An unpublished 2001 Financial System Stability Program conducted by the International Monetary Fund (IMF) found that Ghana exhibited a high degree of observance of the International Organization of Securities Commission (IOSCO) Objectives and Principles of Securities Regulation. However, significant shortfalls were observed in several areas. Since then, the 2003 IMF Financial Systems Stability Assessment (FSSA) Update found that significant improvements had been made and that securities regulations were continuing to be updated. However, further progress is necessary to be in line with best practices. The 2005 World Bank Report on Standards and Codes on Corporate Governance observed that further improvements in Ghana's capital markets will depend more on increasing the institutional capacity of the regulators, administration, and judiciary than on reforming the legal framework, since there are weak institutional foundations and capacity and enforcement gaps. According to Ghanaian authorities, cited in the 2007 IMF Article IV Consultation, Ghana has fulfilled the recommendations of the IMF's 2003 FSSA Update. The Financial Sector Strategic Plan includes reforms to further strengthen the financial sector, which are being supported by the World Bank's Poverty Reduction Support Credits and Economic Management Capacity Building project.

General Overview

Citing an unpublished 2001 International Monetary Fund (IMF) Financial System Stability Program (FSAP), the 2003 IMF Financial Systems Stability Assessment (FSSA) evaluated Ghana as having a "high degree of observance" (p. 25) with the 1998 version of the International Organization of Securities Commission's (IOSCO) Objectives and Principles of Securities Regulation. However, the report found deficiencies in the independence and internal control of the regulator; cooperation and information sharing with foreign regulators; the absence of risk-based capital requirements for licensing and internal standards for intermediaries, especially with regard to cash transactions; and the way in which securities are issued and collective investment schemes (CIS) are regulated. The IMF's 2003 FSSA noted that, since the 2001 evaluation, there had been some significant improvements to securities regulation. However, the report noted that further improvements were needed to bring Ghana into compliance with best practices. The Securities and Exchange Commission (SEC) now has greater independence, as the oversight of the minister of finance has been reduced, but it still relies on the ministry for funding. Capital requirements for securities dealers have been adjusted to require that their cash flow statements be submitted to the SEC on a monthly basis. Also, a comprehensive set of regulations have been introduced for CIS and the issuance of securities, and the SEC has assumed the responsibility of reviewing all public offerings through the Securities Industry Amendment Act. (This task had previously been the responsibility of the Ghana Stock Exchange, or GSE.) Capital requirements for securities dealers have improved, but more needs to be done for them to be in line with best practices. Dealers should not be allowed to accept deposits, and penalties for violating securities regulations should be increased. In addition, the SEC's mandate should include the government securities market, since many of the entities in the market are under the regulation of the SEC and there are reports of dealers partaking in inappropriate trading behavior. Such behaviors would be illegal if they involved securities regulated by the SEC, such as equities and corporate bonds. The 2001 IMF assessment team had recommended that Ghana consolidate oversight of all securities activities in the SEC, but the 2003 FSSA found that SEC must still obtain control over government securities.

According to the IMF 2003 FSSA Update, little progress had occurred in the overall financial sector since the 2001 FSAP, but most relevant progress had occurred in securities regulation. As a whole, the financial sector is underdeveloped and only serves a small portion of the population. A number of problems and inefficiencies stunt the sector's ability to become an effective and efficient financial services supplier. Much new legislation has been drafted to modernize the financial sector, but the process has been slow and has inhibited better financial supervision. However, the 2003 FSSA Update commends the authorities on their introduction of the new Securities Industry Amendment Act, and notes that Ghana has complied with the 2001 FSAP's recommendations to complete implementation of the newly adopted securities legislation and to increase capital requirements and "position and foreign exchange exposure limits for securities companies" (p. 6).

