The development of capital markets and NBFI sector is critically dependent on the establishment of a sound regulatory and supervisory framework in which regulatory authorities are independent of the executive power and have a strong capacity for enforcing regulations.
Strengthening the State Commission for Securities and Stock Market (SSMSC)
As a collective body of the central executive, SSMSC lacks political and operational independence. It is dependent on the State budget for its funding and is seriously under-resourced. It has a shortage of skilled staff and its systems are only partially automated. Commissioners and staff do not have adequate legal protection when acting in good faith in discharging their duties. Supervision by SSMSC is limited to reviewing the regular reports submitted by market intermediaries, and it has a challenge to effectively monitor and control the large number of regulated entities.
Strengthening the State Commission for Regulation of Financial Services Markets (SCRFSM)
As a collective body of the central executive, SCRFSM has limited political and operational independence. It is funded by the State budget, has no financial autonomy, and is seriously under-funded. Following the adoption of the Amendments of the Law on Financial Services, a re-registration and re-licensing of NBFIs would be required, significantly stretching the SCRFSM’s capacity. An influx of new non-state pension funds may also be expected following the planned introduction of the second pillar.
To address these issues, the CMP has been working to assist GOU to undertake a comprehensive reform of the SSMSC and SCRFSM, focusing on: