BSE to become private institution

Central Bank seeks to form tax-exempted financial hub: Salameh says

The Governor of the Central Bank Riad Salameh said that commercial banks will not take part in the capital markets exchange. He underlined the need to disconnect commercial banks from investment banks in order to protect the funds of depositors from stock market speculations.

Salameh said that the recently adopted Capital Markets Law aims at turning the Beirut Stock Exchange (BSE) into a private institution. He said that other licenses would be granted for the establishment of one or more private bourses if the circumstances were apt for it.

The capital market law was approved by Parliament in August. The Law stipulates the establishment of 'The National Council for Financial Markets’, an independent body tasked with regulating and supervising capital markets. The Law stated that the Council should consist of seven members. The Governor of the Central Bank (Chairman), the General Director of the Ministry of Finance, the General Director of the Ministry of Economy and Trade, the Chairman of the Banking Control Committee (of the Central Bank), and three experts. The three expert members should be assigned through a Cabinet decree which has yet to be issued.

“The concept of privatization is productive as long as you have good regulators (laws and law enforcement bodies),” said Saeb Zein, member of the BSE board.

The number of traded shares dropped by 16 percent to 274,559 during the week ending October 21. The BSE is a very good system, constantly upgraded, but it does not have enough stocks or enough investors, said Zein. He said that prompting the activity at the BSE is about adopting a whole system which involves promoting companies to list their stocks, while at the same time encouraging investors to trade.

The Central Bank aims to establish a financial hub exempted from taxes. “If approved by the government, international funds and fund management institutions would enroll in the center,” Salameh said.