1. Key Activities of the WB/IFC Securities Markets Group Global Capital Markets Development Department

2. WB-IFC Securities Market Group (GCMSM) Joint WB/IFC Group 30+ years of WB/IFC experience in securities markets, products, and institutions -- development and operations Specialists include former securities regulators, central bankers, exchange officials, investment bankers, debt managers from developed and emerging markets Team has extensive field-based experience in emerging market countries in every region around the world—Asia, Africa, Middle East, Europe, Latin America Latin America & the Caribbean Ecuador El Salvador Brazil Chile Colombia Costa Rica Dominican Rep. Guatemala Honduras Jamaica Mexico Panama Uruguay East Asia & Pacific China Indonesia Mongolia Philippines South Korea Thailand Vietnam Europe & Central Asia Armenia Croatia Georgia Kazakhstan Lithuania Poland Romania Russia Serbia Ukraine Sub-Saharan Africa Kenya Mozambique Nigeria Rwanda Tanzania Uganda Zambia South Asia Bangladesh India Nepal Pakistan Sri Lanka Middle East & North Africa Bahrain Egypt Jordan Morocco Oman Qatar Saudi Arabia UAE Past and Current Projects WBG Global Product Group for local securities market development 2

3. Develop Domestic Securities Markets, Mainly Debt -Provide long term, local currency instruments -Diversify financial systems -Reduce financing and investment risks -Create new investment vehicles Developing Securities Markets IFC Product: Development of non-governm Support financing for housing, infrastructure, and private sector investment Mobilize savings; provide investments for rapidly growing institutional investors (pensions, insurance) Non-Government Bond Markets Government Bond Markets 2 Main Product Areas ESMIDGEMLOC Reduce government financing risks Create market-based pricing and pricing benchmarks, market-oriented monetary policy 3

4. Crisis Impact The global crisis has increased the demand for domestic securities markets: The outflow of foreign investors increased the need to rely on local investors and markets The banking sector downturn and bank reluctance to meet extensive financing requirements raised the need for financing alternatives Maturing outstanding bonds need to be replenished The need by companies to deleverage and obtain financing without periodic and maturity payments increased the demand for equity For our operations: Continue medium/long term development programs, with a shift in emphasis as required to address crisis-related needs (ie liquidity) Help understand the impact for instruments like securitization Expect going forward substantive changes as new regulatory frameworks emerge 4

5. GCMSM Program Design Assistance to Regulators Strengthening the Marketplace Capacity Building Transaction Support Enabling Environment Programs draw on full range of WB/IFC tools: Global product expertise + in-country knowledge/presence Public and private engagements Enabling environment plus transaction support 5

6. Unique Role of Transactions Component Facilitate Transactions Hands-on support to issuers/ intermediaries Knowledge of specific challenges on the ground Yardstick for program success Improve Enabling Environment Regulations, market infrastructure, market participants 6

7. Gemloc Program World Bank Group initiative to develop mainly local government bond markets Combines comparative advantages of WBG and private sector 3 separate but synergistic pillars with 3 commercial partners: –Investment management (PIMCO) –Index/investability indicators (Markit + Crisil) –Advisory services (World Bank) Creates market-based incentives for policy reforms –Strengthen market operations –Increase investability score/GEMX weight –Attract more foreign/domestic investment 7

8. Page 8 GEMX Index: Investability Indicators 8

9. Broad topicsSpecific agenda Macro and Micro interactions and trade-offs - Capital controls, international excess liquidity and convertibility - Financial markets taxation structure Primary Markets - Debt management strategy and issuance policy - Placement mechanisms and organization Money Markets - Repo markets - Operational liquidity management Secondary and Derivatives Markets - Exchange and OTC markets - Interactions between markets and development sequence - Valuation schemes Participants and Investor Base - Foreign and local investor base - Strategies for diversification - Prudential regulations Custody, Clearance, and Settlement - Local and International Central Securities Depositories (CSD) - Risk management upgrades Regulations for Debt Markets - Systemic risk and investor protection - Enforcement capabilities Gemloc Advisory Services: Program Scope 9