In the 2007 IMF Article IV Consultation report, Ghana's provided a self-assessment that asserts its fulfillment of the recommendations set forth in the 2003 IMF FSSA Update. The Financial Sector Strategic Plan (FINSSP), which was approved in 2003, includes further reforms to strengthen the financial sector, which are being supported by the World Bank's Poverty Reduction Support Credits and Economic Management Capacity Building project. The 2005 IMF Article IV Consultation with Ghana notes that the plan includes more than 20 bills aimed at improving the legal and regulatory framework, strengthening governance, and decreasing the cost of credit. The 2007 Article IV Consultation reports the passage of the Credit Reporting Act and the Foreign Exchange Act, which grants foreign investors access to secondary capital markets. The SEC's 2005 Annual Report indicates that the FINSSP will involve capacity building through upgrading technology, training staff, and development.

Ghana's financial markets are still in the early stages of development and few companies are seeking to be listed. The 2003 IMF FSSA Update suggests that improved financial reporting and governance would strengthen investors' confidence in the market and encourage trading. Also, including the shares of more state-owned enterprises (SOEs) would increase activity on the exchange. Another suggestion involves possible cooperation between the GSE and the Bourse Regionale de Valeurs Mobilieres to help overcome the issue of being a small, illiquid exchange.

The GSE opened for trading in 1990. It is fairly illiquid, with very low market turnover. In 2004, market capitalization was US$ 2.1 billion, which was 24 percent of GDP. The 2005 World Bank Report on the Observance of Standards and Codes (ROSC) reports that the bond market is limited but initial public offerings are on the rise. Ownership is concentrated in the state and foreigners. The U.S. Department of Commerce's 2007 Country Commercial Guide indicates that, in January 2007, the GSE had 32 listed companies, 2 government bonds, and 4 corporate bonds. It also oversees portfolio investment. Market performance was very strong in 2003-2004, dropped significantly in 2005 and improved a bit in 2006. In addition, the introduction of new regulatory policies is promising.

The recent performance of Ghana's capital market demonstrates its potential, according to the World Bank's 2005 ROSC on corporate governance in Ghana. However, challenges remain because of its weak institutional foundation and capacity and enforcement gaps. The 2005 World Bank ROSC states that the improvement of Ghana's capital markets is much more dependent on increasing the institutional capacity of the regulators, administration, and judiciary than reforming the legal framework. Businesses do not yet promote an "ethical, responsible and transparent corporate governance environment" (p. 1), retail investor awareness is practically obsolete, institutional investors are not very involved, and majority shareholders tend to control the boards and overshadow smaller investors. A number of factors discourage medium and large firms from listing, including possible loss of control, cost of listing, transparency and accountability.

The IOSCO multilateral memorandum of understanding (MMoU) is based on the thirty IOSCO Objectives and Principles of Securities Regulation (IOSCO Principles) adopted in 1998 and the experience gathered by securities regulators in using bilateral MoUs. The IOSCO MMoU provides a standardized framework for sharing enforcement-related information and a gradually expanding network of participating regulatory agencies. IOSCO members who wish to sign the IOSCO MMoU participate in a comprehensive screening process to establish that they have the legal capacity to fully comply with the terms of the IOSCO MMoU. The SEC of Ghana is a signatory to the MMoU and an ordinary member of IOSCO.

The Principles

1. The responsibilities of the regulator should be clear and objectively stated.

ID

Regarding the regulatory environment, the 2005 World Bank ROSC reports that the SEC, which was founded in 1998, is responsible for supervising listed companies, investment advisors, brokers/dealers, unit trusts, mutual funds, share transfer agents, CIS trustees, custodial services providers, the Central Securities Depository, registrars, and underwriters. It is under the supervision of the Ministry of Finance. According to the 2003 IMF FSSA Update, the SEC is charged with oversight of all securities activities, including in treasury bills. Also, the SEC has assumed the responsibility of reviewing all public offerings through the Securities Industry Amendment Act, which had previously been the responsibility of the GSE. The ROSC continues explaining that companies must register with the Registrar General's Department of the Attorney General's office and the Ministry of Justice. The GSE is a self-regulatory organization (SRO) supervised by the SEC. The central securities depository was established in 2004 by the Bank of Ghana and expanded to include equities in 2005. SOEs and statutory corporations are supervised by the State Enterprises Commission. The judicial system is overloaded with cases, slow and not always fair. To help this problem, the Ghana Arbitration Center, a "pilot fast-track High Court" (p.1), and a specialized commercial court were established.

