Annual Report 11

1Securities and Exchange Commission Annual Report 2011

ENSURING INVESTOR PROTECTION

2 Securities and Exchange Commission Annual Report 2011

5 About SEC - Mission Statement

6 Chairmans Statement

10 StatutoryMandateoftheSecuritiesand Exchange Commission, and New Strategic Direction - Highlights of 5-year Strategic Plan - NewStructurefortheSecuritiesand Exchange Commission - FunctionsofNewDepartments 17 Governance

- MeetingsoftheCommission - Regulatory Policies - Members of the Commission

21 OperationsReview

- New Issues/ Primary Market - MergersandAcquisitions - NumberofLicensedMarketOperators - SupervisionandEnforcement On-siteinspections Off-siteinspections - Enforcement - InvestigationsandComplaints - Litigation - Anti-MoneyLaunderingand Counter-Terrorism Financing - MarketDevelopment Activities - Human Resources - InternationalCo-operation

Contents


28 EconomicReview - AnOverview - Real Sector Performance - MonetaryDevelopment

35 CapitalMarketReview - StockMarketReview MarketLiquidity/Turnover MarketCapitalization MarketPerformancebySector BondMarket StockMarketPerformanceagainstRateofInflation

47 ReviewofSecuritiesMarketOperators Activities - BrokerDealers - InvestmentAdvisoryServices - CollectiveInvestment Schemes MutualFunds UnitTrusts53 FinancialStatements

- StatementofCommissionersResponsibility - ReportoftheAuditors - IncomeandExpenditureAccount - TheBalanceSheet - The Cash Flow Sheet - Notes to the Financial Statements

61 Appendices

A. Register of Licensees (2011-12) B. ListofCompaniesInspectedin2011 C. Industry Tables D. UsefulContacts


71 TABLES

Table1.1-MembershipofSECCommissionin2011 Table1.2.-MembershipofBoardCommittees Table2.1-LicenceApplicationsReceived2009-2011 Table2.2.-BreakdownofLicensedSecuritiesMarketOperators Table2.3-Ratioofon-siteInspectionsofLicensedSecuritiesMarket OperatorsCompletedin2009-2011 Table2.4.-EnforcementActions Table2.5.-InvestigationsandComplaints Table 3.1. - Growth Rates of GDP by Sector at 2006 Constant Prices Table4.1.-SecuritiesontheGhanaStockExchange Table4.2.-MarketCapitalization Table4.3.-TopTenVolumeLeaders(Jan-Dec2011) Table4.4.-TopTenValueLeaders(Jan-Dec2011) Table4.5.-TopSectorsbyVolume Table4.6.-TopSectorsbyValue Table4.7.-GovernmentBondActivityin2011 Table4.8.-ListedBondattheendof2011 Table4.9.-StockMarketPerformanceAgainstRateofInflation Table5.1.-BrokerageClientele2007-2011

CHARTS/GRAPHS

SECOrganizationChart Graph3.1.-RealGDPGrowthRates:1995-2012 Graph3.2.-InflationRate:Jan-Dec2011 Graph3.3.-PrimeRate:Jan-Dec2011 Graph4.1.-GSECompositeIndex Graph4.2.-TotalVolumeandValueTraded Graph4.3.-MarketCapitalization Graph4.4.-SectorPerformancebyVolumeTraded Graph4.5.-SectorPerformancebyValueTraded Graph4.6.-StockMarketPerformanceAgainstRateofInflation Graph5.1.-MarketShareDistributionofBrokerageIndustryby ValueTradedTop4andtherest Graph6.1.-MarketShareDistributionofFundManagers-Top5andtherest Graph7.1-DistributionofTotalNetAssetValuefortheVariousMutualFunds Graph7.2.-DistributionofTotalNetAssetValueofVariousUnitTrusts


The Mission of the Securities and Exchange Commission (SEC), Ghana, is to promote the orderly growth and development of an efficient, fair and transparent securities market in which investors and the integrity of the market are protected through the proactive implementation of the Securities Laws. This involves ongoing supervision and regulation of the Ghanaian securities market, the education of market operators, policy makers as well as investors on their respective rights and obligations.

i. Enhancementofcapitalmarketinfrastructureandstrengtheningthecapacityofcapitalmarket institutionsandintermediaries

ii. Developmentofcapitalmarketproductsandservices

iii. Promotepublicawarenessandcorporateeducation

iv. Establishmentofarobust,supportive,legalandregulatoryframeworkthatconformsto internationalbestpractice

The vision of the Commission is to create an efficient and effective capital market regulatory framework for Ghana.

MISSION STATEMENT

VISION STATEMENT

OBJECTIVES


In accordance with section 7 of the Securities Industry Act, 1993 (PNDCL 333) as amended, I present to you the 2011 Annual Report of the Securities and Exchange Commission (SEC).

CHAIRMANS STATEMENT

Economic Environment

The year 2011 presented many challenges on theglobal economic front and Ghana was not sparedtheeffectsofthisglobaleconomyonthedomesticeconomicenvironment.Inthemidstofthechallengeshowever, Ghanas economy managed to maintainstrongfundamentalswiththeGovernmentpursuingmacroeconomicpoliciesthatledtoadeclineintherateof inflation,arelativelystablecurrencyregimeandanimprovedbudgetdeficitposition.RealGrossDomesticProduct (GDP)grewby14.4% in2011ascomparedwith6.6% in2010.Achievements in themacro-economic fundamentals saw the country experiencing an increased access to credit, fallinglendingratesandhigherforeigndirectinvestments.This however, failed to impact positively on thecapitalmarketastheAccraboursefailedtoregisterpositivereturnsbythecloseoftheyear.Thebourseclosedtheyearwithanegativereturnof-8.33%.

Governance and Organization

The above developments and challengesnotwithstanding, the Commission continued toadoptmeasurestostrengthenanddeepenthecapitalmarket. Among other measures was the issuance of an Anti-Money Laundering/Combating Financingof Terrorism (AML/CFT) Complianace manual forMarketOperators.

In addition to this, the Commission adopted anew five (5) year strategic plan to strengthen theregulatorycapacityoftheSECthroughimprovement

in its workflows, systems, structure, processes,procedures,staffknowledge,skillsandbetterhumanresource management tools to assist towards the retention of staff, and better output and servicedelivery.

The Strategic Plan sets out four broad strategic objectivesasfollows:

1. Enhancementofcapitalmarketinfrastructure andstrengtheningthecapacityofcapital marketinstitutionsandintermediaries.2. Developmentofcapitalmarketproductsand services.3. PromotionofPublicAwarenessand CorporateEducation.4. Establishmentofarobust,supportive, legal and regulatory framework that conforms tointernationalbestpractice.

Weenvisagethatbytheendof2017theCommissionwould be adequately positioned to effectivelyregulateavibrantcapitalmarketwithanappreciablebalance between the supply and demand sides ofthe market.

In line with these developments, the Commissionhasapprovedtheadoptionofaneworganizationalstructure representing a shift from a functionalbased to a market based structure. These changes have created theneed for augmenting the staffinglevelsinthecomingyears.

Intheyearunderreview,thePresidentinaccordancewiththeadviceoftheCommissiongiveninconsultation


with the Public Services Commission appointed anew Director-General whose appointment tookeffectfromJuly1,2011.ThenewDirectorGeneral,Mr. Adu Anane Antwi, a Chartered Accountant and Lawyer, replaced Dr. Nii Kwaku Sowa who retiredfrompublic service in accordancewith the lawsofthe country. On behalf of the Board,ManagementandStaffof theCommission, I thankDr.Nii KwakuSowaforhisdedicationtoworkduringhistenureasaCommissionerandlaterasthesubstantiveDirector-General of the Commission. We wish him all the best. Inthesamevein,IwarmlywelcomeMr.AduAnaneAntwitotheCommission.Ibelievethathewillusehisknowledge and experience to contribute positivelyto the work of the Commission and assist with the developmentofthecapitalmarket.

