ABSTRACT
In Chapter 5, the need to overcome the liquidity constraints facing emerging markets was identified. Indeed, banks must be encouraged to participate in public distribution of securities on markets such as the Lusaka Stock Exchange. The role that banks play in public distribution of securities can raise issues such as insider dealing by a bank, particularly where such institutions play the role of shadow or de jure director of a listed company. In fighting bank insider dealing – that is, in a case where a bank is committing insider dealing on the stock market – which regulatory authority is responsible for prosecuting the bank? Can we treat this as a function of banking supervision, and thus falling under the jurisdiction of the Bank of Zambia, or as an element of securities regulation and therefore falling in the hands of the Securities and Exchange Commission? Indeed, does the bank remain under the supervision of the central bank simply because it is a bank, or does it move into the jurisdiction of the Securities and Exchange Commission? In Zambia, the Securities Act 1993 vests supervisory powers over the securities industry in the Securities and Exchange Commission. Yet, s 77 of the Banking and Financial Services Act 1994 provides that:
(1) Where, in the opinion of the Bank of Zambia, a bank or any person on behalf of a bank is committing or pursuing or is about to commit or pursue on behalf of the bank any act or course of conduct that is considered by the Bank of Zambia as unsafe or unsound practice, the Bank of Zambia may enter into one or more written agreements with the bank or its board of directors to establish a programme of action to counteract the unsafe or unsound practice and to establish or maintain safe and sound practices in the conduct of the business of the bank.