The 2005 World Bank ROSC notes that there is some overlap of the responsibilities of the SEC and the GSE. However, the World Bank assessment team expected that the issues of overlap will be resolved once the revision of the GSE rules and the amendments to the SEC Regulations are completed. In 2005, the GSE website anticipated that the GSE Rule Book, which includes rules pertaining to members, listing, trading, and settlement would be completed by 2006. There is also some overlap in the public companies, disclosure and enforcement functions of the Registrar General's Department (RGD) and the SEC.

FINSSP, which was approved in 2003, includes further reforms to strengthen the financial sector, which are being supported by the World Bank's Poverty Reduction Support Credits and Economic Management Capacity Building project. The 2005 IMF Article IV Consultation with Ghana notes that the plan includes more than 20 bills aimed at improving the legal and regulatory framework, strengthening governance, and decreasing the cost of credit.

2. The regulator should be operationally independent and accountable in the exercise of its functions and powers.

II

According to the 2003 IMF FSSA Update, the SEC has greater independence, because the oversight of the minister of finance was reduced by the Securities Industry Amendment Act. However, it still relies on the ministry for funding which undermines its independence.

3. The regulator should have adequate powers, proper resources and the capacity to perform its functions and exercise its powers.

II

The 2005 World Bank ROSC reports that the SEC is approximately half funded by the government and its budget in 2004 was 2.7 billion cedis (US$270,000). The salaries of the SEC staff are significantly below a private sector salary but better than the average public sector salary. There is no department dedicated to enforcement. Instead it is carried out by the legal and surveillance department. Enforcement is primarily focused on disclosure. The SECs administrative powers have been expanded to include imposing administrative and civil sanctions. The SEC is empowered to investigate violations of the Securities Industry Law or securities fraud through requesting issuers' books and records, calling witnesses and requiring disclosure of any securities-related material. Market surveillance is weak but reforms such as increasing staff, training and capacity building are underway. The SEC is not authorized to prosecute criminal violations and must refer cases to the Attorney General which is inefficient and lacks corporate and securities expertise.

The SEC is licensed to regulate the government securities market, but doing so is not part of the SEC's mandate. The 2003 IMF FSSA Update recommends that the SEC regulate the government securities market since many of the entities in the market are under the regulation of the SEC. There are reports of dealers partaking in inappropriate trading behavior which would be illegal if they involved securities regulated by the SEC, such as equities and corporate bonds.

According to the SEC's 2005 Annual Report, in 2005 the SEC suspended the operating licenses of five member firms for violating the SEC's Regulations, from failure to submit annual reports to not meeting minimum capital requirements. In addition, the SEC published the names of violators in Ghana's national newspaper.

4. The regulator should adopt clear and consistent regulatory processes.

II

The 2003 IMF FSSA Update indicates that the SEC sets out guidelines for staff actions and governs them in its operations manual. The manual also regulates their private investments. It has not published a written contingency plan for the case of market disruptions, but has the power to stop trading in particular securities. However, the publicly available information does not directly address Ghana's compliance with this principle.

5. The staff of the regulator should observe the highest professional standards, including appropriate standards of confidentiality.

II

See principle 4.

6. The regulatory regime should make appropriate use of Self-Regulatory Organizations (SROs) that exercise some direct oversight responsibility for their respective areas of competence, to the extent appropriate to the size and complexity of the markets.

II

The GSE is a self-regulated organization supervised by the SEC. However, the publicly available information does not directly address Ghana's compliance with this principle.

