By Donovan C. Walker, ContributorTHE DEVELOPMENT of the Jamaican financial system and its integration with regional and international financial markets has resulted in the emergence of a modern, diverse, dynamic and active financial sector.
The financial sector in Jamaica comprises a money and financial services market as well as a stock exchange. Financial sector policy and guidelines have been modernised recently, with a financial crisis in the mid-1990s serving as a catalyst for that modernisation.
Below, is highlighted and briefly discussed the various regulatory bodies charged with managing the legislative framework of the various areas of corporate finance.
THE BANK OF JAMAICA (WWW.BOJ.ORG.JM)
Established in 1960 under the Bank of Jamaica Act, the the BoJ is Jamaica's central bank. Together with the Ministry of Finance, it is responsible for the execution of monetary policy and the regulation of the economy, including supervision of the island's commercial banks and certain non-bank financial institutions. The BoJ also regulates exchange control policy which, since the liberalisation of Jamaica's foreign exchange market, has primarily involved the regulation of foreign currency trading and the licensing of authorised foreign exchange dealers.
The Bank of Jamaica Act is the primary legislation which empowers the BoJ, although the Banking Act, the Financial Institutions Act and the Building Societies Act give the BoJ regulatory authority over banks, financial institutions and building societies.
One of the BoJ's stated mandates is to facilitate the growth and development of trade, employment and production in Jamaica and generally to foster the development of money and capital markets locally. The BoJ also acts as banker to the Jamaican government and supervises and regulates financial institutions and deposit-taking institutions.
THE FINANCIAL SERVICES COMMISSION
(WWW.FSCJAMAICA.ORG)
The Financial Services Commission (FSC) was established by the Financial Services Commission Act. It has the overall responsibility to regulate and supervise institutions that provide non-deposit-taking financial services in connection with insurance, the acquisition or disposal of securities within the meaning of the Securities Act and units under a registered unit trust within the meaning of the Unit Trust Act. The day-to-day management of the FSC is overseen by an executive director who holds office for a term of no more than five years.
The FSC Act provides that the FSC is empowered to: supervise and regulate prescribed financial institutions; promote and adopt risk management procedures for the management, board of directors and trustees of financial institutions; promote stability, public understanding of and public confidence in the running of such institutions; and promote the modernisation of financial services with a view of the adoption and maintenance of international standards of competence, efficiency and competitiveness.
The FSC has wide powers and may take steps to ensure that correct and appropriate standards of conduct and performance are maintained in prescribed financial institutions. It also has the power to: consider applications for licensing or registration; grant or refuse any such licence; and suspend, cancel or revoke any licence granted pursuant to any relevant legislation which governs the financial services provided by particular financial institutions.
Part two next week
