Transcript Document 7477985

THE NEW FINANCIAL
SUPERVISOR IN
COLOMBIA
Washington D.C. June 6, 2006
Index
1.
2.
3.
4.
5.
Financial System main trends
Pre-merge financial scenario
New structure for financial supervision
The challenges today
The challenges tomorrow
Total Assets Under Surveillance
Market Share Trend 95/05
100%
90%
29%
27%
31%
31%
32%
31%
27%
26%
23%
21%
19%
20%
27%
26%
54%
54%
2005
2006
80%
70%
28%
60%
31%
28%
29%
34%
50%
54%
45%
44%
39%
55%
40%
30%
42%
20%
10%
45%
48%
51%
2003
2004
36%
15%
20%
25%
25%
1997
1998
29%
0%
1995
1996
Investment Portfolio
1999
2000
Loan Portfolio
2001
2002
Other Assets
Total Assets Under
Surveillance: Main Participants
100%
90%
20%
19%
21%
21%
21%
12%
13%
23%
24%
24%
14%
15%
15%
25%
26%
17%
18%
80%
70%
6%
8%
6%
4%
6%
9%
4%
4%
8%
60%
11%
11%
4%
5%
5%
5%
10%
10%
9%
11%
50%
5%
7%
5%
7%
40%
30%
62%
60%
55%
51%
49%
47%
46%
46%
45%
43%
2002
2003
2004
2005
2006
20%
10%
0%
1997
Credit Inst
1998
1999
Specialized State-Owned
2000
2001
Insurance Companies
Pension Funds
Fiduciary Funds
Other
Feb-06
Nov-05
Ago-05
Abr-05
Ene-05
Sep-04
4
Jun-04
Feb-04
Nov-03
Jul-03
Abr-03
Dic-02
Sep-02
May-02
Feb-02
Oct-01
Jul-01
Mar-01
Dic-00
Ago-00
May-00
Ene-00
Oct-99
Jun-99
Mar-99
Nov-98
Ago-98
Abr-98
Ene-98
Sep-97
May-97
Feb-97
COP Billions - Fixed Income
20
18
300
14
12
250
10
200
8
150
6
Fixed
Income
100
2
50
Equity
0
0
COP Thousands of Millions - Equity
Fixed Income And Equity
Daily Traded Volumes: 97-06
400
350
16
Trading Platforms Market
Share: 97-06
1.0
SEN
COP Billions
0.8
0.6
OTC
0.4
0.2
MEC
Feb-06
Oct-05
Jun-05
Feb-05
Oct-04
Jun-04
Feb-04
Oct-03
Jun-03
Feb-03
Oct-02
Jun-02
Feb-02
Oct-01
Jun-01
Feb-01
Oct-00
Jun-00
Feb-00
Oct-99
Jun-99
Feb-99
Oct-98
Jun-98
Feb-98
Oct-97
Jun-97
Feb-97
0.0
SEN: Central Bank wholesale government debt trading system.
MEC: Stock Exchange retail fixed income and equity trading system opened to all financial sector market
participants plus some large portfolio holders (government agencies).
The market was demutualized as the unified Colombian Stock Exchange started operations in July 2001.
Mar-06
Nov-05
Jul-05
Mar-05
Nov-04
Jul-04
Mar-04
Nov-03
Jul-03
Mar-03
Nov-02
Jul-02
Mar-02
Sep-01
May-
Ene-01
Sep-00
May-
Ene-00
Monthly Forex Operations
USD Millions
OPCF TRM - BVC
8,000
150
6,000
100
4,000
2,000
50
0
OPCF
16,000
Sep-99
May-
Ene-99
Sep-98
May-
12,000
Ene-98
Sep-97
May-
Ene-97
Fwd & Intebank Set FX
Forex Operations
300
14,000
Fwd - Banrep
250
Interbank Spot
10,000
200
Main Market Participants
MEC
+
SEN
Jan - Apr 2006
Financial
Corp
4%
Individuals Foreign
3%
Funds Securities
Funds Insurance
2%
AFP
1%
1%
3%
Other
13%
Fiduciaries
4%
Banks
31%
Brokerage Firms
38%
Daily Average Trade:
USD $5,364 Millions
Abr-06
Mar-06
Feb-06
Ene-06
Dic-05
Oct-05
Sep-05
2,200
Ago-05
Jul-05
May-05
Abr-05
Mar-05
Feb-05
Ene-05
Nov-04
Oct-04
Sep-04
Ago-04
Jun-04
May-04
Abr-04
Mar-04
Ene-04
Dic-03
Nov-03
Sep-03
Ago-03
Jul-03
Jun-03
May-03
Mar-03
Feb-03
Ene-03
Dic-02
Oct-02
Sep-02
Ago-02
Jul-02
May-02
Abr-02
Mar-02
Feb-02
Ene-02
TRM COP / USD
3,000
2,600
78
68
2,400
58
48
TES 26/04/2012
38
TES 25/01/2012
TES 12/09/2014
28
IGBC/100
TCRM
18
2,000
8
TES & IGBC
USD - TES – IGBC Prices
138
128
2,800
118
108
98
88
Institutions, assets and daily traded
volume by institutions
Total Assets: COP $329.8 Billions
Total Number of Surpervised Intitutions: 495
Total Daily Trade: COP $10.6 Billions
49%
50%
46%
45%
41%
39%
40%
35%
30%
30%
25%
29%
24%
20%
15%
10%
8%
8%
9%
5%
5%
5%
4%
2%
1%
0%
Financial Intermediaries
Pensions, Severance and
Fiduciaries
N. Institutions
Insurance Companies and
Intermediaries
Daily Trade
Issuers, Investment
Securities Intermediaries &