7. SROs should be subject to the oversight of the regulator and should observe standards of fairness and confidentiality when exercising powers and delegated responsibilities.

II

See principle 6.

8. The regulator should have comprehensive inspection, investigation and surveillance powers.

II

The SEC is licensed to regulate the government securities market but doing so is not part of the SEC's mandate. The 2003 IMF FSSA Update recommends that the SEC regulate the government securities market since many of the entities in the market are under the regulation of the SEC. There are reports of dealers partaking in inappropriate trading behavior which would be illegal if they involved securities regulated by the SEC, such as equities and corporate bonds. However, the publicly available information does not directly address Ghana's compliance with this principle.

9. The regulator should have comprehensive enforcement powers.

NC

The 2005 World Bank ROSC reports that the SEC is approximately half funded by the government and its budget in 2004 was 2.7 billion cedis (US$270,000). The salaries of the SEC staff are significantly below a private sector salary but better than the average public sector salary. There is no department dedicated to enforcement. Instead it is carried out by the legal and surveillance department. Enforcement is primarily focused on disclosure. The SECs administrative powers have been expanded to include imposing administrative and civil sanctions. The SEC is empowered to investigate violations of the Securities Industry Law or securities fraud through requesting issuers' books and records, calling witnesses, and requiring disclosure of any securities-related material. Market surveillance is weak, but reforms such as increasing staff, training and capacity building are underway. The SEC is not authorized to prosecute criminal violations and must refer cases to Attorney General which is inefficient and lacks corporate and securities expertise.

The SEC is licensed to regulate the government securities market but doing so is not part of the SEC's mandate. The 2003 IMF FSSA Update recommends that the SEC regulate the government securities market, since many of the entities in the market are under the regulation of the SEC. There are reports of dealers partaking in inappropriate trading behavior which would be illegal if they involved securities regulated by the SEC, such as equities and corporate bonds.

10. The regulatory system should ensure an effective and credible use of inspection, investigation, surveillance and enforcement powers and implementation of an effective compliance program.

II

See principle 8.

11. The regulator should have authority to share both public and non-public information with domestic and foreign counterparts.

EN

According to the 2003 IMF FSSA Update, the 2001 assessment had found that Ghana only participated in limited bilateral agreements and could only share certain types of information in the case of a criminal investigation. However, the SEC of Ghana is a signatory to the MMoU and an ordinary member of IOSCO. The IOSCO MMoU is based on the thirty IOSCO Objectives and Principles of Securities Regulation adopted in 1998 and the experience gathered by securities regulators in using bilateral MoUs. The IOSCO MMoU provides a standardized framework for sharing enforcement-related information and a gradually expanding network of participating regulatory agencies. IOSCO members who wish to sign the IOSCO MMoU participate in a comprehensive screening process to establish that they have the legal capacity to fully comply with the terms of the IOSCO MMoU.

12. Regulators should establish information sharing mechanisms that set out when and how they will share both public and non-public information with their domestic and foreign counterparts.

EN

See Principle 11.

13. The regulatory system should allow for assistance to be provided to foreign regulators who need to make inquiries in the discharge of their functions and exercise of their powers.

EN

See principle 11.

14. There should be full, timely and accurate disclosure of financial results and other information that is material to investors’ decisions.

EN

In its 2005 Corporate Governance Country Assessment of Ghana, the World Bank rates Ghana's observance with Principle V, "Disclosure and Transparency," of the Organization for Economic Cooperation and Development's (OECD's) Principles of Corporate Governance as follows: "Fair and timely dissemination" as "Largely Observed," indicating that only minor shortcomings are observed, which do not raise questions about the authorities' ability and intent to achieve full observance in the short term. "Standards of Accounting and Auditing," "Disclosure standards," "External auditors should be accountable," and "Disclosure of conflicts of interest by analysts, brokers, rating agencies" as "Partially Observed," indicating that while the legal and regulatory framework complies with the Principle, practices and enforcement diverge. "Independent audit annually," and "Disclosure of conflicts of interest by analysts, brokers, and rating agencies" as "Materially Not Observed," indicating that, despite progress, shortcomings are sufficient to raise doubts about the authorities' ability to achieve observance.