Major Market Development Activities

TheSEC,beingverykeenonmeetingtheInternationalOrganization of Securities Commissions (IOSCOs)deadline for member countries who had still notsigned on to the Multi-Lateral Memorandum ofUnderstanding(MMOU),continuedtoworkwiththeAttorneyGeneralsDepartmentand theMinistryofFinanceandEconomicPlanningtofinalizeworkonthedraftSecuritiesIndustryBillforonwardtransmissionto cabinet and thereafter to Parliament. As at thetimeofthisreport,thedraftBillhasbeensubmittedforCabinetapproval.WelookforwardtohavingtheBillpassedintoLawbeforetheendof2012.

In2011,toassistinvestorsandanalystsmeasuretheperformanceofthestockmarkettomakeinformeddecisions based on accurate representations ofmarket activities and stock performance, the GSEAll-Share index was replaced with two (2) indices,namely theGSEComposite Index (GSE-CI)and theGSE Financial Stocks Index (GSE- FSI). While the Composite index, much like its predecessor theAll-share index, measures the performance of allthe companies listed on the market, the FinancialServices Index measures the performance of onlyfinancialsectorcompanieslistedonthebourse.BothindiceshavetheirbasedateasDecember31,2010andtheirbasevalueas1,000.

Last year, we indicated that the Commission was in theprocessofacquiringandinstallinganelectronicsurveillancesystemtomatch theelectronic tradingandsettlementenvironmentofthestockexchange.I am pleased to report that the system has beensuccessfully installed at the SECwith a component

attheGhanaStockExchange.Thisallowsreal-timesurveillance over trading activities on the stockexchange.Work is also progressing steadily on thedevelopmentofthewebportalfortheSECtoallowforelectronicfilingsofreports,applicationformsandcomplaintsbymarketoperators.

During the year, in the face of the global financialmarket challenges,wewere very keen tomaintainfinancialstabilitywithinthecapitalmarketsoastoreduce systemic risk. To this end, the Commission continued to maintain surveillance not only oversecurities industry firms but also on the entirecapital market as well as on risks external to theCommission, which included developments withinthemacro-economy.AspartoftheCommissionsriskcontainmentstrategies,acomprehensiveinspectionprogramme was rigorously implemented forsecuritiesfirmswiththehighestexposureintermsofcustomerbaseanddepthofsecuritiestransactions.Itisinterestingtonotethattheelaborateinspectionand market surveillance programme designed forthe market, brought to the fore isolated structural deficiencies in some of the regulated firms in theindustrythatneededpromptattentionandredress.Therecurringoneswerepoorrecordkeeping,non-existenceorineffectiveinternalcontrols,inadequatecapitalization,weakmanagementandadministrativestructures.

Inordertoreducetheincidenceofnoncompliancewith securities laws and also bridge the perceivedgapbetweenmarketoperatorsandtheCommission,a half-yearly Compliance Officers and MarketOperators forumwas instituted. Thiswas aimed atbringingtogethertheregulatorandmarketoperatorstodiscusskeycomplianceconcernsandshareideasonhowbesttoenhancecomplianceoftherulesoftheSecuritiesIndustry.TheforaarealsotobeusedtodiscussissuesofmutualbenefittobothpartiesforthedevelopmentofthecapitalmarketinGhana.Thisactivityhasbeenhailedbymarketoperatorsasbeingveryusefulandweintendtocontinuetoholdsuchdiscourse.

Investor Education and Awareness Programs

InvestorEducationcontinuestoremainanimportantelementinthecapitalmarketdevelopmentagenda.TheSECin2011continuedwithitsinvestoreducationdrive. Our mode of communication was largelythroughrepresentationonvariousmediaplatforms,


visitationtoorbysecondaryandtertiaryinstitutionsand publication of investor education relatedmaterials.StudentsfromprofessionalinstitutessuchastheNationalBankingCollegeandtheGhanaLawSchool benefitted from the education drive. TheSECalsopartneredwithaprivatesector institutionto organize a Youth Investment Programme. Theprogramme is targeted at educating the youth oninvestmentsandinvestmentopportunitiesinGhana.Thefirst intheserieswas launchedinAccra late inthe year. Subsequent ones are scheduled for 2012 in otherregionalcapitals.

TheCommissionhasalsostartedpublishingquarterlynewsletters which contain information about themajoractivitiesoftheSEC,newsandstatisticsofthecapitalmarket.There isalsoasectiondedicatedtoinvestmenttips.Thisnewsletteriscurrentlycirculatedtotargetedagenciesandeducationalinstitutions.Itisourhopethatonceourfundingsituationimproves,we can circulate it to a wider audience.

Capacity Building

Capacity building continued to be the back boneof theCommissionshuman resourcedevelopmentagenda.StaffoftheCommissioncontinuedtobenefitimmensely from training programmes tailored forregulators such as the Emerging Markets Programme hostedbytheMalaysiaSecuritiesCommission.Withthe change in structure at the SEC, more focused training programmes will be identified to helpbuild thebusinessexpertise requiredat theSEC toeffectivelyregulatethecapitalmarket.

International Cooperation

TheSECcontinuedtobeanactivememberofIOSCO.During the year under review, the SEC activelyparticipated in all of IOSCO conferences aswell asmeetings of the Africa and Middle East RegionalCommittee(AMERC)ofIOSCO.MembershipofthesebodiesprovidedtheSECwithaplatformtolearnandshareexperienceswithotherjurisdictionsregardingregulation and development of securitiesmarkets.Senior staff of the Commission also participatedeither as resource persons or panel members atIOSCOorganizedprogrammes.

To forge further alliance with regulators within the sub region whilst waiting to sign the MMOU, theCommissionduringtheyearunderreview,signedtwo

Memoranda of Understanding with the Securitiesand Exchange Commission of Zambia, and with the CapitalMarketsAuthorityofKenyaonco-operation,consultationandexchangeof informationbetweenthese bodies.

Going Forward

The year 2012 is an election year in Ghana.Traditionally, the macroeconomic indicators in thecountry during election years have suffered someadversedistortionscharacterizedbyhighdepreciationrates of the cedi against the major currencies, rise in inflationandgenerallackofinterestincapitalmarketactivities. The Government of Ghana has given itsassurance not to overspend beyond the budgetapprovedbyParliament.Thismeasureisexpectedtohelpmaintainthestablemacroeconomic indicatorsandensure that theyear2012doesnot suffer thefateofotherelectionyears.TheCommission,awareofallthesechallengeswillstepupitseducationdriveto inculcate inthe investingcommunitythecultureof investment and use of the capitalmarket as analternativemeansofcreatingwealth.

Weintendtore-introducetheCapitalMarketWeek(formerly Securities Week) in the year 2012. Theweekwas suspended due to the lack of funds.TheCapitalMarketWeekfor2012willbeinthreestages:i) launch and public forum at Accra ii) outreachprogrammes aimed at target groups such as theassociationofGhanaIndustriesandpublicandcivilservants, iii) two days capital market conferenceaimedatbringingtogetherpolicymakers,thinktanksand other stake holders to discuss issues of mutual benefittothecapitalmarketandthefinancialsectorasawholeforeconomicdevelopment.

Finally, Iwishtotakethisopportunity tothanktheGovernment of Ghana, through the Ministry ofFinanceandEconomicPlanningforthesupportwecontinue to enjoy in terms of funding and otherlogistics.Ialsowishtothankallstakeholdersincludingthemediafortheirsupportinprojectingthecapitalmarket as an alternative investment avenue forcompanies wishing to raise capital and investorslookingforproductstoinvestin.Noneofthevariedachievementsof theCommissionwouldhavebeenpossible without the hard work of the committedmanagement and staff of the Commission. I saythankyouandpraythatinthecomingyears,weshalltogethercontinuetohelpprotectinvestors,createalevelplayingfieldforallplayersandreducesystemic


risk in the market.

