Emerging Local Bond Markets Post-Crisis:
Challenges and Next Steps
June 15-16, 2010
World Bank Group Headquarters, J Building Auditorium (JB1-080)
701 18th Street, NW, Washington DC 20433
The global financial crisis raised important challenges for emerging local bond markets, from having to respond to excessive foreign outflows to determining how to regulate securities firms and products in the future. The Securities Markets Annual Conference considered the impact of the crisis on local currency bond markets and critical steps in their development going forward. Speakers answered such questions as: How has the need for government and corporate bond markets been affected? What changes in regulating securities markets and institutions are most critical? Should securitization continue to be used, but with appropriate safeguards to avoid some of the abuses seen in more developed markets? Should emerging market countries consider adopting some of the regulatory changes being proposed in the US and UK? How can the World Bank Group help?
In attendance were over 60 policymakers, regulators, global and domestic investors, and other market practitioners from developed and emerging market countries who engaged in fruitful and dynamic discussions of these critical issues.
AGENDA (click on speaker's name to view presentation)Tuesday, June 15
- Shidan Derakhshani, Director, Global Capital Markets Development Department, Financial and Private Sector Development, World Bank Group
- Alison Harwood, Manager, Securities Markets Group, Global Capital Markets Development Department (GCMSM), Financial and Private Sector Development, World Bank Group
- Carmen Reinhart, Professor of Economics and Director, Center for International Economics, University of Maryland
|10:00-10:30 am||Coffee Break and Book Signing, Carmen Reinhart of her new book co-authored with Kenneth Rogoff, “This Time is Different: Eight Centuries of Financial Folly”|
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|10:30 am-12:30 pm|
Government Bond Markets: Crisis Impact and Role in Financial Sector Development
Local currency bond markets in many emerging market countries helped stem the impact of the crisis, benefitting from years of market growth and strengthening. This session will assess the role local government bond markets played in alleviating-or exacerbating-- the impact of the crisis, and how the crisis has affected the need for these markets going forward. What lessons have been learned? What are the critical areas for further market development? How will emerging market countries be affected by their improved growth prospects? What key policies are needed to help them weather the challenges posed by rising inflows from foreign and domestic investors? Given the post crisis dynamics, will government bond markets continue to support broader financial sector development, as reference points and building blocks that help enhance access to long-term financing?
| ||Session Chair: Catiana García-Kilroy, Consultant, World Bank Group|
- Anderson Silva, Senior Debt Specialist, GCMSM, Financial and Private Sector Development, World Bank Group (presenting a paper on "Public Debt Management in Emerging Markets: Has this time been different?")
- Bhimantara Widyajala, Director, Government Debt Securities, Directorate General of Debt Management, Ministry of Finance, Indonesia
- Mehmet Tolga Yucel, Head of Domestic Debt Department, Undersecretariat of Treasury, Turkey
- Octavio Lara, Deputy Director General of Debt Issuance, Secretaría de Hacienda y Crédito Público, México
- Joyce Chang, Managing Director, Global Head of Emerging Markets and Credit Research, JPMorgan
|12:30 -1:45 pm||Lunch|
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|1:45-3:00 pm||Corporate Bond Markets After the Crisis: How will they change?|
Corporate or non-government bond markets play a particularly vital role in providing long-term, local currency funding to key sectors of the economy including infrastructure, housing finance and increasingly to domestic Microfinance and MSME lending institutions who are seeking to diversify their financing sources and expand their lending activities. As a result of the crisis, foreign bank lending and foreign portfolio capital flows into emerging markets have been severely curtailed, with the result that, in many countries, local corporates had nowhere to turn but to the domestic debt markets. This panel will discuss the importance of access to local current bond markets for issuers in the infrastructure and housing sectors in particular and will also consider the impact of the crisis on these markets and the changes we can expect to see going forward.
Session Chair: Tim Brennan, Principal Financial Specialist, GCMSM, Financial and Private Sector Development, World Bank Group
- Denis Clarke, Chief Investment Officer, Infrastructure, IFC
- Ade Adebajo, Director, Capital Markets, Africa, Standard Chartered Bank, U.K.
