Palestine Capital Markets Authority1

 PCMA has been established in 2005 to be the REGULATOR for the non- banking financial sectors  Sectors under the mandate of the PCMA are: - Securities - Insurance - Mortgage - and Leasing Finance Palestine Capital Markets Authority2

 Board of Directors - Chairman of the board - Members of the board - 3 members from Private Sectors - 3 members from Public Sectors ( MOF, MONE, PMA).  Management - CEO, Directorates head Palestine Capital Markets Authority3

VISION  Being the proficient regulator and the safeguard of strong and transparent capital market in Palestine. MISSION  Implementing modern, robust, transparent and fair regulatory framework for the securities, insurance, mortgage and leasing sectors. Palestine Capital Markets Authority4

Goal  To maintain an orderly capital market, with the institutional capability to conduct effective and responsible market oversight and supervision that supports capital investment and economic growth in Palestine Palestine Capital Markets Authority5

 General Manager  Market Supervision Department - Trading Surveillance - On site inspection - Off-site analysis  Corporate and Investors Affairs - Disclosure - Corporate governance - Issuance and licensing  Licensing Committee  Investigation Committee Palestine Capital Markets Authority6

General Manager Market Supervision Dep. Trading Surveillance div On-site Inspection Div. Off-Site Analysis Div Corporate & Investor Affairs Dep. Disclosure Div. Corporate Governance Div. Issuance & Licensing Div Licensing Committee Investigation Committee Palestine Capital Markets Authority7

Mission  Regulate and develop the securities sector Goal  Build a strong securities sector overseen by a competent and effective capital market authority Palestine Capital Markets Authority8

 Strengthen institutional framework  Protect investors and integrity of the market  Provide confidence to prospective investors  Simplify regulation of securities business Palestine Capital Markets Authority9

 Palestine Stock Exchange  Central Depositary of Securities  Custodians  Securities Companies - Securities brokerage - Securities dealing - Investment advisory services - Investment portfolio management - Underwriting of securities issues - Investment fund management Palestine Capital Markets Authority10

 Objectives - Provide confidence to actual and prospective investors - Protect investors - Protect securities brokers - Protect investment advisors - Standardize required disclosure Palestine Capital Markets Authority11

 Fair dealing; fiduciary duty  Truth in advertising  Disclosure: providers, services and costs  Stability of investment  Documentation of client relationship  Confirmation of trades  Custodian’s statement  Periodic reporting to client (transactions, cost, value of portfolio, performance) Palestine Capital Markets Authority12

The Securities Directorate developed a risk- based supervisory methodology based on three supervisory tools:  Trading Surveillance system: electronic surveillance system (SMARTS Online)  On-site Inspection.  Off-site Inspection. Palestine Capital Markets Authority13

 New Corporate Governance Division to oversee compliance and promote awareness.  New disclosure regulations and arrangements during  Simple issuance licensing process, and clear comprehensive prospectus forms. Palestine Capital Markets Authority14

SectorNo. of CompaniesTotal Assets ( USD Millions) Banks20 7,880 Securities Companies1070 Insurance9285 Housing finance270 Financial leasing655 Palestine Capital Markets Authority15

 20 Banking Institutions:  10 Local banks and 10 Foreign.  Foreign Banks- (9 Regional banks and 1 International Bank).  Out of the 20, 3 Islamic banks & 1 Micro- Finance bank. Palestine Capital Markets Authority16

 Assets: 45.96%  Customer Deposits: 50.05%  Total Deposits: 44.33%  Equity: 73.99%  Non Performing Loans: %  No. Of branches: 51.08%  Equity/Assets Ratio: from 10.30% to 12.28%. Palestine Capital Markets Authority17

 Minor direct effects on earning and no effect on soundness.  No failures.  Indirect effects were through Interests rates, foreign exchange prices and commodities prices, along with liquidity shortages in the international and regional markets. Palestine Capital Markets Authority18

Palestine Monetary Authority Law No. 2/ 1997 Banking Law No. 2 /2002 PMA Instructions Palestine Capital Markets Authority19

Capital Market Authority Law No. 13/2004 Securities Law No. 12/2004 Insurance Law No. 20/2005 Financial Leasing Law (Planned 2010) Housing Mortgage Law ( planned 2010) Palestine Capital Markets Authority20

 Securities Issuance: IPOs, Secondary offerings, Prospectus.  Licensing: Securities Exchange, Securities Firms, Custodians, Investment Funds, Brokers, Advisors ….etc.  Capital Adequacy.  Disclosure. Palestine Capital Markets Authority21

 Independent regulatory institutions  Prudential supervision, corporate governance and ethical conduct.  Adoption of international standards: IFRS and Basel standards.  Open for foreign investment; - No capital controls, - No limits on foreign ownership, - Multi currency System. Palestine Capital Markets Authority22

CMA Securities Insurance Financial Leasing Housing Finance PMA Banks Moneychangers Payment System FFU Financial & Non-Financial. Palestine Capital Markets Authority23

CMAFFUPMA Palestine Capital Markets Authority24

Joint Committee PMACMA Palestine Capital Markets Authority25

Money Laundering Law (UN Model Law) National Committee for Money Laundering CMAPMA Relevant Government Bodies Independent Experts FFU Based At PMAProfessional Independent Institution Palestine Capital Markets Authority26

 Two corporate Governance Codes have been approved.  Hard and soft codes were combined in one document.  OECD principles were adopted. Corporate Governance Code For Banks Corporate Governance Code Palestine Capital Markets Authority27

 New structure for the Stock Exchange.  International Certification arrangement Securities and Investment Institute (SII).  Full IOSCO membership.  T +0 settlement (in coordination with PMA’s Real Time Gross Settlement System (RTGS) project). Palestine Capital Markets Authority28

 World Bank  USAID  First Initiative  Union Of Arab Securities Authorities  Securities & Commodities Authorities/ UAE Palestine Capital Markets Authority29

 PCMA is currently working with its local and international partners on several projects.  Advisors and consultants experience background from several leading international institutions: IMF, World Bank, IFC, SEC and others. Palestine Capital Markets Authority30

THANK YOU Palestine Capital Markets Authority31