TIRANA, June 10- The Ministry of Finance and Economy Mirela Denaj, has issued a draft bill on capital markets for consultation, opening the way for comments and finalizing new foundations for a market that is an important part of the market financial and the EU directives. The objective of this law regarding the development of capital markets is summarized in three points. Firstly, it is intended to create financing opportunities and enable securities to be issued. Secondly, to channel savings through better regulated investment and pension funds. Thirdly, to attract foreign investors. The draft law “On capital markets” aims the development of capital markets in Albania and the establishment of a comprehensive, clear and applicable legal basis for these markets.
The Financial Supervisory Authority will set competences in capital markets, especially in the investigative process of illicit trading practices and imposing administrative fines. Standards will be set for fit and proper of influential shareholders, administrators, members of the supervisory board, other key persons, and also for the best interest of investors excluding preferential treatment, and confidentiality over investor information. Rules on avoiding market manipulation and other illegal trading practices, and for the creation of new institutions will be set.
The Central Securities Depository, the Credit Evaluation Agency, and the Financial Supervisory Authority will oversee the market and the draft law’s implementation. The draft clearly defines the role each has and the services it will provide. For example, the Depository first registers the initial of the securities in an inventory (“notary service” ). Secondly, providing and maintaining the highest level of securities accounts (“central holding service” ). Thirdly, the operation of the securities settlement system (“settlement service” ). The Depository may also provide non-bank ancillary services that do not include credit risk or liquidity.
Regarding local credit rating agencies they are licensed and evaluated by the Financial Supervisory Authority, which will conduct data and information analysis, as well as review of credit risk assessments. The Authority may also carry out an administrative investigation for the market transparency if there are grounds to suspect that a criminal offense has been committed. The investigation may include several aspects, starting from the conduct of a licensed owner’s business activity, but also involved third parties. This competence also serves for investor protection, sanctioning the Authority to intervene when it is ascertained that a licensed person has not respected the obligations imposed by law.
Firstly, it can request correction of the violation, while in the interest of customer protection the Authority may issue an order for the freezing of any person’s assets that is inconsistent with any provision of this law, sub-legal acts or orders, for seven calendar days. In cases where the interests of investors, investment firm clients or collective investment undertakings quota holders are likely in risk, the Authority may order the investment firm to stop trading with the investors’ money or assets. Similarly, it may prohibit an investment firm from carrying out transactions, offering commercial activity to persons, or requiring the investment firm to pursue its business activity in a manner the Authority designs.
Interest groups are positive about the new draft law on the capital market. Artan Gjergji who is executive director of the Albanian Stock Exchange, estimates that there are some innovations that come with this bill, such as collecting the entire legal framework of the securities industry in a single law, better harmonization of the current legal framework with EU directives and best international practices, as well as the clearer and more precise roles of some institutions and financial markets.
“It introduces, for the first time, the legal coverage of the activity of some important operators, such as financial intermediaries in the capital market, which were absent from existing law such as securities depositors, rating rating agencies, managers of portfolios of titles,” said Gjergji.
Mirela Angjeli who is broker at Triumf Group LLc said the new law requires large organizational structures that increase human resource costs and total costs for the fragile finances of brokerage companies in an embryonic market. She said the law should foresee transitional timeframes for implementation by brokerage companies, in order to enable these important operators to grow gradually along with the capital market.