10. 10 Leveraging country-led market development reforms through: Country-specific work, Cross-country (peer group) dialogue, and Applied research Gemloc Advisory Services

11. Gemloc: Selected Advisory Services Operations Country Specific Programs Peer Group Dialogue KM Products Egypt, Nigeria, Costa Rica – ongoing Brazil, Morocco – being assessed Additional TBD Pilot Peer Group: consists of 10 largest emerging bond markets; meets via teleconference. –Meeting 1 (Mar 31 st ): crisis challenges –Meeting 2 (Jul 20 th ): primary dealer practices –Meeting 3 (Nov 18 th ): electronic trading platforms Second Peer Group: consists of Gemloc countries not included in the pilot peer group. –Meeting 1 (Jan 25th): primary dealer practices and preconditions Gemloc survey on development obstacles (22 countries) Research papers, policy notes Forthcoming handbooks on primary dealers, liability management and repo markets 11

12. 33 countries currently eligible Gemloc Eligible Countries: Advisory Services 12

13. ESMID-Africa (Pilot) 3 year, $5.5 million comprehensive program funded by SIDA, with advisory-investment linkages Special focus on long-term funding for critical sectors, including housing and infrastructure Transaction support component acts as catalyst and validates success in enabling environment work Sub-regional program for East Africa (Kenya, Rwanda, Tanzania, Uganda), to foster a regional market that can be accessed by smaller IDA countries And a country program for Nigeria given its size and its developmental needs A comprehensive and integrated approach to developing local bond markets 13

14. ESMID-Africa (Pilot) A comprehensive and integrated approach to developing local bond markets Advice on Legal and Regulatory Framework Improve approval process Reduce costs Framework for new products Capacity Building Certification/Licensing Training Develop regional provider Strengthening Market Infrastructure Market Structure Clearing & Settlement Transparency & Information Dissemination Regionalization Broadening & deepening markets Minimum common standards Consolidated infrastructure Cross border issues Transactions Support Active support to issuers and intermediaries for replicable transactions Introduce new & innovative products 14

15. ESMID Africa: Pilot Program Key Achievements Produced recommendations for improving regulatory framework for bond issuance and trading –Regulatory changes in drafting and/or approval stage –Preliminary impact: Recent Tanzania bond issue approved in record time Developed roadmap for regional integration –Roadmap in approval stage at East African Community Secretariat –Process of integrating clearing and settlement infrastructure initiated Established regional training institute –Developed and piloted regional training curriculum –Trained 557 market participants and 67 local trainers –Assisted regulators define regional licensing framework for market professionals Supporting potential bond transactions –Supporting 6 transactions of potential issuers in key sectors – infrastructure, housing, MSME –Monitoring a transactions pipeline of USD 400 million Developed partnerships with other programs and close coordination with WB policy work –PPIAF, FIRST, Making Finance Work for Africa –WB programs: Kenya FLSTAP, FSAP; Nigeria FSS 2020 Strategy 15

16. ESMID C O U N T R Y O P E R A T I O N S East Africa Kenya Rwanda Tanzania Uganda Nigeria Regional Approach Implementation Country Approach Implementation CURRENTFUTURE Africa Other Regions* Potentially: Ghana, Zambia, West Africa Potentially: South Asia, MENA Indicators Database Training materials Publications Workshops and conferences K N O W L E D G E M A N A G E M E N T 16 *Operations in LAC (Peru and Colombia) to be launched shortly

17. Country specific programs with project scope based on level of market development Market Development Less Developed More Developed Component Needs Broader-Based Targeted Country Specific Project Scope Entry Point Diagnostics Implementation Project Scope 17

18. Partnership Programs For Securities Markets Development Thank you very much! Tel: +1 202-473-0006 Email: SecuritiesMarketsGroup@worldbank.orgSecuritiesMarketsGroup@worldbank.org 18