Finally, I express deep gratitude to my fellowCommissioners for their invaluable contributionsto theoverallpolicydirectionof theSecuritiesandExchangeCommissionwhichhasbeenveryhelpfulandstimulatingtothesecuritiesmarketenvironment.MayGodcontinuetoblessourhomelandGhana.

Thank you.

PROFESSORE.V.ODANKWA(CHAIRMAN)


Section9oftheSecuritiesIndustryAct,1993(PNDCLaw333)asamendedbytheSecuritiesIndustry(Amendment)Act,2000(Act590)providesthatthemandateoftheCommissionshallbeasfollows: ToadvisetheMinisterofFinanceandEconomicPlanningonallmattersrelatingtothesecurities

industry; Tomaintainsurveillanceoveractivitiesinsecuritiesandtoensureorderlyfairandequitabledealings insecurities; Toformulateprinciplesfortheguidanceoftheindustry; Toprotecttheintegrityofthesecuritiesmarketagainstanyabusesarisingfrominsidertrading; Toadoptmeasurestominimizeandsuperviseanyconflictofintereststhatmayarisefromdealers; Toreview,approveandregulatetakeovers,mergersandacquisitionsandallformsofbusiness

combinationsinaccordancewithanylaworcodeofpracticerequiringittodoso; Toexamineandapproveinvitationstothepublic; Toregister,license,authorizeorregulateinaccordancewiththislaworanyregulationsmadeunder it,stockexchanges,investmentadvisers,unitschemes,mutualfunds,securitiesdealers,andtheir agentsandtocontrolandsupervisetheiractivitieswithaviewtomaintainingproperstandardsof conductandacceptablepracticesinthesecuritiesbusiness; Tocreatethenecessaryatmospherefortheorderlygrowthanddevelopmentofthecapitalmarket; Toundertakesuchotheractivitiesasarenecessaryorexpedientforgivingfulleffecttothe provisionsofthelaw; Tomonitorthesolvencyoflicenseholdersandtakemeasurestoprotecttheinterestofcustomers

wheresolvencyofanysuchlicenseholdersisindoubt;and Toperformotherfunctionsspecifiedunderthelaw.

ToenabletheSECeffectivelyperformitsfunctionsastheapexregulatoroftheSecuritiesIndustryandfulfillitsmandateofprotectinginvestors,creatinganefficient,freeandfairsecuritiesmarketandreducingsystemicriskinthesecuritiesmarket,theCommissionintheyearunderreviewadoptedanewfive(5)yearstrategicplan.

STATUTORY MANDATE OF THE SECURITIES AND EXCHANGE COMMISSION (SEC) AND NEW STRATEGIC DIRECTION


Highlights of the Five (5) year Strategic Plan

TheStrategicPlan(2012-17)setsouttheSECsvisionforthedevelopmentoftheGhanaiancapitalmarketandhasbeenpreparedwithextensiveinputfrommarketparticipantsandotherstakeholders.ItoutlinesthemajorstrategicobjectivestobeimplementedwithinthePlanperiodandprovidesimplementationstrategies,activityimplementationplansandamonitoringandevaluationmechanism.ItisalsoenvisagedthatthePlanwillbeusedbyparticipantsinthesecuritiesindustrytoformulatetheirownbusinessandoperationalplans.

ThePlanisalsodesignedtostrengthentheregulatorycapacityoftheSECthroughimprovementinworkflows,systems,structure,processes,procedures,staffknowledgeandskillsandbetterhumanresourcemanagementtoassisttowardstheretentionofstaff,andbetteroutputandservicedelivery.

TheworkplanusedincludedanenvironmentalscanofthesecuritiesindustryinGhanaandthesub-region,interviewswithmarketparticipants,anassessmentofthecurrentlegalandregulatoryframework,andanassessment of SECs training needs and Human Resource strategy.

BelowarethehighlightsofthePlan;

Vision

SECs vision under the plan is to create an efficient and effective capitalmarket regulatory frameworkforGhana.ThestrategicplaniswrittentosupportthisvisionandincorporatesGovernmentspoliciesofdevelopingthecapitalmarkets.

Objectives

ThePlan setsout fourbroad strategicobjectiveswhichwill beachievedby theSEC throughavarietyofstrategiesasfollows:

1. Enhancement of capital market infrastructure and strengthening the capacity of capital market institutions and intermediaries.

Strategies: introducecorporategovernancestandardsforlicensees establishacorporategovernancewatchdoggroup commissionindependentreviewofstockexchangetradingalgorithmandGhana SecuritiesDepository(GSD)/CentralSecuritiesDepository(CSD)riskmanagement systems draftchangestotheSecuritiesIndustryLaw(SIL)torequiredirectors,compliance officersandsubstantialshareholderstoseekpriorapprovalfromtheSEC introducesubcategoriesoflicences developaSecuritiesInstitute,ResourceCentreandLibrary issueregulationsgoverninginternettrading,margintrading,stockborrowingand lending issueaconsultationpaperonshortselling.


2. Development of capital market products and services.

Strategies:

reviewdisclosureofinformationbyissuersofsecurities,regulationsgoverningthe securitiesindustryandtheGSElistingrules. analyzeandproposeincentivesforissuersofsecuritiesandinvestors reviewadvisersfeesandcharges workwithsecuritiesregulators,exchangesandotherstakeholdersfromthewest Africansub-regiontoidentifythebenefitsofthecapitalmarketandworktowards harmonisationofitsrulesandregulations. developregulationsforaCommoditiesMarket developinfrastructureforthebondmarket developregulationsforAsset-BackedSecurities(ABS)

3. Promotion of Public Awareness and Corporate Education.

Strategies:

promotebenefitsoflistingtocompaniesandadvisers launchlongtermeducationalprogrammesaimedatimprovinginvestorawareness andencouragingparticipationinthesecuritiesmarket introducemoneymanagementintotheschoolcurriculum undertakeregularfinancialliteracysurveys.

4. Establishment of a robust, supportive, legal and regulatory framework that conforms to international best practice.

Strategies:

draftamendmentstotheSecuritiesIndustryLaw(SIL) discusswiththeMinistryofFinanceandEconomicPlanning(MoFEP)changestoBoard appointment,accountabilityandbudgetaryfreedom commissionandadoptadocumentedriskassessment undertakeanexchangeandclearingsystemoversightprogramme reviewofficeroutinestostrengthenaudittrails prepareacomprehensiveofficeproceduresmanual introducepermanentlicences introducerisk-basedsupervision changetheRegulationsonnotificationrequirementsandpriornotificationinrespect ofadvertisementsintheindustry introducelicencesub-categories introducemandatoryqualificationsforcertainpositionsintheindustry eg;complianceofficers preparecontingencyplanforthefailureofanintermediary implementthenewmarketsurveillancesystem determinetheroleofademutualisedGhanaStockExchangeasaSelf-Regulatory Organization(SRO) implementanewHumanResourcestrategyandstafftrainingprogrammeforthe Commission.


NewstructurefortheSEC

TheplanproposedthattheSECreplacethefunction-basedorganisationalstructurewithabusiness-basedonetohelptheSECdevelopbusinessexpertise.Inpursuanceofthis,theCommissionin2011adoptedaneworganogramtoreflectthebusinessareaswhichtheSECregulates.Belowistheneworganizationalstructureof the SEC.

!

!

!

BOARDDirector - General

BoardSecretary

DDG-Finance

DDG-Legal

Audit & RiskManagement

Finance & Capital

Brokers-Dealers & Advisers

FundManagement

Policy,Research & IT

Issuers

Exchangers & Markets

Legal & Enforcement

HR & International

Relations

Functions of the New Departments

Finance and Capital Department:

TheFinanceandCapitalDepartmentisresponsibleforthefinancialadministrationandmanagementofthefinancesandfundsoftheCommission.

