Investor confidence critical for financial markets

Regulators, stock exchanges and market intermediaries all have a role to play in ensuring the integrity and fairness of a market, in order to foster investor confidence, he said.

Mr. Al Maraj was speaking during the opening of a three-day seminar on 'Detection and Prosecution of Securities Market Abuses', being held at the Bahrain Institute of Banking & Finance (BIBF).

The event, being held under the patronage of the BMA, has been organized by the BIBF in partnership with the US Securities and Exchange Commission (SEC) and the Financial Services Voluntary Corps (FSVP), under the auspices of Middle East Partnership Initiative of the US State Department.

It is being attended by nearly 60 participants representing central banks, capital market authorities, stock exchanges and brokerage firms from 10 countries in the Middle East and North Africa (MENA) region.

The seminar is focused on market surveillance systems and their techniques and enforcement, market manipulation incidents and insider trading issues.

"Global and regional financial markets are increasingly becoming integrated, and it is important for individual markets to remain fair, efficient and liquid, and to be able to offer superior value to their investors, issuers and market intermediaries," said Mr. Al Maraj.

"If investors do not have the confidence in the fairness, efficiency and transparency of the market, they will feel that they are not being adequately protected and will move out of the market in pursuit of better opportunities elsewhere. Indeed, investor confidence in the risk management systems and integrity of the capital market is essential and will enhance its liquidity and efficiency."

It is essential that regulators, stock exchanges and market intermediaries play an active role in enhancing the fairness, efficiency and transparency of the markets and maintain market integrity, by ensuring that the price of securities is determined efficiently by the market forces of supply and demand.

In order to accomplish this, investing in the education of the capital markets sector's human resources is a fundamental way of achieving this goal. Enhancing the knowledge of the industry's key players will allow for greater insight into better ways of early detection of market abuse, and the prevention of such abuse from occurring.

The seminar, which began today, follows on from the success of a similar event, titled Broker-Dealer Regulation and Enforcement Programme, held in 2005.