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Untitled Document

JSDA Council Bulletin (November 01, 2004)

In an effort to promptly disseminate to our members, information on critical issues in the securities sector, we have developed a Bulletin. This will be a monthly publication highlighting issues from our Council Meeting. We hope you will find this useful and we look forward to your feedback. From the President’s Desk
Fixed Income Project
The JSE has requested that a committee constituting representatives of the JSE/JCSD, JBA and JSDA be formed to draft an agreement which will guide further developments in relation to the Fixed Income Project. Mr. Mark Golding and Mrs. Lisa Gomes were appointed to the committee.
Discussion Paper – Guidelines On Audit Committees
It was noted that the proposed responsibilities of the Audit Committee and its members, outlined in the FSC’s Discussion Paper on Guidelines for Audit Committees, were significantly more onerous than current responsibilities. It was recommended that companies, in compiling a response to the FSC, seek feedback from their internal auditors as the new Guidelines proposed major changes relating to the functioning of the Committee.
Market Analysis

The yield curve shown below, generated from information gathered on November 10, 2004 was reviewed.

Council also discussed the current initiative of the BoJ aimed at generating a yield curve from trading data collected from Primary Dealers.

Financial Services Commission
Council was informed that all securities dealer entities were required to submit their Immobilisation Report to the FSC. The Chairman urged members to make every effort to submit same. It was reported that the FSC was not prepared to extend the December 31, 2004 deadline for compliance with the Guidelines for Interim Capital Standards and Margin Requirements for Repurchase Agreements rather it was expected that by now entities should be well into their transition strategy and migrating their clients to alternative products. Council expressed concern however that alternative products, specifically Unit Trusts & Mutual Funds lacked uniformity particularly as it relates to taxation issues. Members of council expressed concern regarding a letter from the FSC dated November 4, 2004, which was sent to the industry advising of a new Capital Adequacy – Capital to Total Asset Ratio of 6% benchmark measure. Council was informed that in discussions with the FSC on this matter, the President was advised that the measure would be used purely as an early warning indicator. A draft response letter was tabled and members recommended that the letter be amended to request that the FSC advise the industry in writing regarding their revised position on this contentious issue. Council was reminded that the FSC had made the provision for entities that were unable to comply with the guidelines to indicate this by the end of September and only one institution had responded. It was agreed that a letter would be sent to the FSC informing them of the industry’s concern regarding the implementation of an artificial cap and that a consultant would be engaged to research best practices and recommend an appropriate capital regime for the existing business models currently operating in the local securities industry.
Government Of Jamaica Debt Payment System
Council agreed to investigate whether the decision of the MoF to change the interest payment policy for maturing GoJ instruments was in keeping with international standards.

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