Registrants Disclosure and Filing Obligations in the Securities Market

In this week’s article, we will discuss the disclosure and filing obligations of Registrants under section 51 of the Securities Act, 2012 (“SA 2012”). According to the legislation, Registrants are defined as persons registered or required to be registered under Part IV of the Act, these include entities conducting business activities of Investment Advisers, Broker-Dealers and Underwriters.

Investment Adviser, Broker-Dealer and Underwriter

An Investment Adviser provides investment advice in exchange for a fee while a Broker-Dealer, in addition to providing investment advice, buys and sells securities on behalf of its clients, as well as executes trades on its own behalf. Activities performed by Broker-Dealers include Repurchase Agreement Selling, Collective Investment Scheme and Wealth Management and Discretionary and Non-Discretionary Trading. On the other hand, an Underwriter provides services in connection to the distribution of securities. Within these Registrant categories, individuals can act on behalf of the entity and comprise the following:

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Significance of Global Money Week

Global Money Week (GMW) is an annual global awareness-raising campaign on the importance of ensuring that young people, from an early age, are financially informed and are acquiring the knowledge, skills, attitudes, and behaviours necessary to make sound financial decisions and achieve financial well-being. It seeks to ensure that all children and youth have access to high-quality financial education, learn about money matters and are able to make smart financial decisions that can improve future financial resilience and financial well-being. Since 2012, this global youth initiative has steadily grown and now attracts participation from 176 countries. As of 2020, the campaign is coordinated globally by the Organisation for Economic Co-operation and Development/International Network on Financial Education (OECD/INFE) and organised nationally by a wide range of stakeholders. Participating organisations encourage youth engagement during GMW through a variety of financial education activities in-person and on-line which can include financial education workshops, trainings and seminars, visits to money museums and financial institutions, public debates and competitions, financial literacy games and fairs, and many more.

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Risk-Based Capital Adequacy Regulations

The globalisation of financial institutions and the resultant change in their risk profiles, necessitated regulatory requirements for firms to maintain, at all times, adequate capital commensurate with the level of risk inherent in their business activities. The Basel Committee on Banking Supervision (BCBS), which operates through the Bank for International Settlements, has led regulatory efforts at establishing risk-based capital adequacy standards with the introduction of Basel I in 1988. The BCBS has enhanced its standards over the years taking into consideration the growing complexity of banking activities and gaps in regulations that was most evident given the financial crisis of 2007/ 2008. Basel II was introduced in 2004 and Basel III in 2010. The Basel III Accord is based on three pillars:

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Raising Capital in the Securities Market

The sale and purchase of financial assets, such as stocks and bonds, take place in the securities market. The securities market is comprised of both the primary and secondary markets. Most investors are familiar with the operations of the secondary markets where existing securities are traded. The trade is carried out between a buyer and a seller, with the stock exchange facilitating the transaction. Transactions can also occur “over the counter” which is direct trading among broker-dealers. In the secondary market, the company that issues the security is not involved in its sale, as the amount invested by the buyer goes to the seller. However, firms use the primary market to issue new securities, to raise capital for growth and investment. In this article, we will discuss the various methods of raising capital in the primary securities market.

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Investment Strategies: Active vs. Passive

As simply defined by one of the most successful investors of all time, Warren Buffet, “investing is laying out money now to get more money back in the future.” Investors may hire financial professionals who possess the analytical skills, expertise and knowledge of the market and securities to assist them in attaining returns on their investments. One such professional is a portfolio manager. The portfolio manager develops and implements investment strategies aligned to their client’s objectives, risk tolerance, liquidity needs, etc. as outlined in their client’s Investment Policy Statement. This week’s article discusses the difference between two types of investment strategies which the portfolio manager may utilise in the management of a client’s portfolio of securities.

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