- Loic Chiquier, Manager, Non-Bank Financial Institutions Group, Global Capital Markets Development Department, Financial and Private Sector Development, World Bank
|3:00-3:15 pm||Coffee Break|
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|3:15-4:45 pm||Securities Regulation Post-Crisis: More Regulation or Smarter Regulation?|
Critical aspects of securities market regulation were challenged by the crisis, from regulatory scope, relevance, and supervision to issues related to incentives and excessive behavior in the securities industry. Regulatory reform is a heated debate today, with serious concerns about how to restore market trust and mitigate future crises. This panel will highlight and discuss the key regulatory issues and reform efforts. Will current and anticipated reforms adequately address the most pressing problems? What is the most optimal way to formulate regulatory and supervisory regimes in securities markets? Should emerging market countries adopt similar measures to those in the advanced markets?
| ||Session Chair: Clemente del Valle, Lead Financial Specialist, GCMSM, Financial and Private Sector Development, World Bank Group|
- Tajinder Singh, Deputy Secretary General, International Organization of Securities Commissions (IOSCO)
- Jonathan Sokobin, Deputy Director and Managing Executive, Division of Risk, Strategy and Financial Innovation, U.S. Securities and Exchange Commission
- Guillermo Larrain, Chairman , Emerging Markets Committee, IOSCO, and former Chairman, Superintendencia de Valores y Seguros, Chile
- Bert Chanetsa, Deputy Executive Officer, Investment Institutions, Financial Services Board, South Africa
|4:45-5:45 pm||World Bank Group: Supporting Local Bond Markets Development |
What is the World Bank Group doing to support development of local bond markets? What other activities do conference participants think the WBG should support?
| ||Presented by: Securities Markets Development Group, Global Capital Markets Development Department|
|5:45-7:30 pm||Cocktail Reception|
Wednesday, June 16
|9:00 - 10:15 am||What is the Future of Securitization?|
Securitization was at the heart of the crisis, generating serious concerns and probing questions about its usefulness and reliability as a financial instrument. This panel will consider whether regulatory and other changes being proposed in more advanced markets are addressing the underlying securitization –related problems that helped create the crisis. How will these changes impact the securitization industry? Should emerging market countries adopt them? How do emerging market countries view the need for asset backed products today? Should a broader spectrum of asset-backed instruments be developed?
| ||Session Chair: Alison Harwood|
- Friedrich Jergitsch, Partner, Freshfields Bruckhaus Deringer, Austria
- Javier Utria, Director, Investments and Market Development, Titularizadora Colombiana
- Robert Liao, Managing Director, CEEMEA Securitised Products Group, Citi, U.K.
|10:15-10:30 am||Coffee Break|
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| ||Rating Agency Reforms: Is there a Better Model?|
This latest crisis once again called into question the role of rating agencies. This panel will consider the reforms being discussed about rating agencies, whether these reforms are appropriate, and what other models are being and should be considered. Has the crisis altered the view of emerging market countries about rating agencies? Are emerging market countries reconsidering their use? How will reforms being discussed in advanced markets affect them?
| ||Session Chair: Patrick Conroy, Program Director and Senior Adviser, Global Capital Markets Development Department, Financial and Private Sector Development, World Bank Group|
- Paul Coughlin, Executive Managing Director, Standard & Poor's
- Roopa Kudva, Managing Director and Chief Executive Officer, CRISIL, India
- Mahesh Kotecha, President and Founder, Structured Credit International Corporation
|11:45 am-12:30 pm||Investor Panel|
Many emerging market countries are becoming more attractive investment opportunities post-crisis, given their rising economic growth rates and investment ratings. This panel will discuss the investors’ perspective on emerging market debt. What is happening in terms of inflows today and what is likely going forward? Which countries are likely to get money and why? What makes a domestic bond market attractive to a foreign and domestic investor?
- Presenter: Cynthia Steer, Chief Research Strategist and Managing Director, Rogerscasey
- Comments by: Denise Simon, Managing Director and Senior Portfolio Manager, GEM Fixed Income and Currencies, HALBIS Asset Management
|12:30 pm||Concluding Remarks, Alison Harwood|
The Securities Markets Group is a global leader in developing securities markets in emerging market countries, providing advisory services, supporting IFC investments, and providing intellectual leadership on global trends and operations. The group works closely with in-country counterparts to build enabling legal and regulatory environments and strengthen market institutions. As a joint World Bank and IFC operation, the team works closely with IFC and World Bank industry, regional and Treasury departments throughout the emerging markets world.
Securities Markets Group
Global Capital Markets Development Department
Financial & Private Sector Development
The World Bank Group
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