Portfolios and Other Agents
Other Agents
Assets
Main Financial
Conglomerates Market Share
Assets
Investment Portfolio
Jun-05
Mar-06
Jun-05
Mar-06
GEA
20.5%
20.4%
21.9%
21.7%
G Aval
22.1%
22.8%
21.9%
23.0%
State-Owned
15.2%
13.7%
18.2%
14.7%
BBVA
6.0%
7.3%
6.6%
7.7%
Bolivar
3.5%
4.0%
3.7%
3.4%
Other Foreign Owned
14.3%
15.2%
14.9%
16.5%
Other Institutions
10.6%
9.6%
8.3%
7.8%
7.7%
7.0%
4.5%
5.2%
100.00%
100.00%
100.00%
100.00%
IOE
Total
Index
1.
2.
3.
4.
5.
Financial System main trends
Pre-merge financial scenario
New structure for financial supervision
The Challenges today
The Challenges tomorrow
Pre-merge financial scenario
• Stable macroeconomic and political environment
• Relevant institutional savings growth
• New challenges for risk management among
market participants, regulators and supervisors
• Strong growth of fixed income and equity trade
with important implications and demands on
market conduct regulation and supervision
• Market demutualization
• Basic
market
infrastructure
development
(Trading
platforms,
Central
Depositories,
Payment Systems, Centralized Asset Valuation)
Pre-merge financial scenario
• Finance Minister commitment to renew
regulation and supervision for the Financial
Sector
• Need for consensus building among former
Banking and Securities Superintendencies and
Finance Ministry
• Overall Governance of the Financial Sector
– Policy definitions – Congress
– Regulation – Finance Ministry
– Supervision – Banking/Securities
Superintendences
Pre-merge financial scenario
1. Different kinds of financial sector institutions
perform similar activities.
2. Common activities exposed to common
risks.
3. Financial System stability and consumer
protection highly dependent on adequate
and specialized risk management
Index
1.
2.
3.
4.
5.
Financial System main trends
Pre-merge financial scenario
New structure for financial supervision
The Challenges today
The Challenges tomorrow
Main Objectives
• Avoid/Eliminate regulatory arbitrage.
• Financial system stability.
• Consumer protection.
Value Chain
RESEARCH AND
DEVELOPMENT
R
E
G
U
L
A
T
I
O
N
SUPERVISORY
METHODOLOGIES DESIGN /
RISK ANALYSIS
CORE
SUPERVISORY
STRUCTURE
RESEARCH /
MARKET ANALYSIS /
INFO ADMINISTRATION
REGULATORY
COORDINATION
CONSUMER
PROTECTION
SUPPORT AREAS
SECRETARY GENERAL AND ADMINISTRATION
LEGAL AFFAIRS
INFORMATION TECHNOLOGY
FINANCIAL
SYSTEM
C
U
S
T
O
M
E
R
Core Supervisory Structure
Relationship Matrix
Global
Specific
Market
Conglomerates
& Corporate
Governance
Asset Laundry
Operational
Social
Security
Pensions, Severance Funds &
Fiduciaries
X
X
X
X
X
Insurance Companies and
Intermediaries
X
X
X
X
Issuers, Investment Portfolios and
Other Agents
X
X
X
X
X
X
X
X
X
X
X
X
Institutions
Risks
Financial Intermediaries
Securities Intermediaries & Other
Agents
Credit
X
Technical
(Insurance)
X
SFC Organizational Structure
OVERALL
MANAGEMENT
CONSULTATIVE
FINANCIAL SUPERINTENDENT
OF COLOMBIA
ADVISORY
GROUP
COORDINATION
COORDINATION
FOR THE
FINANCIAL SYSTEM
LEGAL
ORIGIN
INTERNAL AFFAIRS
SECRETARY
GENERAL
LEGAL
AFFAIRS
ADMINISTRATIVE AND
FINANCIAL
JUDICIAL
REPRESENTATION
HUMANS
RESOURCES
APPEALS
DISCIPLINARY CONTROL
CONSUMER
PROTECTION
I&T
R&D
SUPERVISION
METHODOLOGIES
DESIGN / RIKS
ANALYSIS
INFORMATION
SYSTEMS UNDER
INFO
ANALYSIS
UNDER
OPERATIONS UNDER
NORMATIVE
COORDINATION
UNDER
DOCTRINE
UNDER DIRECTORATE
INSTITUTIONAL / PRUDENTIAL
PENSION AND
SEVERANCE FUNDS
FIDUCIARY
AGENTS
,
DEFINED BENEFIT /
DEFINED CONTRIBUTION
SYSTEMS
CREDIT
INSTITUTIONS
CREDIT
INSTITUTIONS
INSURANCE
AND
REINSURANCE
AGENTS
INSURANCE
AGENTS
INSURANCE
TCHNICHAL RISKS
FIDUCIARIES
SUPERVISORY
CREDIT
INSTITUTIONS
GLOBAL RISKS
