Securities regulators in Africa and Middle East have approved a joint project with Financial Sector Deepening Africa (FSDA) to develop strategies to increase listings and the uptake of capital markets products in the region.
During the 42nd Meeting of the Africa Middle East Regional Committee (AMERC) of the International Organisation of Securities Commissions (IOSCO) the members agreed that promoting additional listings was key to tackling market liquidity challenges faced in multiple markets as well as reinforcing the central role of securities markets to support sustainable economic growth through increased market-based financing.
Some of the key recommendations arising from the work of the AMERC Working Group on Listings to be further developed upon include: creating more awareness among prospective companies on the opportunities available in the capital markets; improving the efficiency of regulator approval processes to minimise time to market for issuers; reviewing minimum float requirements and minimum shareholder requirements; training of market intermediaries to build their capacity to motivate & handle transactions; and considering more incentives for prospective issuers such as subsidising listing costs and negotiating preferential tax treatment for listed companies.
To move the discussion forward, AMERC, will draw on support from FSD Africa to identify and unlock the potential for additional listings; promote and deepen market-based financing through the a spectrum of capital markets products; and catalyse business growth and expansion plans in the AMERC region. Noting the diverse levels of development of markets in the region, the work will leverage lessons from jurisdictions that have increased listings through policy interventions and innovative and facilitative regulatory frameworks.
In response to the growing demand for responsible or sustainable investments globally, members further deliberated the need to work towards greater convergence on standards for sustainable finance to address quality and consistency of disclosure, costs of issuance and attractiveness to investors.
Regional members acknowledged that the demand for sustainable assets also provided a platform to use sustainable issuances to fast track wider market structure and efficiency reforms that can strengthen the overall market value chain for all asset classes.
In order to feed into IOSCO’s overall priorities and risk outlook, the meeting mapped key risks that could impede growth of securities markets in the region including: regulatory responses to trading in crypto assets; cyber security and resilience; unfavourable macro-economic environment; and systemic issues around securities market trading and settlement infrastructure.
They also identified opportunities to grow markets including; promoting fintech-related innovations such as harnessing distributed ledger technology, artificial intelligence/machine learning, introduction of new products such as derivatives; and deepening financial literacy and education