Itskeyfunctionsare:

1. Todevelop,oversee,andmaintainthefinancialsystemsoftheCommission 2. TopreparethebudgetoftheCommission 3. TosupervisetheallocationanduseoftheCommissionsfunds 4. Tointroduceandimplementcontrolsandstrategiestopreservefinancialintegrity 5. Tomaintainaccountsandaccountingrecords 6. To collect fees for the Commission 7. ToensuretimelysubmissionoftheCommissionsfinancialreportstotheMinistryofFinance and Economic Planning. 8. Todevelopandadviseonrisk-basedcapitalregimeofMarketOperators


Fund Management Department:

TheFundManagementDepartmentoverseestheactivitiesofallinvestmentmanagementcompanies,custodians,trusteesofcollectiveinvestmentschemes,andpensionfunds.

Thedepartmentperformsthefollowingspecificfunctions:

1. Processingofalllicenceapplicationsforfundsmanagers,custodians,trusteesandcollective investmentschemes. 2. Renewaloflicencesforoperators 3. InspectionofLicensees 4. ReceiptofperiodicfinancialandoperationalreportsasrequiredundertheSecurities IndustryLaw,1993,asamended,UnitTrustsandMutualFundRegulations,2001(LI1695) andSecuritiesandExchangeCommissionRegulations,2003(LI1728). 5. PreparationofreportstomanagementandBoard

BrokerDealers & Advisers Department:

TheBroker-DealerandAdvisersDepartmentoverseestheactivitiesofbroker-dealersandadvisers.Thedepartmenthasthefollowingfunctions:

1. Processingofnewlicenceapplicationsandrenewaloflicencesforbroker-dealersand investmentadvisers 2. On-siteandoff-sitemonitoringandinspectionoftheactivitiesofmarketoperatorswithinits purview 3. Reviewingandreportingonthefinancialandsystemicstabilityoflicensedoperatorsandthe market 4. Recommending regulatory enhancements

Issuers Department:

TheIssuersDepartmentoverseesallactivitiesinvolvedintheissuanceofsecurities,fromtheinitialapplica-tiontopost-offeractivities.

Thekeyfunctionsofthedepartmentincludethefollowing:

1. Reviewingofprospectuses 2. Reviewingoftakeoversandmergers 3. Postfloatationinspectionofissuersandsponsoringbrokers 4. Ensuringdisclosureofinformationbyissuersofsecurities 5. Workingwithprivate-sectoractivitybodiestoformulateaccountingstandards 6. AttendingAnnualandExtra-ordinaryGeneralMeetings(AGMsandEGMs)oflisted companiestoobserveproceedings

Exchanges and Markets Department:

TheExchangesandMarketsDepartmentisresponsibleforensuringfair,efficientandtransparenttradinginsecuritiesonGhanascapitalmarket.Inparticular,itsupervisesthesecondarymarketandallitsparticipants,i.e.exchanges,depositoriesandregistrars.

Itsfunctionsincludethefollowing:


1. Surveillanceoftradestodetectanddiscourageoffensivetradepracticeslikeinsiderdealing, marketmanipulation,churningetc. 2. Ensuringtimelysubmissionsofallreturnsfrommarketoperators(i.e.exchanges, depositoriesandregistrars 3. Analyzingreturnsforcompleteness,solvencyandcompliancewithregulations 4. On-siteinspectionoflicensees 5. Processingnewlicenceapplicationsandlicencerenewalsforoperatorswithinitspurview 6. Recommending regulatory enhancements

Policy, Research and Information Technology Department:

ThePolicy,ResearchandInformationTechnologyDepartmentisresponsibleforcarryingouttheCommissionsmarketdevelopmentalroleandmanagingitsinformationtechnology.

Itskeyfunctionsincludethefollowing:

1. Generalresearchinthefieldsoffinance,lawandcapitalmarketdevelopment 2. AnalyzingdataonmarketactivitiesthatmayrequireattentionbytheCommission 3. Analyzingpotentiallysignificantmarketdevelopments 4. AdvisingtheCommissionanditsstaffonpolicyissuesassociatedwiththeCommissionsrole 5. Investoreducation 6. Generalpublicrelations 7. ImplementinganintegratedprogramdesignedtosupporttheCommissionanditsstaffinall aspectsofinformationtechnology 8. DevelopingtheCommissionsITarchitectureandmaintainingresponsibilityfornetwork administration. 9. MaintainingtheCommissionsRegulatoryCompliancePortal(RCP)whichincludesElectronic LicensingApplication,e-fillingSystemsandElectronicSurveillanceSystem. 10. DisasterRecoveryPlanning&DataSecurity.

Audit and Risk Management Department:

The Audit and RiskManagement Department is responsible for evaluating the adequacy of accounting,financial,operatingproceduresandinternalcontrolsoftheSEC.ThedepartmentalsodoublesastheAnti-MoneyLaunderingandCounterFinancingofTerrorismUnit (AML/CFT)of theCommission.TheUnitwasestablishedtodetectallformsofmoneylaunderingandterrorismfinancingactivitiesinthecapitalmarket.

Itskeyfunctionsincludethefollowing:

1. Developingstrategy,systemsandstructurestoachievedepartmentalgoals 2. Developingandreviewingoperationsofeachdepartment. 3. Developingadequatecontrolstoensuretheintegrityandreliabilityofaccountingandother informationgeneratedbytheCommission. 4. Ensuringthatstatutorypaymentsaremadewithinrelevantperiods 5. Complaintshandlingandinvestigation 6. Coordinationwithexternalauditors. 7. ComplyingwithrequestsonAML/CFTfromtheInter-GovernmentalActionGroupagainst MoneyLaunderinginWestAfrica(GIABA)suchasfollowupreportsandtypologies. 8. DevelopingandenforcingAML/CFTguidelinesforlicensedmarketoperators 9. EnsuringthatallaccountableinstitutionsimplementAML/CFTprograms 10. Undertakingon-siteinspectionofmarketoperators


Legal and Enforcement Department:

TheLegalandEnforcementDepartmentprovidesgeneral legaladvicetotheCommissionandinvestigatesbreachesofthesecuritieslaws.ItistheprimarydepartmentthroughwhichtheCommissioncarriesoutitsroleasregulator,chargedwithimplementationoftheLaw.

ThekeyfunctionsoftheDepartmentinclude:

1. Reviewinganddraftingofrulesandregulations 2. Providinglegaladvisoryservices 3. HandlingalllitigationforandonbehalfoftheCommissionandrepresentingtheCommission inanylitigationfiledagainstit 4. Investigations 5. Referralofoffencesforprosecution 6. UndertakingenforcementactionsonbehalfoftheCommission

Human Resources and International Relations Department:

TheHumanResourcesandInternationalRelationsDepartmenthasnodirectfrontlinedutiesbutisresponsibleforensuringthesmoothfunctioningandtheprovisionandmaintenanceoftheappropriatesupportservicesto all departmentsof theCommission. Toenhance itsworkwith InternationalOrganizationof SecuritiesCommissions (IOSCO) and other international organizations, the Board has also set up an internationalrelationsoutfitwithinthedepartment.

Thefunctionsofthisdepartmentincludethefollowing:

1. Recruitment 2. Placementandstaffing 3. Performance management and measurement 4. Employeetrainingandcareerdevelopment 5. Humanresourcedevelopment 6. Generaladministration 7. CoordinatingthecooperationandrelationswithIOSCOcommittees/workinggroupsand General Secretariat 8. SubmittingcommentsontheworkoftheSECtoIOSCOinrespectofcompliancewithIOSCO principlesandinternationalbestpractices 9. KeepingSECprofessionalstaffinformedoftheprojectscarriedoutwithinIOSCOandtheir results


GOVERNANCE

TheregulatorypowersoftheSECarevestedintheCommission(theBoard)madeupof11persons.ThisincludesaChairman,(asanon-executivemember),the Director-General and his two deputies whoareexecutivemembersof theSEC.AllmembersoftheCommissionareappointedby thePresidentofGhanaandholdofficefor3yearsbutareeligibleforre-appointmentattheendoftheirthree-yearterm.

