• The New Capital Markets Law: Interview
  • September 10, 2012 | Author: Alexander Savva
  • Law Firm: Turcan Cazac Law Firm - Chisinau Office
  • Chisinau, Moldova - In an interview with the local publication ECOnomist, the Turcan Cazac lawyer Alexander Savva shed light on the benefits and the key aspects of the new Law on Capital Markets, passed on July 11. Alexander Savva is a regarded regulatory lawyer and he drafted the Law in question in cooperation with an international expert, as part of the Financial Sector Reform Project of 2009-2010 (an advisory project funded by the World Bank).

    As discussed in the interview, the Law significantly reduces the restrictions that currently make the local capital market unattractive to businesses and investors. For instance, the Law removes the requirements to register private security issuance, to register securities on an exchange and to register all companies as public entities, as well as to conduct transactions only via specific market operators and via secondary public offers. Not only do the enumerated restrictions hinder the performance of the capital market and are exclusively beneficial for the market operators, these restrictions also significantly encumber the corporations and investors.  As the new law is revoking these limitations, it is a law of liberalization and a law of the investors and businesses.

    Within the interview, Mr. Savva has also addressed some of the criticism towards the Law from a local press agency; he evaluated one by one the counterarguments, indicating how they were unfounded or exaggerated. Among many things, Alexander Savva provided a few illustrative examples demonstrating how the new Law diminishes the risk of corruption as a result of significantly less procedures and authorizations demanded from the market participants. It is important to note that the Law reduces the authorities' regulation and intervention areas to three market sectors: public offers, financial services, and the distribution of financial instruments on organized markets.

    A key conclusion from the interview is that the capital market belongs to the companies and the investors, rather than to operators or intermediaries. The new Law seeks to build a regulation model that should have been implemented years ago; that is why the authorities need to strive to implement the Law and continue to reform the market  in order to align the incentives of its participants. The role of the intermediaries should be winning over  investors and businesses through high quality services and  effective financial instruments. Only when companies and investors are swayed to the capital market for profitability reasons rather than due to legal obligations, the capital market of Moldova can grow and mature.