South Asia: Strengthening of Stock Exchange Listing Regulations in SAFE Countries

South Asia: Strengthening of Stock Exchange Listing Regulations in SAFE Countries

This project sought to address two needs: a) the strengthening of stock exchange listing regulations in individual South Asia Federation of Exchanges (SAFE) member countries; and b) facilitating progress towards harmonization of listing regulations in the region.  The consultant produced a comprehensive report providing recommendations for legal and regulatory change that were responsive to the circumstances of the capital markets sector in the region.

The consultant, with the assistance of local representatives from the exchanges, conducted a survey in each member country to gather information on the regulatory status of each exchange.  This data was collated and used to prepare the final report which addressed the weaknesses of existing listing regulations and recommended measures to move towards a harmonization of rules as between SAFE members in order to facilitate cross-listing.

The comments from the SAFE members were generally supportive of the recommendations and they requested further technical assistance to help them in conducting a workshop to lay out the next steps towards harmonization.

Lessons Learned

Lessons relating to project conduct/management:

  • Liaising with the head of the SAFE organization proved very helpful in gaining overall support for the project.
  • Use of a SAFE members in the survey exercise provided greater access and buy-in than had the consultant attempted to conduct the survey himself. Workshops also proved to be useful in strengthening commitment to the project.
  • Legislation needs to be drafted broadly in order to provide flexibility to adjust to changing circumstances through regulations
  • Remote mentoring is also useful to provide additional assistance in implementation without incurring too much cost
  • The scope of similar work on issues of regional harmonization, for example, in southern Africa, need to involve in the survey not just the regulatory bodies but also domestic and international investors, a cross-section of corporate sector business and financial intermediaries operating in the market such as broker-dealers. Otherwise the survey results tend to be skewed towards only the Government or regulator perspectives. The project cost was modest at $153,000, so broadening the scope in this way could be managed in a cost effective manner.
  • There may be many reasons why companies are reluctant to use the capital markets for raising funds. In the South Asia region, one of the reasons identified was a reluctance by family-owned businesses (estimated to account for close to 75% of all business in the region) to dilute their control. There may be other reasons too such as costs of capital as compared to retained earnings, informal fund raising, cost of bank finance etc. Any feasibility on the efficacy of local or regional capital markets should take account of comparisons with alternative sources of finance.


  • The Consultants Final Report provides a very good overview of the project and contains a series of recommendations for action. Whilst not all of these recommendations may be relevant to other areas of the world, many should provide food for thought. The survey approach is also summarised in this report.
  • Terms of reference