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Events
2008 Gemloc Advisory Services Roundtable Conference and Workshop Launch
May 29-30, 2008Washington, D.C.

The Gemloc Advisory Services Roundtable Conference and Workshop was held on May 29-30 in Washington D.C. The conference served as a platform for participants to share their views on and experiences in developing local currency bond markets.

The Gemloc Advisory Services Roundtable Conference and Workshop was held on May 29-30 in Washington D.C. The two-day event attracted representatives from Ministries of Finance, Central Banks, and securities regulators from over 20 emerging market countries, as well as capital market specialists from the World Bank and other multilateral, academic, and investment consulting institutions.

The conference served as a platform for participants to share their views on and experiences in developing local currency bond markets. It has also fostered an environment for further cross-country discussions and cooperation.

 

Thursday, May 29 - Roundtable Conference

INTRODUCTION

8:45 – 9:30 AM Breakfast and Registration
   
9:30 – 9:45 AM Opening Remarks
Michael Klein, Vice President, Financial and Private Sector Development, The World Bank Group and Chief Economist, IFC
   
9:45 – 10:00 AM Context for the Gemloc Conference 
Shidan Derakhshani, Director, Corporate Governance and Capital Markets Advisory Department, World Bank and IFC
   
10:00 – 10:30 AM Overview of the Gemloc Initiative (PDF, 4MB)
Gemloc Advisory Services Team 
This session will present a broad overview of the Gemloc Initiative, including issues and challenges in the design of the Advisory Services Program.
   
10:30 – 10:45 AM Discussion
   
10:45 – 11:00 AM Coffee Break

SESSION 1: Emerging Market Local Currency Bond Market Development: Prospects and Policy Implications

11:00 AM – 12:15 PM Emerging Market Local Currency Bond Market Development: Prospects and Policy Implications
Moderator: Patrick Conroy, Senior Adviser, Corporate Governance and Capital Markets Advisory Department, World Bank and IFC
   
11:00 – 11:20 AM Speaker Presentation: Thoughts on Local Debt Markets and Challenges Ahead (PDF, 1.5MB)
Thomas Glaessner, MD and Head, Emerging Markets Trading Strategy, Citigroup
The speaker will provide an overview of drivers, trends, and challenges in emerging market local currency debt market development over the next 5 years to portray the environment in which Gemloc will likely be operating. Macroeconomic and financial impacts of investment flows to these markets, as well as policy implications for emerging market governments, will also be discussed.
   
11:20 AM – 11:50 PM Panel Discussion
  • Johan Schoeman, Deputy Director-General, National Treasury, South Africa
  • Gerardo Rodriguez, Director General, Public Credit, Ministry of Finance, Mexico
  • Chandra Premaratne, Assistant Governor, Central Bank of Sri Lanka
Policy makers from emerging economies will share their specific country perspectives regarding trends and challenges they see in local currency bond markets over the next 5 years.
   
11:50 – 12:15 PM Q&A
   
12:15 – 1:45 PM Lunch

SESSION 2: Key Challenges and Priorities for Emerging Market Issuers

1:45 – 3:15 PM SESSION 2: Key Challenges and Priorities for Emerging Market Issuers 
Moderator: Phillip Anderson, Senior Manager , Banking and Debt Management Department, World Bank Group
   

1:45 – 2:15 PM

Speaker Presentation: Key Challenges and Priorities for Emerging Market Issuers (PDF, 3.8MB)

Anderson Silva, Senior Debt Specialist, Capital Markets Advisory Group, World Bank Group
Alison Harwood, Head, Capital Markets Advisory Group, IFC

The speaker will provide a global overview and shed some light on key challenges and perceived priorities for emerging market policy makers based on the Gemloc Advisory Services survey results, as well as the team’s experience, current literature, and observed practices. While the main focus will be on government debt markets, key priorities for corporate bonds will also be addressed
   

2:15 – 2:55 PM

Panel Discussion

  • T.C. Nair, Executive Director, Securities and Exchange Board, India
  • Abraham Nwankwo, Director General, Debt Management Office, Ministry of Finance, Nigeria
  • Mohamed Assad, Advisor to the Minister, Public Debt Management, Ministry of Finance, Egypt
  • Emre Balibek, Head of Market Risk Management, Ministry of Finance, Turkey

In light of the speaker presentation, debt managers from around the world will share their specific country experiences regarding recent lessons, current challenges, and future priorities in local currency bond markets. Panelists will address bottlenecks in regulations, primary market practices, clearing and settlement and other areas envisaged under the scope of Gemloc Advisory Services.

2:55 – 3:15 PM

Q&A

3:15 – 3:30 PM

Coffee Break

SESSION 3: Key Challenges and Priorities for International and Domestic Investors

3:30 – 5:00 PM

SESSION 3: Key Challenges and Priorities for International and Domestic Investors
Moderator: Anderson Silva, Senior Debt Specialist, Capital Markets Advisory Group, World Bank Group

3:30 – 4:00 PM Speaker Presentation: Gemloc Advisory Services Roundtable (PDF, 82KB)
Cynthia Steer, Chief Research Strategist and Managing Director, Rogers Casey

The speaker will provide an overview of key challenges facing international and domestic investors and address the consolidation of emerging market local currency bonds as an international asset class.