To ensure wide consultation in the discharge ofits functions, the Securities Industry Act, 1993(PNDCL333)asamendedbytheSecuritiesIndustry(Amendment)Act,2000(Act590),hasprovidedforthemembershipoftheSECtoincluderepresentativesfromtheBankofGhana,theJudiciary,theMinistry

of Finance and Economic Planning, the Registrar-Generals Department and persons who by virtueof their ability, experience, specialist knowledge insecurities or professional attainment, are capableofmaking useful contributions to the work of theCommission.

TheCommissioners,seniormanagementandstaffoftheSECaredrawnfromavarietyofdisciplinesandinclude economists, lawyers, accountants, financialanalysts, information technology professionals,businessadministratorsandmarketingprofessionals.

Membership of the Commission during the yearunderreviewwasasfollows:

1

Professor E.V.O Dankwa - ChairmanMr. Adu Anane Antwi* - Director-GeneralMr. Ken Okwabi - Deputy Director-General IMr. Ekow Acquaah-Arhin - Deputy Director-General IIMrs. Justice Margaret Welbourne - Member (Rep. of the Judiciary)

Mrs. Jemima M. Oware - Member (Rep. of Registrar Generals Dept.)

Mr. Ko AduLarbi - Member (Rep. of Bank of Ghana)Mr. K.B. Oku-Afari - Member (Rep. of Ministry of Finance and Economic Planning)

Dr. Charles Asembri - Member(Government Nominee)

Ms. Sena Kudjawu - Member(Government Nominee)

Mr. Joe Aboagye Debrah - Member(Government Nominee)

* Mr. Adu Anane Antwi was appointed the Director-General of the SEC and assumed office on July 4, 2011. Mr. Antwis appointment followed the retirement of the then Director-General, Dr. Nii Kwaku Sowa on June 30, 2011.

Table1.1.MembershipofSECCommissionin2011

TheCommissionmetonceevery2months.Duringthe year under review, seven (7) Board meetingswere convened, including 1 emergency meeting.Members of the Commission were in additionassigned to various standing Committees of theCommission which met regularly.

Under the Terms of Reference set out for theCommittees, each Committee met as frequentlyas was required for the effective discharge of itsmandate.

Meetings of the Commission


COMMITTEE MEMBERSHIP NUMBER OF MEETINGS HELD

Approvals & Licensing Committee

Professor E.V.O. DankwaDr. Charles AsembriMrs. Jemima M. OwareMr. Joe Aboagye Debrah

8

1

5

Dr. Charles AsembriMrs. Justice Margaret WelbourneMr. Joe Aboagye DebrahMr. K.B. Oku-Afari

Mr. Ko Adu-LabiMr. K.B. Oku-AfariMs. Sena KudjawuMrs. Justice Margaret Welbourne

Research and Market Development Committee

Finance & Administration Committee

Table 1.2. Membership of SEC Board Committees

During the year under review, the Commissioncausedtobeissuedacirculartomarketoperatorsonthesolvencyrequirementsofoperators.Thecircularwasissuedpursuanttosection9(e)oftheSecuritiesIndustryAct,1993(PNDCL333)whichmandatestheSECtomonitorthesolvencyoflicenceholdersandtakemeasurestoprotectthe interestofcustomerswherethesolvencyofanysuchlicenceholder is indoubt.

Thecirculardirectedthatinvestmentadvisorsmain-tainthefollowing:

a. A net worth of not less than the minimum capitalrequirementb. Solvencyratio(Profit+Depreciation/total liabilities)ofnotlessthan20%c. Liquidityof3monthsaverageexpensesequal toorlessthancashandcashequivalents.

Regulatory Policies


Professor E.V.O. DankwaChairman

Mr. Kenneth OkwabiDeputy Director-General I

Mr. Ekow Acquaah-ArhinDeputy Director-General II

Mrs. Justice MargaretWelbourneMember (Rep. of Judiciary)

Mr. Ko Otutu Adu LabiMember (Rep. of Bank of Ghana)

Dr. Charles AsembriMember (Government Nominee)

Mrs. Jemima MamaaOwareMember (Rep of Registrar-Generals Department)

Mr. Adu Anane AntwiDirector-General

Professor E.V.O. Dankwa is a retired Associate Professor of Law of the University of Ghana, Legon. He is a private legal practitioner.

Mr Kenneth Okwabi is a Barrister-at-Law from the Ghana School of Law and holds a LLB (Hons.) from the University of Ghana. He has an impeccable track record in legal practice specializing in Corporate, Commercial Law and Securities Law.

Mrs. Margaret Welbourne is a High Court Judge with the Commercial Court in Ghana. She holds a Bachelor of Arts (B.A) degree in English and Linguistics from the University of Ghana and a LLM in Interna-tional Taxation from the Harvard Univer-sity, U.S.A.

Dr. Charles Asembri is a Securities Market Consultant and holds a Doctorate Degree (PhD) in Business Administration from the Graduate School of the City of New York as well as an Advance Professional Certicate in Finance.

Mrs. Jemima Oware is a Barrister-at-Law from the Ghana School of Law and holds a Bachelor of Arts (B.A) degree from the University of Ghana.

Mr. Ko Otutu Adu Labi is a Barrister-at-Law from the Ghana School of Law and holds a LLB (Hons.) from the University of Ghana. He also has a certicate in lnvestment Negotiations from the Georgetown University Law Centre, Washington and an MBA degree from the University of Bradford School of Management, U.K. He is currently an adviser to the Governor of the Bank of Ghana

Mr.Ekow Acquaah-Arhin is a Char-tered Accountant and also holds a MSc. degree in Public Sector Economics from the University of Buckingham, UK and Bachelor of Commerce (Honours) degree from the University of Cape Coast.

Mr. Adu Anane Antwi is a Chartered Accountant and a Barrister-at-Law from the Ghana School of Law. He holds a BSc. Administration (Accounting) degree and an MBA degree from the University of Ghana, and is a member of the Institute of Chartered Accountants, Ghana.

MEMBERS OF THE COMMISSION


K.B. Oku-AfariMember (Rep. of Ministry of Finance and Economic Planning)

Mr. Joe AboagyeDebrahMember (Government Nominee)

Sena KudjawuMember (Government Nominee)

Mr. Kwabena Oku-Afari is the Director, Policy Analysis Division of the Ministry of Finance and Economic Planning. He represents the Ministry.

Ms. Sena Kudjawu is Barrister-at-Law from Middle Temple, UK and holds a LLB (Hons.) from the University of Warwick, UK.

Mr. Joe Aboagye is a Barrister-at-Law from the Ghana School of Law and holds a LLB (Hons.) from the University of Ghana. He also holds a LLB (with merit) in inter-national Banking and Finance from the London School of Economics, U.K.


2 OPERATIONS REVIEW

During the year under review, the Commissioncontinuedtoperformitscorefunctionsofregulatingthecapitalmarketindustry.BelowaredetailsoftheactivitiesoftheCommissionintheyearunderreview.

Licensing and Approvals

Undersection9(c)oftheSecuritiesIndustryAct,1993(PNDCL333)asamendedbytheSecuritiesIndustry(Amendment)Act,2000(Act590)theCommissionismandated to register, license, authorize or regulate in accordance with this law or any regulations made under it, stock exchanges, investment advisers, unit

schemes, mutual funds, securities dealers, and their agents and to control and supervise their activities with a view to maintaining proper standards of conduct and acceptable practices in the securities business.

Inpursuanceoftheabove,theCommissionin2011received17applications forvarious licences.Theseweremadeupof1securitiesdepository,6investmentadvisers, 52 broker-dealers, 56 custodians, and 2mutual funds. Below is a table comparing licenceapplicationsreceivedin2011withthosereceivedin2009and2010.

