The Securities and Exchange Commission (SEC) has outlined some relief packages to cushion Market Operators whose capital may be impaired due to the government’s Domestic Debt Exchange Programme.
SEC has assured that Market Operators who participate in the Programme will have access to the Financial Stability Fund.
A statement issued by SEC indicated, “the SEC proposes to support the market with the following reliefs amongst others:
• Regulatory capital forbearance for Market Operators whose capital may be impaired because of the Domestic Debt Exchange Programme.
• Market Operators who participate in the programme and require some forbearance regarding full compliance to certain regulatory requirements in the Conduct of Business Guidelines, Licensing Requirement Guidelines, the Investment Guidelines for Fund Managers, and other regulatory requirements may apply accordingly to the Commission.
• The SEC shall intervene further with other measures where it becomes necessary.
In addition, Market Operators that participate in the programme shall have access to the Financial Stability Fund, when established, as a last resort for liquidity needs.
Touching on other regulatory reliefs, SEC said, “Other regulatory reliefs or exemptions may be considered by the SEC in the light of new and unanticipated developments in the market”.
SEC indicated that it reserves the right to revise, amend, modify, vary or revoke the information contained in the statement where necessary.
“Where any doubt arises about any provision contained in this Circular, the same shall be referred to the SEC and the interpretation provided by the SEC shall be final.”
SEC said the Sovereign transaction is anticipated to impact market operators in a number of ways, including portfolio liquidity, operational revenue, client base, and growth prospects.
SEC in the statement said it appreciates the importance of a stable macroeconomic environment to the growth and development of Ghana’s capital market, “therefore supportive of Government’s efforts to stabilize Ghana’s economy and the fiscal position with the proposed initiative”.
However, SEC advised investors in the country to remain calm and exercise restraint following the debt exchange programme.
According to SEC, there may be some difficulty or delays in the ability of some Market Operators to sell their bonds to meet redemption requests.
SEC urges Market Operators to notify the Commission of such occurrences and sensitise their clients or investors on the DDEP.
The SEC in a statement said, “the SEC further notes that the Domestic Debt Exchange Programme has affected the normal functioning (price discovery) of the secondary market for the trading of bonds and may lead to difficulty/delays in the ability of some Market Operators to sell their bonds to meet redemption requests.
“Market Operators are expected to notify the Commission of any such occurrence in accordance with LI 1695 (Regulation 26, sub-Regulation 5). Investors are hereby advised to remain calm and exercise restraint until the restoration of normalcy in the secondary market for the trading of bonds when the DDEP is completed. Market Operators are advised to engage their clients/investors to explain the relevance and impact of the DDEP on the
performance of their investments”.
The statement assured investors and the public that it will enforce rules for all players in the capital market.
“The SEC wishes to assure all investors and the general public that it is committed to ensuring rigorous enforcement of all the rules for players in the capital market, in order to ensure an efficient, fair and transparent securities market in which investors and the integrity of the market are protected,” the statement added.
Debt Exchange Programme
The Government of Ghana launched the Domestic Debt Exchange Programme on December 5, 2022 which affects Government of Ghana bonds listed on the Ghana Fixed Income Market (GFIM).
The Debt Exchange Memorandum has an indicative exchange period which expires on December 19, 2022.