According to the 2003 IMF FSSA Update, the SEC has developed power for the review and approval of issuing securities. The 2005 World Bank ROSC gives a number of recommendations to improve disclosure. The SEC needs to expand its responsibilities to include monitoring quality of disclosure, the timely filing of material announcements, disclosure of related-party transactions (RPTs), ensuring that director holdings registers are well maintained, and other types of non-financial disclosure. RPTs should be regulated for directors, controlling owners, and large non-controlling owners, in accordance with best practices. The identity of ultimate beneficial owners should be required in the annual report. Executive and non-executive directors should be prohibited from taking out related loans. Also in line with best practices, the law should require that the annual report includes company objectives, stakeholder issues, governance policies, and a Management Discussion and Analysis section. Disclosure of non-listed companies should also be monitored. The Ghana National Accounting Standards (GNAS) should be reviewed to ensure compliance with international accounting and auditing standards. The Institute of Chartered Accountants should have the ability to monitor audits and the power to stop unlicensed auditors from practicing. Best practices require that the law define auditor independence; it should not just be included in the Code of Professional Conduct of Accountants. Also, to comply with best practices, the law must require disclosure of the rights of different share classes and the amounts of shares in each class, as well as stakeholder issues in the annual report.

15. Holders of securities in a company should be treated in a fair and equitable manner.

EN

In its 2005 Corporate Governance Country Assessment of Ghana, the World Bank rates Ghana's observance with the sub-principles of Principle III, "The Equitable Treatment of Shareholders," of the OECD's Principles of Corporate Governance as follows. "All shareholders should be treated equally" and "Prohibit insider trading" were rate as "Partially Observed," indicating that while the legal and regulatory framework complies with the Principle, practices and enforcement diverge. "Board/Managers disclose interests" was rated as "Materially not Observed," indicating that, despite progress, shortcomings are sufficient to raise doubts about the authorities' ability to achieve observance.

The 2005 World Bank ROSC recommends that Ghana spread awareness of the importance of corporate governance. To do so, institutional investors, executives and directors require training and a shareholders association should be established. The listing of new companies should be promoted by the GSE through educational efforts and public awareness about the capital markets should be improved. It is recommended that the SEC consider including director training as a listing requirement instead of just a recommendation, and subsequently license bodies to complete the training. In addition, the SEC should enforce the comply-or-explain requirement of the SEC's Code of Best Practices on Corporate Governance.

According to the 2005 World Bank ROSC, basic shareholder rights are protected, for the most part. Information is readily available in a timely manner, but enforcement of disclosure is sub-par. A central depository system for equities was expected to be available in 2005. There is no regulation for private registry services. No shareholder can nominate a director without the approval of the board and management. While basic AGM rules are implemented, shareholders have little impact for listed companies. Controlling shareholders dominate AGMs through the board. While shareholders may vote by mail, they rarely do so due to the inefficiency of the postal system; and electronic voting is not an option. Company bylaws and prospectus must include information about share classes and any changes must be disclosed. "Approval of decisions by negatively impacted classes is regulated" (p. 2). However, no shareholder can nominate a director without the approval of the board and management. While basic AGM rules are implemented, shareholders have little impact for listed companies. Controlling shareholders dominate AGMs through the board. While shareholders may vote by mail, they rarely do so due to the inefficiency of the postal system; and electronic voting is not an option. Company bylaws and prospectus must include information about share classes and any changes must be disclosed. "Approval of decisions by negatively impacted classes is regulated" (p. 2).

