The Tribune

By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

REGULATORS have argued that the main law governing the Bahamian capital markets’ regulatory regime needs to be modernised to account for 13 years of change.

Christina Rolle, the Securities Commission’s executive director, told an industry consultation that the regulator decided to “modernise” the Securities Industry Act in 2022 after evaluating stakeholder feedback. It enlisted Canadian drafters that contributed to the 2011 law for the task.

She said: “In setting out to overhaul the legislation we recognise that the regulatory framework was in desperate need of updating in a number of areas to bring it in line with evolution of industry practices and standards since 2011.

“This recognition came through the Commission’s own observation and continuous benchmarking, as we thoroughly went through the feedback that we received and also tracked industry comments over the years.

“By 2022 we felt that it was time to address and modernise the legislation. We internally drafted effective instructions for the legislative overhaul and engaged with the same Canadian drafters who were involved with the drafting of the 2011 legislation.”

Ms Rolle explained that the updated legislation provides clarification on several areas including investment powers, the securities and investments fund regime, digital assets and tipping-off provisions.

She added that the majority of enforcement provisions were “left untouched” as they are already within the current legislation’s scope but the redraft will clarify the authority.

Ms Rolle said: “Some of the key areas addressed in the legislative overhaul include clarification of investment powers, provisions which recognise the need for the management of systemic risk and automatic penalties framework, long outstanding clarification between the securities and investment fund regimes, derivatives and derivatives framework, classification of digital assets and tipping-off provisions.

“With respect to the Commission’s enforcement authority, you will find that the vast majority of the provisions have been left untouched. Even in cases where there are changes, for example, changes to clarify the Commission’s authority with respect to the directives that we issue, filing of criminal complaints and anti-money laundering/counter-terror financing breaches, these are already within the current scope of the legislation and what we are doing in the redraft is mainly a clarification of the authority, but does not amount to any new powers.”

Ms Rolle said the areas with a true expansion of the Securities Commission’s powers are administrative action and its ability to freeze assets. “The areas where there are new, and perhaps a true expansion of powers, are in the areas of the Commission’s ability to take administrative action as well as our ability to freeze assets,” she said.

“In the case of the expansion with respect to taking administrative action, this is based on the Commission’s experience over the years and will not deny a registrant due process. They do, however, allow the Commission to address non-interpretive issues in a more effective and efficient manner.

“With respect to asset freezing powers, these are necessary to bring the Commission in line with regulatory best practices and international standards.”

Michael Halkitis, minister of economic affairs, said the Bill is necessary to manage new risks presented by the “evolving financing landscape”.

He added: “The genesis of the Securities Industry Bill 2024 lies in the recognition of our evolving financial landscape. The advent of digital assets, the increasing complexity of financial markets and the ever-present challenge of managing systemic risks, demand a legislative response that is both comprehensive and adaptive.”

Mr Halkitis said consultation was central to the legislative overhaul and, by allowing stakeholders to contribute to the Bill, implementation and adherence should be “smooth”. He added: “The Bill seeks to update an overall legislative regime of the securities industry in The Bahamas. Central to the ethos of this legislative endeavour is the principle of consultation.

“One of the key benefits of public consultation is its ability to build consensus around legislative initiatives. When stakeholders are invited to contribute their views and have a say in the drafting process, there is a greater sense of ownership and support for the resulting legislation.

“This collective sense of ownership is crucial for the smooth implementation of, and adherence to, new laws, particularly in sectors as dynamic and complex as the financial markets.”