NUMBERS
2007SECURITIES FIRMS 40
(4 in process 2008)
INVESTMENT MANAGERS 15 companies
21 individuals
INVESTMENT ADVISORS 14 companies
1 individual
(3 in process 2008)
BROKERS 321
ANALISTS 56
PRINCIPAL EXECUTIVES 157
RATING AGENCIES 5
(1 in process 2008)
CNV`s VISIONIOSCO 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.
IMF 2006 ASSESSMENT PANAMA COMPLIANCE WITH IOSCO PRINCIPLES
REGULATION AND SUPERVISION
•
Importance for integration
An equitable, transparent and efficient
regulatory and supervisory framework
•Promotes competition•Promotes investments
•Economic growth
Regulation and Supervision are not ends, they are means
An efficient securities marketBetter assignment of savings
Option for financing the enterprises
REGULATION AND SUPERVISIONIMPORTANCE 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
TO INTEGRATE IT IS NECESSARY TO COMMUNICATE
• Memorándum of Understanding (MOU) in negotiation with Ukraine
• Not succesful with China
• IOSCO MMOU. Panamá Appendix B since 2005.
• Need for international cooperation.
• Current weakness of the Panamanian regime. NO compliance with principles 11 and 13 of IOSCO.
MOU SIGNED BY PANAMA
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
ACKNOWLEDGED JURISDICTION
CONCEPT
Every jurisdiction which the CNV acknowledges as having laws and
regulationswhich, 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
ACKNOWLEDGED JURISDICTIONSTHE LIST
• 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.
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)
ACKNOWLEDGED JURISDICTIONIMPLICATIONS
• 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.
ACKNOWLEDGED JURISDICTION IN PRACTICE
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)
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.
INSTITUTION BUILDINGASSESSMENTS 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 2006. Elected by regional financial press.
– Presidency of the Iberoamerican Securities Market Institute. Regulators from Latinamerica, Spain and Portugal.
PANAMANIAN CASE IN NUMBERS8 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: 12,000
• 2007
• 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$27,894.698.342.27
• Number of affiliates to private pension funds: 25,000
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.
COMISIÓN NACIONAL DE VALORESWWW.CONAVAL.GOB.PA
PHONE (507) 501-1700 FAX:(507) 501-1709 P.O. BOX: 0832-2281 WTC PANAMA, PANAMA
““WORKING FOR AN EFFICIENT AND WORKING FOR AN EFFICIENT AND MODERN SECURITIES MARKET”MODERN SECURITIES MARKET”
ADDRESS: BALBOA AVENUE, BAY MALL BUILDING, 2ND FLOOR