The law does not ensure equitable treatment of shareholders by directors. The 2005 World Bank ROSC recommends that legal provisions allowing directors to give special treatment to a certain class should be replaced with the requirement that directors provide equal treatment to all shareholders. Minority rights are weakly protected. All shareholders may bring an AGM resolution to court for being unfair or contradictory to the company bylaws, and all shareholders may sue a director. However, there is little defense of minority rights. An AGM can be called by 5% block of the shareholders, or for private firms, a 10% block of the shareholders. Although there are oppression rights for shareholders that require a company or other shareholders to buy back their shares, there is no minimum/ fair price rule. The ROSC recommends that a minimum price should be set in the law for squeeze-outs, oppressed shareholder withdrawal and share buy-backs. Other suggestion, by the ROSC, for the equitable treatment of shareholders include that the law should guarantee that smaller block holders are represented on the board, and a provision allowing minority shareholders to nominate a director should be included in the Companies Code. In addition, to comply with best practices, the law must require disclosure of the rights of different share classes and the amounts of shares in each class, as well as stakeholder issues in the annual report.

16. Accounting and auditing standards should be of a high and internationally acceptable quality.

II

In 2004, the World Bank conducted a review of accounting and auditing practices in Ghana in order to evaluate the weaknesses and strengths of the accounting and auditing requirements, and to review the reporting requirements against actual practices. The ROSC for Accounting and Auditing, published in June 2004 as a result of the assessment recommended that, to improve the statutory framework of accounting and auditing, Ghana adopt the International Financial Reporting Standards (IFRSs) without any modifications. The World Bank had noted that the regulation of accounting practices was somewhat weak and recommended to strengthen the statutory framework, enforcement mechanisms and professional education in the field of accounting. The World Bank report also recommended creation of an independent oversight body responsible for the process of adoption and enforcement of accounting and auditing standards and developing simplified reporting requirements for the Small and Medium-size Enterprises (SMEs).

However, according to the IAS Plus website maintained by Deloite & Touche Tohmatsu, on January 1, 2007 Ghana adopted the IFRSs, thereby replacing the local GNASs in use. IFRSs became applicable for all listed companies, banks, insurance companies, government-owned and other private businesses. SMEs will be required to use IFRSs beginning 2009.

The ROSC published in June 2004 contained suggested policy recommendations to improve the reporting framework in Ghana. As part of its recommendations for improvement of the statutory framework of accounting and auditing, the World Bank recommended adoption of International Auditing Standards (ISAs) without any modifications. The World Bank noted that "although Ghana Accounting and Auditing Standards have been based on International Accounting Standards and International Standards on Auditing, respectively, they are outdated and gaps exist in comparison with the international equivalents" (p. 1). Ghana National Auditing Standards (NASs) issued by the Institute of Chartered Accountants of Ghana (ICAG) became effective in 2001. However, the World Bank noted that NASs need to be updated and revised in line with the ISAs. Furthermore, the absence of implementation guidelines impedes application of NASs locally. While Ghana adopted IFRSs in January 2007, there is insufficient publicly available information whether Ghana plans to adopt ISAs as well. The securities market in Ghana is regulated by the SEC, which monitors compliance with financial reporting requirements, while the GSE ensures compliance with disclosure requirements. The SEC does not play a role in setting auditing standards however it does set additional requirements for listed companies described as International Securities Principles and Practices in the ICAG self-assessment of 2006. The World Bank noted that the SEC and the GSE, both lacked adequate capacity to monitor compliance with the financial reporting requirements.

17. The regulatory system should set standards for the eligibility and the regulation of those who wish to market or operate a collective investment scheme.

II

There have been significant improvements in the regulation of CIS, as reported in the 2003 IMF FSSA Update. The 2001 Unit Trusts and Mutual Funds Regulations has enabled closed-end investment vehicles. Also, the establishment of comprehensive CIS regulations has set the rules for CISs, such as separating the functions between investment managers, custodians and trustees. However, the publicly available information does not directly address Ghana's compliance with this principle.

