Jamaica Stock Exchange (JSE) & The Institute of Chartered Accountants of Jamaica (ICAJ) Sign MOU

 

  

This morning we are gathered to witness the signing of a Memorandum of Understanding (MOU) between the Jamaica Stock Exchange (JSE) and the Institute of Chartered Accountants of Jamaica (ICAJ). This occasion allows for the formalization of the relationship and strategic direction of both organizations. Clearly it would be remiss of me not to say that this is another major milestone for the Exchange. As such, it is only fitting that I contextualize how we reached here.

 

The starting point takes me to the last quarter of 2007 when the Exchange undertook a major policy undertaking of separating its commercial activities from its regulatory responsibilities. Arising from this, the Board of the Exchange ceded all its regulatory responsibilities to its newly formed sub-committee the Regulatory & Market Oversight Committee (RMOC), of which I presently chair. In an effort to represent the best governance structure for the Exchange’s operations; the RMOC’s membership is comprised of only the Independent Director’s of the Board of the Exchange. Of equal significance to note is that all decisions that are taken by the Committee are final and binding on the entire JSE.

 

Since inception, the RMOC has been functioning along a path of clearly defined objectives, and these include:

1.      Adopting measures and rules that maintain and strengthen market integrity and transparency;

2.      Monitoring the conduct of member-dealers, listed companies and their responsible officers where necessary and take steps to enforce market regulations;

3.      Addressing any perception of conflict of interest between the Exchange and its stakeholders, such as member-dealers and listed companies;

4.      Setting the policy direction of its operational arm, the Regulatory & Market Oversight Division.

 

At this point in time I would like to seize the moment to highlight some of the major achievements of the RMOC during the course of 2011. During the year:

1.      Five new market regulations were drafted, and these are expected to be finalized by the 1st quarter of this year. Of significance is the fact that the Exchange is moving towards implementation of a system to promote regulatory compliance through administration of a schedule of fines and penalties for breaches of some of the Exchange’s rules;

2.      There was a 100% compliance rate for:

a.       Member-dealers’ timely filing of financial statements;

b.      Member-dealers’ renewal of Indemnity Insurance

c.       Member-dealers’ compliance with the Exchange’s capital requirements

3.      Listed Companies timely financial filing compliance rate were as follows:

a.       Unaudited Statements – 99% versus 89% in 2010;

b.      Audited Statements – 93% versus 66% in 2010;

c.       Annual Reports – 61% versus 40% in 2010

4.      Total market surveillance and compliance issues amounted to 127 cases, which was 5% below 2010

5.      The case closure rate for the year was 98%, which equaled that of 2010.

 

This MOU will facilitate continued improvement in the regulatory functions of the JSE by leveraging the accounting and financial reporting capacity of the ICAJ and its members.    These expectations should be realized through:

1.      Periodic meetings between the Exchange and ICAJ to discuss issues relating to the publication and preparation of financial statements;

2.      Guidance from ICAJ in the Exchange’s assessment of Listed Companies’ and member-dealers submissions.

I am mindful of the fact that all over the world there is increasing recognition of the interconnectedness between good corporate governance, an appropriate financial regulatory framework, market efficiency and timely promotion and adoption of internationallu accepted accounting and reporting standards. We in Jamaica are no different and through the signing of the MOU this morning we are recognizing the interconnectedness and we are committing ourselves to working together to ensure that the domestic securities market continue to grow and develop.

 

In closing, I believe it is fitting to say that this new association between the JSE and ICAJ will deepen the synergy, strength and capacity of both institutions. All in all, this should result in a more robust market place that resounds to the benefit of all stakeholders. Equally, it can be taken that this MOU will lead to the furtherance of the mission and objectives of both the JSE and the ICAJ.

 

 

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Mr. Livingstone Morrison

February 14, 2012