Table2.1. LicenceApplicationsReceivedin2009-2011

Category of Licence

Collective Investment Scheme (CIS) 8 9 2

Investment adviser 6 13 6

Securities Depository - - 1

TOTAL 17 34 17

Dealers licenses

- Broker dealer 1 2 2

- Registrar 1 - -

- Custodian 1 8 6

- Trustee - 2 -

2009 2010 2011


Newlicencesweregrantedtoallexcept3custodianapplicants, whose applications were still underreviewattheendofthereportingperiod.

TheCommission also reviewedand approved rulesfor Exchange Traded Funds (ETFs). The rules are designed to enable ETFs to be traded on the Ghana Stock Exchange.

New Issues

During the year under review, there was a rightsissue by Guinness Ghana Breweries Ltd. (GGBL) toraiseGH70million. TheOfferwas for46,666,667ordinarysharesofnoparvalueatGH1.50persharein a ratio of 1 new share for every 3.5287 existingsharesheldbyqualifyingshareholdersofGGBL.Theofferwasoversubscribedby44.6%,raisingatotalofGH101,222,002.50 compared to the offer amountof GH70 million.

TwoInitialPublicOffering(IPO)applicationsapprovedin2010werelaunchedin2011bytheirsponsors.ThefirstwasanIPObytheAccraHeartsofOakFootballClub.TheofferraisedGH2,554,426.50,representing25.54%oftotalsharesonoffer.Itssecondarylisting

wasscheduledtotakeplacein2012.

The second IPO by Tullow Oil Ltd. raised GH109.447millon against a projected GH124mfrom the sale of 4 million shares.

AnewcollectiveInvestmentScheme,theGold Money Market Fund Ltd was also launched during the year.

Mergers and Acquisitions

The Commission is mandated under section 9 (h)oftheSecuritiesIndustryLaw,1993(PNDCL333)asamendedtoreview,approveandregulatetakeovers,mergers and acquisitions and all forms of businesscombinations. Inpursuanceofthismandate,SECreviewed and gave approval to a proposedmergerbetween Ecobank Ghana Ltd. and Trust bank Ltd. The twocompanieshavesincemerged.

Number of Licensed Securities Market Operators

During the year under review, the total number oflicenseeswas129composedasfollows:

Table2.2. BreakdownofLicensedSecuritiesMarketOperators

Category

TOTAL 129

Broker - Dealers 23

Investment Advisers 58

Registrars 4

Collective Investment Schemes 26

Trustees 3

Custodians 12

Stock Exchanges 1

Depositories 2

Number of Licensed Operators


Table2.3. RatioofOn-siteInspectionsofLicensedSecuritiesMarketOperatorsCompletedIn2009-2011

On-siteInspections

In2011,theCommissioninspected6broker-dealers,25investmentadvisersand1registrar,representinganinspectionrateof26%,46%and25%,respectively,forthedifferentcategoriesoflicensees.

Supervision and Enforcement.

2010

Broker-Dealers Number of licensed rms 22 Number inspected 10 Ratio of inspection achieved 45% Investment Advisers Number of licensed rms 51 Number inspected 13 Ratio of inspection achieved 25% Registrars Number of licensed rms 4 Number inspected 1 Ratio of inspection achieved 25% Collective Investment Schemes Number of licensed rms 24 Number inspected 15 Ratio of inspection achieved 62% Trustees Number of licensed rms 3 Number inspected 2 Ratio of inspection achieved 66% Custodians Number of licensed rms 9 Number inspected 6 Ratio of inspection achieved 66% Stock Exchanges Number of licensed rms 1 Number inspected 0 Ratio of inspection achieved 0% Depositories Number of licensed rms 1 Number inspected 0 Ratio of inspection achieved

2011

23 6 26%

58 25 46%

4 1 25%

26 5

19%

3 0 0%

12 560%

1 00%

200% 0%

2009

19 5 26%

43 12 28%

3 3

100%

15 7 46%

2 0 0%

4 0 0%

1 00%

000%


Off-siteinspections

The Commission reviewed returns filed by marketoperators. Returns were reviewed for timelysubmission,completeness,liquiditypositions,capitallevels, solvency and other exceptions. Incidencesof late report submissions reduced from 17 inDecember 2010 to 3 in December 2011. Quarterly financials,fundsundermanagementreports,annualfinancials andmanagement returnswere reviewed

foralloperators.

Enforcement

During the year under review, the Commissionundertook investigative and enforcement actionsagainstviolatorsofthesecuritieslaws.Enforcementactions were brought against those who failed tocomplywithvariousprovisionsofthelawasfollows:

Table2.4. Major EnforcementActions

Market Operator Nature of Oence Penalty

Databank Brokerage Ltd. Failure to obtain a licence for some of its representatives.

GHC 26,400

Orialles Capital Ltd. Failure to renew licence on time.

GHC 11,700


Investigations and Complaints

Belowisatableshowingthemajorcomplaintshandledduringtheyearunderreview:

Complaint Details of Case and Actions Taken

Status

Complaint of CAL Bank Ltd. against NTHC Ltd. in respect of migration of Shareholder Regis-ter from NTHC Ltd. to Computershare Pan Africa Ghana Ltd.

The Administrative Hearings Committee reported its ndings to the Board of the SEC for further directives

According to the complainant, NTHC Ltd., its former registrars, had failed to hand over to the bank the electronic copy of the banks shareholder register, claiming ownership instead of the said documents.

A terminal meeting was held to try to resolve the outstanding issues. However, the parties were unable to come to an agreement.

Complaint of Standard Chartered Bank Ghana Ltd. (SCB) against NTHC Ltd. - Termina-tion of contract and migration of Register from NTHC Ltd. to Computershare Pan Africa Ghana Ltd.

NTHC Ltd. has since handed over the hard copy format of the shareholders register to SCB.

In a parallel case, SCB complained to the Commission that NTHC Ltd. was holding on to its shareholders register after an agreement between the parties for registrar services had been lawfully terminated.The Secretariat directed that all les and documents in the custody of NTHC Ltd. be handed over to SCB. NTHC Ltd. did not comply immediately and another meeting was held where the directives of the SEC were reiterated

Table2.5. InvestigationsandComplaints

Litigation

DanielOforiVrs.OppongBio,Ecobank,theGSEandSEC-SuitNo.BFS545/2008

Judgement was given in favour of the Defendantsincluding the Commission on the 15th day of September,2011,with costsofGH2,500awardedinfavourofsame.TheSECfiledEntryofCostsandgarnisheeproceedingstorecoverthecost.However,thePlaintiffhassincefiledaStayofExecution.TheapplicationforStayisyettobeheard.

Further, the Plaintiff filed a Notice of Appeal inrespectofthematteronthe2nddayofNovember,2011. TheSECsettledtherecordofappealonthe23rddayofNovember,2011withtheRegistraroftheCommercialCourt.TheCommissionisawaitingthecompletedrecordfortheappealandahearingdate.


SethOforivrs.SECComplaintofAllegedFraudulentSaleofMr.OkubanjosEcobankShares

The High Court, in its ruling on the above casedirectedthatthePlaintiffreferthecomplainttotheAdministrativeHearingsCommittee(AHC)oftheSECfor redressandonlyproceedtoCourt in theeventthattheywerenotsatisfiedwiththedecisionoftheAHC.Adateisyettobefixedforthehearings.

SDCBrokerageServicesLtd,MrsCeciliaAnsah,CharlesOforivrs.SEC-SuitNo.MISC.95/10

TheCommissionwassuedbytheabovementionedpersonsinthenamedsuit.Thecasehassincebeenarguedoutincourt.Therulingisyettobedeliveredby the court.

Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT)

LaunchofAML/CFTComplianceManualForMarketOperators

The SEC launched an AML/CFTmanual for CapitalMarketOperatorson20thDecember2011.ThiswasinkeepingwiththeresponsibilityoftheCommissionto provide guidelines on AML/CFT for its licencedmarket operators. The manual was launched incollaborationwiththeFinancial IntelligenceCenter,whichisthebodysetuptocoordinateallissuesonAML/CFTinGhana.TheUnitalsoprovidedtrainingforSECstaffonAnti-moneyLaundering.Inaddition,theAML/CFTUnitcollaboratedwiththeInter-MinisterialCommitteeonAML/CFTinGhanatodevelopaNationalActionPlanforthecountry.