SECURITIES ISSUERS,
PORTFOLIOS
AND OTHER AGENTS
ACCESS
TO MARKET
SECURITIES
INTERMEDIAR
IES AND
OTHER
AGENTS
SECURITIES
INTERMEDIARIES/
SELF REGULATED
AGENTS
SECURITIES ISSUERS
SUPERVISORY
INFRAESTRUCTURE
SUPPLIERS /MONEY
EXCHANGE AGENTS
LEGAL
CREDIT RISK
CREDIT
RISK
SUPERVISORY
LEGAL
LEGAL
LEGAL
MONEY LAUNDERING
PREVENTION/
CONTROL
SUPERVISORY
MARKET RISK
AND INTEGRITY
MARKET RISKS
SUPERVISORY
CONDUCT
SUPERVISORY
CREDIT
RISK
SUPERVISORY
INVESTMENT
PORTFOLIO
LEGAL
MONEY
LAUNDERING
RISK
LEGAL
OPERATIONAL
RISK
TECNOLOGY
AND OPERATIONAL
RISKS
SUPERVISORY
PROCESSES RISK
CONGLOMERATES
RISK AND
CORPORATE
GOVERNANCE
CONGLOMERATES
RISKS
SUPERVISORY
CORPORATE
GOVERNANCE
Present SFC Governance Structure
CONSULTATIVE
OVERALL
MANAGEMENT
ADVISORY
FINANCIAL SUPERINTENDENT
COORDINATION
FOR
THE FINANCIAL
SYSTEM
LEGAL ORIGIN
INTERNAL
CONTROL
EXTERNAL
COMMITTEES
GROUP COORDINATION
DISCIPLINARY
CONTROL
MANAGERIAL
COMMITTEES
External Committees
•
Consultative: representatives of the financial
sector associations (10)
•
Advisory: independent professional advisors
(5)
•
Coordination for the Financial System:
–
–
–
–
Finance Minister
Central Bank Governor
Fogafin Director
Financial Superintendent
Managerial Committees
The Committees are divided in:
Overall Management
1. Management Committee
2. Human Resources Committee
3. Quality Assurance Committee
Group Coordination
Legal Origin
1. Core Supervisory Structure
1. Internal Control Committee
2. Research and Development
2. Conciliation and Judicial
Defense Committee
3. Research and Development
and core supervisory structure
4. Legal Control directors
3. New financial sector managers
approval Committee
4. Purchases and Bids Committee
SFC New Proposed
Governance Structure
• Board of Directors
• Fixed term and clearly defined appointment
procedures for head of SFC.
• Accountability rules
• Judicial protection regime for Supervisors
• Strengthened administrative and budgetary
independence.
• Supervision of competition practices and rules
within the financial sector.
Index
1.
2.
3.
4.
5.
Financial System main trends
Pre-merge financial scenario
New structure for financial supervision
The Challenges today
The Challenges tomorrow
Main Challenges of Initial
Phase
• Cohesion and motivation of the executive group,
explanation and promotion of the new
conceptual framework both within and outside
SFC
• Active commitment of the SFC staff to the
definition and development of particular
objectives by areas.
• Assimilation of new functions, team-work and
coordination among the new areas.
• Financial System understanding of the SFC new
structure, functions and responsibilities.
The Challenges Today
• Full development of Law 964 of 2005 – Securities
Law
– Self-regulated organization for securities markets
– Promotion of information disclosure.
– Trading systems improvements
– Organization of a fully developed futures market
• Adoption of international standards for prudential
regulation.
• New supervision methodologies design
• ISO certification of supervision core processes.
Index
1.
2.
3.
4.
5.
Financial System main trends
Pre-merge financial scenario
New structure for financial supervision
The challenges today
The challenges tomorrow
The Challenges Tomorrow
• Consolidation of the new risk based supervision
model.
• Widespread adoption of Corporate Governance
standards, both within SFC and supervised
institutions.
• Consolidated supervision of conglomerates.
• Development of long term approach to issues
related with pension funds and annuities.
• Strengthened
regulation
for
portfolio
management and market conducts.
• Enhanced information disclosure.
Thank You