18. The regulatory system should provide for rules governing the legal form and structure of collective investment schemes and the segregation and protection of client assets.

II

See Principle 17.

19. Regulation should require disclosure, as set forth under the principles for issuers, which is necessary to evaluate the suitability of a collective investment scheme for a particular investor and the value of the investor’s interest in the scheme.

II

See Principle 17.

20. Regulation should ensure that there is a proper and disclosed basis for asset valuation and the pricing and the redemption of units in a collective investment scheme.

II

See Principle 17.

21. Regulation should provide for minimum entry standards for market intermediaries.

II

According to the 2003 IMF FSSA Update, amended legislation has changed capital requirements to be dependent on aggregate indebtedness and the reserve requirements for companies are associated with securities positions; and to further increase liquidity, the SEC may require a broker to inject additional funds. However, sanctions are weak. The fine for not meeting capital requirement is merely a token, and there is a 30-day delay for suspension of activities. Reporting requirements have been changed from monthly to quarterly. The assessment also notes that while the new capital requirements for dealers is a significant improvement, they still do not meet best practices. However, the publicly available information does not directly address Ghana's compliance with this principle.

22. There should be initial and ongoing capital and other prudential requirements for market intermediaries that reflect the risks that the intermediaries undertake.

II

See principle 21.

23. Market intermediaries should be required to comply with standards for internal organization and operational conduct that aim to protect the interests of clients, ensure proper management of risk, and under which management of the intermediary accepts primary responsibility for these matters.

II

See principle 21.

24. There should be procedures for dealing with the failure of a market intermediary in order to minimize damage and loss to investors and to contain systemic risk.

II

See principle 21.

25. The establishment of trading systems including securities exchanges should be subject to regulatory authorization and oversight.

II

The 2003 IMF FSSA Update, indicates that the trading systems and other market infrastructure need to be improved. The SEC plans to demutualize the GSE so that it will have the capital necessary to invest in better trading systems. Also, there is recognition for the need of a more efficient transfer system for the GSE and government securities market. The assessment recommends that Ghana do a cost-benefit analysis of introducing a central depository with dematerialized securities. In 2005, the GSE website indicated that clearing and settlement of securities was expected to become automated in 2006. However, the publicly available information does not directly address Ghana's compliance with this principle.

26. There should be ongoing regulatory supervision of exchanges and trading systems which should aim to ensure that the integrity of trading is maintained through fair and equitable rules that strike an appropriate balance between the demands of different market participants.

II

The 2005 World Bank report notes that the SEC supervises the GSE. However, the publicly available information does not directly address Ghana's compliance with this principle.

27. Regulation should promote transparency of trading.

II

There is insufficient information publicly available that directly addresses this principle.

28. Regulation should be designed to detect and deter manipulation and other unfair trading practices.

II

There is insufficient information publicly available that directly addresses this principle.

29. Regulation should aim to ensure the proper management of large exposures, default risk and market disruption.

II

The 2003 IMF FSSA Update reports that the SEC has not published a written contingency plan for the case of market disruptions, but has the power to stop trading in particular securities. However, the publicly available information does not directly address Ghana's compliance with this principle.

30. Systems for clearing and settlement of securities transactions should be subject to regulatory oversight, and designed to ensure that they are fair, effective and efficient and that they reduce systemic risk.

II

The 2003 IMF FSSA Update, indicates that the trading systems and other market infrastructure need to be improved. The SEC plans to demutualize the GSE so that it will have the capital necessary to invest in better trading systems. Also, there is recognition for the need of a more efficient transfer system for the GSE and government securities market. However, the assessment recommends that Ghana do a cost-benefit analysis of introducing a central depository with dematerialized securities. In 2005, the GSE website indicated that clearing and settlement of securities was expected to become automated in 2006. However, the publicly available information does not directly address Ghana's compliance with this principle.