November 1, 2009

CMDA back in RBF fold - Saturday, October 31, 2009

A CONTINUOUS increase in the cost of maintaining the Capital Markets Development Authority's operations is one of the major reasons it was brought back under the arm of the central bank.

Reserve Bank of Fiji governor Sada Reddy cleared the air on this shift and said the CMDA could not justify the rise in costs because it would have led to increase in fees, which could later affect the capital market.

He said when the CMDA was established, it was hoped that it would be able to sustain itself as capital markets was forecast to grow strongly.

"When the CMDA was set up we were thinking that in five to six years, the capital market will grow quite strongly and we were hoping that the number of companies (to list) will increase to 25," Mr Reddy said.

"We were hoping that on the back of that kind of growth, the CMDA will be able to sustain itself through the authority. Unfortunately that did not happen," he said. "The cost of operations of CMDA kept escalating.

"We could not justify it because if that cost kept going up, I think the CMDA would probably have to increase some of the fees, which -- of course -- would have affected the intermediaries and would have affected the growth of capital markets in the country."

Mr Reddy said, however, that he hoped this would not be long term and "that we can always go back where we were".

"For the time being, it has been folded back into the RBF and they are now fully operational in RBF as one of the units."

Mr Reddy also assured the business community that there was "absolutely no conflict of interest in the RBF with regard to CMDA being based there".

"If anybody has any doubt, our doors are open for you to come and talk to us and you demonstrate to me or my management where there is conflict of interest and I will make sure if there is any, I will remove that," he said.

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