4:00 – 4:30 PM

Panel Discussion

  • Eliot Kalter, President, EM Strategies, Inc., United States, Emerging Market Private Sector Access to Capital Markets - The Role of the Domestic and Foreign Investor Base (PDF, 665KB)
  • Frank Warnock, Associate Professor, Darden School of Business, University of Virginia
  • Paulo Fontoura Valle, Undersecretary of Public Debt, Ministry of Finance, Brazil, Presentation (PDF, 190KB)

Panelists will share their specific experiences regarding obstacles facing investors and what policy makers can do to facilitate both domestic and international institutional investment in local currency bonds. These insights would serve as valuable feedback for policy makers and the Gemloc team in mapping advisory services needs.

4:30 – 5:00 PM Q&A

SESSION 4: Key Lessons and Next Steps

5:00 – 6:00 PM

SESSION 4: Key Lessons and Next Steps

In this wrap-up session, moderators will briefly summarize key conclusions from their respective panels. Their highlights will be followed by an open discussion with the audience on the way forward and concrete actions for initiatives like Gemloc to facilitate further development of local currency bond markets.

6:00 – 7:30 PM Reception

Friday, May 30 - Workshop

 

Gemloc Applied Research and Publications

9:00 AM – 12:15 PM Gemloc Applied Research and Publications
   
9:00 – 9:30 AM Overview of the Gemloc Applied Research Program (PDF, 3.6MB)
Pedro Elosegui, Deputy Head of Economic Research, Central Bank of Argentina and Consultant, Capital Markets Advisory Group, World Bank

This session will provide an overview of the Gemloc Applied Research program, agenda, and publications.

9:30 – 9:45 AM Discussion
   
9:45 – 10:15 AM Presentation 1: “Foreign Currency Debt, Financial Crises and Economic Growth: A Long Run Exploration (PDF, 385KB)
By Michael Bordo and Chris Meissner

Michael Bordo, Professor of Economics and Director of the Center for Monetary and Financial History, Rutgers University

10:15 – 10:30 AM Discussion
   
10:30 – 10:45 AM Coffee Break
   
10:45 – 11:15 AM Presentation 2: “A Virtuous Cycle in Local Currency Bond Markets (PDF, 1.5MB)
By Frank Warnock, Veronica Warnock, and John Burger
Frank Warnock, Associate Professor, Darden School of Business, University of Virginia
   
11:15 – 11:30 AM Discussion
   
11:30 – 12:00 AM Presentation 3: “Pension Funds and Capital Market Development: How Much Bang for the Buck? (PDF, 345)
by Claudio Raddatz and Sergio Schmukler
Sergio Schmukler, Lead Economist, Development Research Group, World Bank
   
12:00 AM – 12:15 PM Discussion
   
12:15 – 1:15 PM Lunch

Friday, May 30 - Technical Sessions

SESSION 1: What Can DMOs Do to Enhance the Liquidity of Their Secondary Market?

1:15 – 2:45 PM Session 1: What Can DMOs Do to Enhance the Liquidity of Their Secondary Market?
Moderator: Baudouin Richard, Senior Consultant, Capital Markets Advisory Group, World Bank

1:15 – 2:45 PM

The discussion provided an opportunity for participants to exchange views about the degree of importance of market liquidity and to share experiences about the most efficient ways to increase the depth of the secondary market by fostering a trading activity.

Participants focused the discussion mostly on the organization of their respective primary dealers systems. This included the creation by some DMOs of a specific “market maker” status granted to some of their primary dealers and the establishment of an objective procedure for appraising primary dealers’ performance in order to best motivate them to perform.

The discussion also covered some technical features such as the possible creation by DMOs of a “securities repurchase facility” meant to help primary dealers to cover their short position with a short term borrowing of securities from the relevant DMO. Different views were expressed as to whether primary dealers should be obliged to quote prices only to their customers or also to one another and as to whether giving primary dealers the status of “DMO’s privileged counterpart for its debt management operations “ as an incentive to perform is a feasible proposition in all markets .

The general conclusion was that a primary dealer’s system can bring a positive contribution to the liquidity of the market provided the required procedures and market infrastructure are set to that effect.

2:45 – 3:00 PM Coffee Break

SESSION 2: Linking Local CSDs to International CSDs

3:00 – 4:30 PM Session 2: Linking Local CSDs to International CSDs 
Moderator: Catiana Garcia-Kilroy, Senior Consultant, Capital Markets Advisory Group, World Bank
 

Four countries ( Brazil, Mexico, Turkey and South Africa) with different infrastructure connections to international markets led an open discussion on their views and concerns on linking their national C&S infrastructure to international C&S arrangements such as Euroclear and Clearstream. The discussion was open to representatives from approximately 16 additional emerging markets that attended the Conference..

The main conclusion of the discussion was that while connectivity with international markets is a desirable objective, it is not exempt from a series of policy dilemmas under current operational arrangements. Countries represented in the discussion provided a broad range of views, which depended on their domestic regulations, market structure, size and degree of market development.

Highlights of the discussion included concerns over the opacity of nominee accounts for countries that require identifying final ownership for supervisory or tax compliance reasons, or the nature of local debt holders for better targeted issuance strategy. Additionally, policy issues related to the impact of ICSDs connections on domestic markets’ liquidity and the ability of authorities to organize their domestic market structure were raised. A relevant conclusion was that operational international connectivity is not a substitute to the development of a solid local institutional market organization. Even when the latter is in place, the debt issuer may have to take specific initiatives to ensure the integrity of the market. An example of the latter is the securities lending facility provided by the South African debt office that enables matching the different settlement cycles in Euroclear (T+ 5) and the local market (T+3).