Ghana’s capital market and the investment industry is regulated by the Securities and Exchange Commission (SEC). The Commission was formally set up in September 1998 as an independent regulator of the capital market in Ghana. Prior its formal establishment, the commission had begun operation in 1993 per the SIL 1993, PNDCL 333. At the time, It was known as the “Securities Regulatory Commission.
In 2000, the name was changed to the Securities and Exchange Commission by an act of Parliament, Securities Industry Amendment Act, 2000(Act 590).
In 2016, a new Act, known as the Securities Industry Act, 2016 (Act 929) came into force to further regulate the activities of the market operators. This new law replaced the Securities Industry Law, 1993(PNDCL 333).
These market operators include the Ghana Stock Exchange (GSE), Fund Managers, Investment Brokers, Commodity Exchange, Investment Advisors and Private Equity Firms among others.
The mandate of the SEC is to regulate and promote the growth and development of an efficient, fair, and transparent securities market in which investors and the integrity of the market are protected.
Over the past three decades SEC’s activities have helped to improve infrastructure in the capital market, in areas such as;
- Automation of trading and settlement platforms
- Dematerialization of securities and establishment of a Central Securities Depository (CSD),
- Development of benchmarked legal and regulatory framework and market practices
- Modest expansion in capital market products and services including Collective Investment Schemes (CIS), a Commodities Exchange and Warehouse Receipts system.
Composition Of The Capital and Investment Industry
The capital market is dominated by government domestic debt with a total value of GH¢235 billion as of June 2021. This is made of outstanding debt value of GHS 174.2 billion of debt market and GHS 61.3 billion of equity market.
The main markets are the Fixed Income, Equity and the Commodity Markets
- Fixed Income (FI) –
Fixed income trade takes place on the Ghana Fixed Income Market (GFIM). The GFIM handles debts issued by both government and private entities.
As of June 2021, the GFIM had all time outstanding securities valued at GH¢ 174.2 billion, made up of both government and corporate bonds. Total outstanding government debt on the FI market stood at GHS 144.1 billion, while corporate bond value stood at GHS 30.1 billion.
Total debt securities traded on the FI market from January 2021 to June 2021 comes to GHS 107.6 billion, with GHS 10.3 billion from the corporate sector.
Between 2020 and 2021 corporate bond contribution to the debt market dropped from 21.4 percent to 17.3 percent, while government’s contribution increased from 78.6 percent to 82.71 percent.
This trend does not favour expansion of the private sector whose activites lead to real economic growth. Government is seen lapping up more capital than the private sector which needs the financing to grow the economy.
Ghana’s capital market and investment industry…
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