Tool to conduct capital markets assessments in developing countries

As used in this AT, an organized public market is a well-regulated market for equity or corporate debt securities that is open to retail and institutional investors and that is capable of performing effectively the functions normally associated with capital markets, including channeling savings into investments and offering reliable price discovery and liquidity. An organized public market provides companies with a cost-effective means of capital formation as an alternative to bank borrowing. It may be a securities exchange, automated trading system, or over-the-counter market. The AT was designed to be used independently to obtain and assess all information considered necessary for development and regulation of markets for equity or corporate debt securities. The tool also may be part of a broader financial sector assessment. In such circumstances, it may not be necessary to use some of the questions that pertain to topics addressed in other components of the broader assessment process. Because an assessment of the potential for development of a jurisdiction"s capital markets requires an assessment of their regulation as well, the AT was designed so that it interfaces with, but does not duplicate, the questions included in the International Organization of Securities Commissions (IOSCO) methodology for Assessment of the Implementation of the IOSCO Objectives and Principles of Securities Regulation. To assess the adequacy of securities regulation in a jurisdiction, the assessor working on a best-effort basis should aim at obtaining answers to all of the questions in the IOSCO methodology. The AT has four sections, as explained below. Sections 1 and 2 include questions intended to assess whether there exist, or it is realistic at present to attempt to develop, organized public markets for equity and corporate debt securities. Depending on the answer to this question, it may not be necessary to complete all of Sections 3 and 4. (Author abstract, modified)