Market Development Activities

InvestorEducation

InvestorEducationremainsanimportantelementinthecapitalmarketdevelopmentagenda. Inviewofthis, theSECattachesgreat importance to investoreducation in Ghana. In 2011, the SEC reviewed allexistinginvestoreducationmaterialstoupdatethemwith new relevant information for investors. It isenvisagedthatcoupledwithoutreachprogramsand

completionof theSECwebportal, investorswouldnot only be more educated on their rights but will alsounderstandcapitalmarketactivities.

PublicAwareness

Toraise thefinancial literacy levelof theGhanaianpubliconthecapitalmarketanditsroleineconomicdevelopment,theSECcontinuedtoengageinpubliceducation. Contributions were made in variousforms,frompubliclecturestoeducationalvisitspaidtoSecondaryandTertiaryInstitutions.

The SECalso started thepublicationof aquarterlynewsletteraimedatinformingandeducatingmarketoperators and the general public about the capitalmarket.

HalfYearlyMeetingswithComplianceOfficersand

MarketOperators

TheSEC,duringtheyearunderreview,commenceda half yearly meeting with Compliance Officersand Market Operators meeting aimed at bringingtogether the regulator and market operators todiscusskeyissuesaffectingtheSecuritiesIndustry.

The fora were used to discuss issues of mutual interest to both parties for the development ofGhanascapitalmarket.

ElectronicSurveillanceSystemandWebPortalfor

theSEC

DevelopmentofthewebportalfortheSECcontinuedin2011.Thewebportalwhencompletedwillpresentinformationfromdiversesourcesinaunifiedwayontheweb. The SECweb portal is expected to allowfor electronic filing of reports, registrations, onlinesubmission of complaints, digital library, licensing,IPOs, approvals etc. Internal users in the variousdepartmentswillalsohavequickandeasyaccesstorelevantreportstoperformtheirduties.


Human Resources

Staffstrength

ThestaffstrengthoftheCommissionin2011was45.Thesecomprisedprofessionals in thefieldsofLaw,Accounting, Finance, Information Technology andHuman ResourceManagement. Eighty-five percent(85%)ofthestaffholdbachelorsdegrees.Ofthese,fifty percent (50%) hold post graduate degrees.In addition, thirty five percent (35%) of staff holdprofessionalqualifications.

TrainingandCapacityBuilding

Training and staff development continued to be atthe heart of SECs human resource developmentpolicy.Duringtheyearunderreview,staffoftheSECparticipatedinanumberoftrainingprogrammesandseminars in Ghana and abroad. These were aimed at equipping them with the skills and knowledgerequired to meet the ever-changing challenges ofthecapitalmarket.

International Co-operation

Building the Commissions regulatory capacitywould be incomplete without forging closer co-operationandcollaborationwithregulatorsinotherjurisdictionsandwiththeInternationalOrganizationofSecuritiesCommissions(IOSCO),aninternationalstandards setting body for the securities market.During the year under review, SEC as member ofIOSCO actively participated in the organizationsconferencesandmeetings,whichincludedtheAfricaand Middle East Regional Committee (AMERC) ofIOSCO, IOSCO Annual Conference and the Emerging Markets Committee (EMC) These provided theSEC the platform to learn and share experienceswith other jurisdictions regarding regulation anddevelopmentofthesecuritiesmarkets.

During the year under review, twoMemoranda ofUnderstandingweresignedbetweenSEC,GhanaandSEC,Zambiaononehand,andtheCapitalMarketsAuthorityofKenyaontheotherhand,toco-operate,consultandexchangeinformation.


3ECONOMIC REVIEW

An Overview

Ghanas economy was robust in 2011 despite achallenging global economic environment. Themacroeconomic policies pursued by governmentresulted inadecline in inflation leading toasingledigitfigure,a relativelystablecurrencyregimeandan improved budget deficit position. Real GrossDomesticProduct (GDP)grewby14.4% in2011ascomparedwith6.6%in2010and4.7%in2009.Theeconomy was also characterized by an increasedaccess to credit, falling lending rates and higher foreign direct investments, all of which suggestincreased investor confidence in the domesticmarketandanimprovingeconomicenvironment.ItisnotsurprisingthereforethatarecentWorldBankreport namedGhana the fastest growing economyin 2011.

Inflationwas amajor concern in the early part oftheyearwiththeupwardreviewof fuelandutilityprices,and the implementationof theSingleSpineSalary Structure. However, with fiscal discipline,government successfully contained the pressurefromthesecost-pushanddemand-pull factors,andinflationremainedrelativelystableanddeclinedformostpartoftheyear. Infact, inflationhastrendeddown consistently over the last thirtymonths andhas been well anchored within single digits since June 2010. In July 2011, it reached its lowest rateinovertwodecades(8.39%)andendedtheyearat8.6%.

The economy also saw a decline in interest rates on government securities to their lowest level in fourdecades. Interest rate on the 91-day Treasury Billfellconsistentlyfrom12.15%atthebeginningoftheyearto10.67%attheendoftheyear.TheBankofGhanas policy to boost economic activity led it toconsistentlyreducetheprimeratefrom13.3%atthebeginningoftheyearto12.25%atyearend.Lendingrates fell in tandem, from an average of 27.6% in2010to25.9%in2011.

The Cedi enjoyed relative stability against thecountrys major trading currencies, despite the

unusual surge in demand for foreign exchange during the last quarter of the year. Initially, this led to amarginaldepreciationintheinterbankrateasbankssearched for resources to meet their customers requirements. Further pressurewas placed on theexchange ratewhen foreign investors sought earlyredemption of their investments on the domesticbondmarket.Thesituationwas furtheraggravatedbythespeculativeactivitiesofdealersandtraders.Byyearend,thecedihasdepreciatedby10.2%againsttheUSdollar,7.6%and10.5%againsttheEuroandPoundSterlingrespectively.

The year 2011 was significant for Ghanaians as itmarkedthebeginningoftheproductionofcrudeoilincommercialquantitiesbythecountry.Itwasalsodubbed an action year by the government, whosought to transition from stabilizing the economytogrowing theeconomy. Accordingly,governmentincreased its spending inwages and infrastructuretospeedupeconomicactivity.AlthoughthispolicyincreasedthecountrystotalexpenditurefromGH9.2billionin2010toGH12.7billionin2011,italsowent a long way in boosting economic activity ascapturedbytheBankofGhanasCompositeIndexofEconomicActivity (CIEA).This indexappreciatedby15.2%comparedto10.4%in2010.GrossDomesticProduct (GDP) went from 44 billion cedis in 2010 to almost60billioncedis in2011, representinga realGDP growth of 14.4% and exceeding World Bankgrowthforecastsforthecountryby0.6%.Growthofthe economy in 2011 was broad-based and led by an expansioninthemanufacturing,construction,andoilandgassectors.Inaddition,theeconomybenefitedfromastrongreboundofgoldandcocoaexportsandaboostintourism.Thus,whilethenewlyaddedoilsectorundoubtedly improvedthecountrysgrowthprospects, thenon-oil sectorsof theeconomyalsocontributedsignificantlytogrowth,expandingbyanestimated8%.

Ghanas overall balance of payments recorded asurplusofUS$546.5millionin2011,downfromtheGH1.5billionsurplusrecordedin2010.Thedeclinewas due to the widening current account deficitdrivenbytheincreasednetoutflowsintheservices


andincomeaccount,whichrosetoUS$3.1billionin2011fromUS$2.1billionin2010.Totalmerchandiseexports grew by 60.6% in 2011 to US$12.7 billion,supportedbyoilexportsandfavourablecommodityprices while total merchandise imports grew by46.2% in 2011 toUS$15.9 billion. Total oil importswere US$3.3 billion compared with US$2.2 billionrecorded in 2010. Crude oil imports amounted toUS$1.4billionwhile importsofrefinedoilproductswereUS$1.7billion.CrudeoilexportswereUS$2.7billionoverthesameperiod.

