Heike Harmgart, the head of the EBRD office in Jordan

Overhaul of Financial Watchdogs Needed – Study

Jordan’s financial regulators need to undergo greater reform for the Kingdom’s capital markets to achieve their full potential, the European Bank for Reconstruction and Development (EBRD) said in a new strategy paper it produced in conjunction with the Jordan Securities Commission (JSC).

“The results of the analysis show that Jordan has all the ingredients to operate a healthy capital market, as the required regulatory entities are in place in the country, but they need to be upgraded,” the EBRD said in a statement.

Furthermore, the EBRD said the range of available instruments needed to be broadened to encourage the use of available domestic investable funds and to attract foreign investors. “Making Jordan’s capital market more attractive to issuers will therefore require legal and regulatory reforms.”

Improving the effectiveness of the JSC by strengthening its authority and capacity is also seen as key to enabling the commission to fully play its role as a major catalyst in the review of the regulatory environment and a move to a risk-based supervision.

“What we need is the mobilization of capital within a robust and transparent regulatory framework which allows for clear monitoring on the one hand and supplying the private sector with capital on the other,” said Heike Harmgart, the head of the EBRD office in Jordan.

The strategy, which is based on a year-long study of Jordan’s capital market, calls for better access to government securities and the development of investment funds as well as the enabling of exchange-traded funds, such as tracking a commodity or bond index. It also calls for tax policy changes as the current regime is seen as detrimental to investment funds.

JSC Executive Chairman Mohammad Saleh Hourani said his organization was “very keen to implement the strategy in a manner that would further enhance investor protection and the investment climate in Jordan’s capital market, and that would help the sector in facing its current challenges.”

Jordan became an EBRD shareholder in 2012 and to date the bank has committed $775 million across 33 projects in various sectors of the country’s economy, in addition to $120 million of trade facilitation credit lines with local banks.