Bill passed to give securities industry regulator more teeth

Parliamentarians passed amendments yesterday that would give the Securities Commission of The Bahamas (SCB) more teeth in its regulation of the entities under its purview and safeguard against deficiencies highlighted by international regulatory bodies in the insurance sector.

Starting off the debate in House of Assembly, Prime Minister Dr. Hubert Minnis said the proposed amendments in the Securities Industry (Amendment) Bill, 2021 will allow the SCB to act swiftly and provide real consequences in the face of delinquency.

The bill seeks to provide for the automatic revocation of a registration where a registrant fails to renew its license, submit its annual filings and/or pay its annual fees.

It would further require the disclosure of material contracts, as well as for a public issuer to post its annual financial statements and auditor’s reports on the company’s website or in the newspaper and make it a requirement to make the register available to the public.

“The commission has historically found that it had very few options to address these failings in an efficient and effective manner. This challenge was also identified in relation to other legislation administered by the commission. Similar shortcomings were therefore addressed in relation to the Investment Funds (Amendment) Act, 2020 and the Financial and Corporate Services Providers Act, 2020, which are both administered by the Securities Commission,” the prime minister said.

“The proposed enforcement regime provides for the automatic revocation of the registration of a marketplace or ancillary facility registered under part five of the act, as well any person registered to conduct any of the activities registerable under part six of the act. Therefore, the registration of any registered exchange, clearing facility, or person registered to deal, arrange deals, advise or manage securities that fails to renew their registration will be automatically revoked should they fail to take any of these required actions.”

The prime minister noted that while the SCB is in the process of reviewing the Securities Industry Act to determine ways in which it can be modernized, it concluded that these amendments were imminently required and therefore sought to address the technical gaps in relation to its ability to enforce against those failing to renew their registration in a timely and appropriate manner now.

“The amendments provide that where the registered person fails to renew the registration before its annual renewal date the registration shall be automatically revoked. Further, the registrant shall be liable to pay an automatic penalty of 10 percent of its prescribed license fee to the commission. The additional monetary penalty is an administrative fine,” the prime minister said.

“This is meant to be a deterrent and to ensure that the industry operates at its optimum compliance with licensing requirements. Where a registrant fails to submit its annual filings or insurance information, the registration will be automatically revoked immediately. There will be no further redress.

“Where the registrant fails to pay its annual fee within 30 days of it being due, the registration will automatically be revoked. Mr. Speaker, the amendments also provide for the ability to restore one’s registration within a 30-day period. The process and conditions for restoration include an administrative penalty to address the delinquency and provide deterrence against non-compliance. It also includes a requirement for the registrant to submit the outstanding filings or fees.”

In addition to the Securities Industry Act amendments, the prime minister also presented the Insurance (Amendment) Bill 2021 to the House of Assembly.

Among other things, the bill seeks to address deficiencies highlighted by the Caribbean Financial Action Task Force (CFATF), that there is no specific requirement for insurance companies to obtain prior approval whenever there is a change in senior management.

“The CFATF considered this a deficiency in the insurance legislation. It was deemed to affect the commission’s ability to prevent criminals from doing business in the insurance sector after the initial company registration,” the prime minister said.

“FATF (Financial Action Task Force) Recommendation 26 requires that financial supervisors take the necessary legal or regulatory measures to prevent criminals or their associates from holding, or being the beneficial owner holding a management function in a company. It was determined that insurance companies should obtain prior approval from the Insurance Commission for any change in senior management in the company, to mitigate against this risk.”

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Paige McCartney

Paige joined The Nassau Guardian in 2010 as a television news reporter and anchor. She has covered countless political and social events that have impacted the lives of Bahamians and changed the trajectory of The Bahamas. Paige started working as a business reporter in August 2016. Education: Palm Beach Atlantic University in 2006 with a BA in Radio and Television News

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