Rotary Club of Nassau - Securities Commission of the Bahamas

Rotary Club of Nassau
Presentation by Philip Stubbs
Chairman
February, 2008

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Good morning. I would like to thank the Rotary Club for inviting me to speak at this
event and provide me the opportunity to give you an overview of the role and activities
of the Securities Commission, and where we fit in to the financial services landscape in
The Bahamas. However, before I begin, I must make clear that the views expressed in
this paper are those of the author and do not necessarily represent those of the
Securities Commission, its members or staff.
Financial Services in The Bahamas
Tourism, as we are all aware, is the primary pillar of our economy bringing in
some 40% of Gross Domestic Product (GDP). The second pillar of the Bahamian
economy, financial services, comprises banking and trust, investment fund
companies, insurance and capital market activities. Official estimates place the
financial sector’s combined contribution between 15 and 20 percent of The
Bahamas’ GDP.
The Domestic Regulatory Regime
To uphold the Bahamas’ position as a sound financial centre, a domestic
regulatory regime is in place. Collectively, the regime adheres to international
best practices to ensure a vibrant, competitive financial services sector that has
sound regulatory practices and policies.
Currently, The Bahamas’ financial services sector has four regulatory agencies:
• The Central Bank of the Bahamas, which supervises banks and trust
companies;

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• The Securities Commission of The Bahamas, which regulates the
investment funds, securities and capital markets, and financial and
corporate service providers;
• The Registrar of Insurance Companies; and
• The Compliance Commission;
The number of regulatory agencies obviously created challenges with regard to
overlapping of regulatory responsibility as well as duplication of efforts on the
part of industry participants licensed or registered by more than one agency.
Further, all of the regulatory agencies were not under one ministry. For example,
the Central Bank and Securities Commission fell under the portfolio of the
Ministry of Finance, while the other regulators were either the responsibility of
the Ministry of Financial Services or the Office of the Attorney General.
It was determined that a more efficient regulatory regime was essential in
increasing investor confidence and fostering the growth and development of the
financial sector. In the circumstances the government committed to the process.
Significant progress has been made in this regard over the past six months. Firstly,
all financial services regulators have been transferred to the portfolio of the
Ministry of Finance. Secondly, the administration of the Financial and Corporate
Service Providers Act has been transferred to the Securities Commission, effective
January 1, 2008. Thirdly, I should mention that in addition to serving as Chairman
of the Securities Commission, I also serve as Chairman of the Compliance
Commission. These initiatives effectively bring three regulators under the same

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governance, which brings me to the next point: the government has agreed to
move incrementally toward a super regulator with the next stage being the
creation of a Financial Services Commission (FSC) where all regulators, with the
exception of the Central Bank, would be merged. This is anticipated within six to
eighteen months. The transfer of the bank supervision function of the Central
Bank to the Financial Services Commission is expected a few years after the FSC is
established. The Central Bank would then be responsible for monetary policy and
the payment system.
The Securities Commission
I would now like to focus more closely on the role and function of the Securities
Commission.
As I briefly mentioned earlier, the Commission is responsible for regulating the
Bahamian securities industry. Overall, the mandate of the Commission is to:
• Formulate principles to regulate and govern mutual funds, securities and
capital markets;
• Maintain surveillance over mutual funds, securities and capital markets
ensuring orderly, fair and equitable dealings;
• Create and promote conditions to ensure the orderly growth and
development of capital markets; advise the Minister of Finance regarding
investment funds, securities and capital markets; and

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• Educate and protect investors
The legislation that governs the regulation of the industry is the Securities
Industry Act, 1999 (SIA) and the accompanying Regulations. More specifically, the
legislation governs the operation of securities exchanges, securities markets and
market participants. The SIA also regulates the contents of prospectuses for the
purpose of issuing securities to the public, and the conduct of securities business
and transactions in or from The Bahamas.
Commission.
The SIA, 1999 also established the
The Investment Funds Act, 2003 and Regulations governs the operation of
investment funds and associated persons. The Commission, in its capacity as
Inspector of Inspector of Financial and Corporate Service Providers, is also
responsible for corporate service providers and all financial services that are not
captured by banking, securities and insurance legislation.
In carrying out its mandate, the specific functions of the Commission translate
into the authorisation of individuals and entities that satisfy the requirements to
conduct regulated activities. Once approved, licensed or registered firms and
individuals are subject to on- and off-site inspection to ensure they are operating
within the law.
The Structure of the Commission

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The Board
Departments