Regulating Capital Markets

The Securities Commission of Papua New Guinea (SCPNG) is currently a Division within the Investment Promotion Authority. The SCPNG regulates the capital markets in Papua New Guinea.
The SCPNG is vested with the regulatory and enforcement powers and functions under the Securities Act 1997, the Securities Regulations and the Takeovers Code 1998. The SC regulates Primary markets through the issue of shares, both equity and debt through an IPO (Initial Public Offering). It also monitors the Secondary markets including compliance listings of companies from other foreign stock exchanges.

Financial Markets
Capital Market is part of the Financial Markets of a country. The Banking Industry is the other aspect of the Financial Industry or Market of a country. The Bank of Papua New Guinea or BPNG regulates the Banking, Savings & Loan Societies, Superannuation Funds and related Industry, including Life Insurance. BPNG also regulates the money markets and government issued securities, such as Treasury Bills, government bonds, etc…
The Securities Commission regulates the Capital markets, both equity and debts securities including privates bonds, swaps, subordinate notes, etc… The SC also regulates the Unit Trusts industry and the Fund Management Industry (Non Superannuation).

Under the Securities Act 1997, the SC only licenses the Port Moresby Stock Exchange and Trustee Companies involved in the Unit Trust Industry. It does not have the powers under the current law to issues licenses to other market intermediaries such as Fund Managers, Stock Brokers/Dealers, Investment Advisors, Underwriters, etc….

Port Moresby Stock Exchanges
The SC monitors and regulates the Port Moresby Stock Exchange and its activities. The Commission monitors all trades on the market every day to ensure that the market functions well. The Commission also approves listing and business rules of POMSoX, including any new amendments.
The Commission also approved POMSoX as a Self Regulatory Organisation. This means, POMSoX is allowed to set rules and standards for its members and also allows it to discipline members if they breach such rules and standards.

At the moment, there are only two stock brokers, Kina Securities and BSP Capital Limited. They are the only members of the Port Moresby Stock Exchange and wholly own the Exchange.

The Securities Act 1997 empowers the SCPNG to investigate persons and organisations which breaches the provisions of the Securities Act 1997, Securities Regulation 1998, and the Takeovers Code 1998.
The Commission has conducted several investigations and recommendations have made to relevant agencies to file proceedings against people implicated breaches of the law. Some investigations are currently underway.

International Organisation of Securities Commission
The SCPNG was admitted as a member of the International Organisation of Securities Commissions (IOSCO) in 1997. IOSCO is a standard setter for all global securities regulations and is based in Madrid, Spain.

The Securities Commission is a yet to become a full signatory member of the IOSCO MMoU.  The Commission expected to be a full member by first quarter of 2013.

The Securities Commission is currently undergoing reforms. The Reforms are aimed at building the institutional capacity, enhancing and improving regulatory capacity of the Commission and improving and opening up the PNG Capital Market for more players, improved service and better competition.