The government has committed itself to have, by the end of October, a concrete and comprehensive plan of action with specific deadlines for reform of the securities dealers sector.
The plan will cover legal and regulatory reforms, for example, to the prudential framework for securities dealers and regulation for a master repurchase agreement, among others, according to the updated memorandum of economic and financial policies submitted to the International Monetary Fund (IMF).
It will also deal with effective monitoring and additional reporting to address post-National Debt Exchange vulnerabilities by the Financial Services Commission (FSC), as well as enhanced stress testing by the FSC and the Bank of Jamaica, the memorandum said.
The plan will also cover sequencing and timing of reforms and, in consultation with the IMF, contingency planning, including improving the insolvency regime that deals with failures of securities dealers.
Key aspects of the plan are expected to be incorporated in the programme, most likely in the context of the second quarterly review scheduled for December 20, the memorandum said.
Reforms include a commitment by the Government to phase out the retail repo model over time and allow the sector to provide a wider range of financing services, including collective investment schemes (CIS).
To achieve that objective, the Government said that as a first step, efforts would be accelerated to make less-risky business models available to securities dealers.
In particular, the Government said, by December 2013 the authorities will amend the Securities Act and attendant regulations to establish a comprehensive framework for the regulation of CIS.
The Government will also amend the income tax law to remove double taxation and reform the Companies Act to eliminate - or exempt CIS from - the need to register unit-holders in the company's registry.
In addition, also by December, the authorities will publicly commit to a timetable for raising the cap on investments in foreign securities from five per cent of assets to at least 25 per cent by the end of 2015, and removing the cap by the end of 2016 unless extraordinary circumstances require a reassessment.
Those reforms are among the structural benchmarks set out under the four-year loan agreement between Jamaica and the IMF.