REAL SECTOR PERFORMANCE

Ghanas real sector is based on activities in threesectors of the economy, namely; Agriculture, Industry andtheServicesectors.Revised GDP estimates released by the GhanaStatisticalService inApril2012 indicatethat in realterms, the economy expanded by 14.4% in 2011compared to an actual growth outturn of 7.7% in2010.The2011revisedGDPgrowthtranslates intoa real GDP of GH28.67 billion and a nominal GDP of GH59billion.During thefiscal yearunder review, theCompositeIndexofEconomicActivity(CIEA),anindexfashionedby the Bank of Ghana to measure the level ofeconomic activity and consumer confidence in theGhanaianeconomyupturnedby15.2%comparedto10.4%inDecember2010indicatingthatthepaceofeconomicactivityinthecountrywashigh.

Source: The coordinated programme of Economic and Social Development policies, 2010 2016; MOFEP, GSS and 2012 budget

Graph 3.1. Real GDP Growth Rate: 1995 - 2012


Below is the sectorial performance for the yearunderreview:

Agricultural Sector

The Agriculture Sector recorded the lowest growth of 0.8%againstatargetedgrowthrateof5.3%.ThelowgrowthrateofthesectorislargelyexplainedbythedeclineinreforestationactivitieswhichledtoadrasticcontractionoftheForestryandLoggingsubsectorby14.0%.However,thedeclineinloggingactivitiesalsohadapositive impactonenvironmentalprotectionand deforestation. With the exception of Forestryand Logging, and the Fishing sub-sector which also performed poorly, all other sub-sectors expanded.Thehighperformanceofthecropssub-sector(5.4%growth)waslargelyduetothespectaculargrowthofthecocoasub-sector.Itisworthnotingthatduetotheprudentpoliciesandstrategies,aswellasthehardwork of our cocoa farmers and other stakeholders in the industry, Ghana achieved its target of onemilliontonnesofcocoaproductionforthefirsttimein2011aheadofschedule.GiventhelargeshareofthecropsubsectorinGDP,thegoodperformanceofthesectorimpactedsignificantlyontherevisedGDPgrowth for the year.

Industrial Sector

The Industrial Sector recorded the highest growth output from 6.9% in 2010 to 41.1% in 2011. ItreplacestheagriculturalsectorasthesecondlargestcontributortoGDP(25.9%).Thephenomenalgrowthof the industrial sector was due to the inclusion of crude oil production in the Mining and Quarryingsubsector.TheoutputoftheMiningandQuarryingsubsector grew by 206% over that of 2010. TheManufacturing and Construction sub-sectorsrecordedappreciablegrowthratesof13%and20 % respectively, whilst theWater and Seweragesubsector grewby2.9%andElectricity shrankby -0.8%.

Crude oil production for 2011 is estimated at24.78million barrels. As a result of the significantcontributionofpetroleumoutputtotheMiningandQuarrying subsector, the sub-sectors share in GDP increasedfrom1.8%in2010to8.7%in2011,makingitthesecondhighestcontributorafterConstructionwithin the Industrial Sector. The Constructionsubsectorexceededitstargetby6.5%points.Thisislargelyattributabletothemassivepublicandprivateconstructionactivitiesinthesub-sector.

Service Sector

TheServices sector grewby8.3%and remains thelargest sector, contributing48.5% toGDP.The fourmaingrowthdriversof theServices Sectorare theTrade, Repair of Vehicles, Household Activities(17.9%); Information and Communication (17.0%);Business, Real Estate and Other Activities (14.0%);andCommunity,SocialandPersonalServiceActivities(13.0%).FinancialIntermediationgrewmarginallyby1%. Transport and Storage continues to dominatethesectorwithashareofGDPof10.8%.

Thetablebelowdepictstheperformanceofthevarioussectorsoftheeconomy:


Table3.1.GrowthRatesofGDPbySectorat2006ConstantPrices

Business, Real Estate and other Services

Source: Ghana Statistical Service & 2012 Budget Statement and Economic Policy

Monetary Development

MoneySupply

Moneysupplygrowtheased inOctober, supportedbyaslowdown in thepaceofaccumulationofNetForeign Assets in line with the revised monetaryprogram.

Annual growth of broad money supply includingforeigncurrencydeposits(M2+)declinedto38.1%from41.9%inSeptember2011.Thegrowthof38.1%inOctobercompareswith33.1percentinOctober2010 and 33.8% at end December 2010. ThegrowthofM2+overthe12-monthperiodtoOctober2011 was driven almost equally by Net ForeignAssets(NFA)andNetDomesticAssets(NDA)ofthebankingsystem,butreflectsasignificantslowdown

inthepaceofaccumulationofNFAinlinewiththerevisedmonetaryprogramme.

Net Foreign Assets of the banking system rose by 47.7%yearonyearcomparedtoa targetof38.8%fortheendofquarterfour(4).NetDomesticAssetsofthebankingsystemontheotherhandsupportedmainlybyaslowdowninnetclaimsongovernment(NCG),roseby31.8%relativetothetargetof42.7%for theendofquarter four(4). ThegrowthofM2+over the periodwas reflectedmainly in growth indemanddepositsandforeigncurrencydeposits,thelatter partly reflecting the increased exchange ratevolatility earlier in the year. Broad money (M2+)growtheasedfrom33.8%in2010to33.2%in2011.ThisisattributedtothesloweraccumulationofNetForeign Asset (NFA).


Inflation

Inflation remained within single digits throughouttheyearandendedat8.6%,lowerthantheprojectedtarget of 9%. The low inflation environment wasdriven by relative stability in both food and non-foodcomponentsoftheconsumerbasket.Non-foodinflationwhichwasat11.2%atthebeginningoftheyear increased to 12.4% by end of June 2011 andeasedto11.2%bytheendoftheyear.Foodinflationontheotherhand,fellfrom4.5%atthebeginningof the year to a historical low of 2.8 % in June.Subsequentlyitroseto4.3%byDecember2011.

Thefollowingchartdepictsthe inflationarypatternfortheyear2011:

Source: Ghana Statistical Service


Interest Rate

Interest rates generally trended downwards in 2011. TheMonetaryPolicyCommittee(MPC)oftheBankofGhana,thecentralbankscommitteeresponsibleforsettingthebanksprimerate,maintainedthepolicyrateat12.50%for the lasthalfof theyear.On themoneymarket,the91-dayTreasurybillratefellfrom12.3%to10.3%whilethe182-dayratealsofellfrom12.7% to11.1%byyearend. Similarly, the interestrate on the 1-year note declined from 12.7% to11.3%andthe2-yearnotefellfrom12.7%to12.4%.Averagebaseratesofbankswentdownfrom25.8%to22.5% in2011withquotationswithin the rangeof16.825.9%.Averagelendingratesalsodeclinedfrom27.6% in2010to25.9% in2011,withAnnualPercentage Rates for enterprises ranging between17.430.8%.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Prime Rate 13.50 13.50 13.50 13.50 13.00 13.00 12.50 12.50 12.50 12.50 12.50 12.50

12.00

12.20

12.40

12.60

12.80

13.00

13.20

13.40

13.60

Rat

e (%

)

Graph 3.3. Prime Rate: Jan - Dec 2011

Source: Bank of Ghana and MOFEP


Exchange Rate

Thecedidepreciatedby10.2%againsttheUSdollar,7.6%againsttheEuroand10.5%againsttheBritishPound Sterling in 2011. The cedi weakened against these major currencies as a result of the high demand forforeignexchange.Muchofthisdevelopmentwaswitnessedinthelastquarterof2011andwasdrivenbyseveralfactorsincludingthegrowingdemandforforeign exchange to support increased economicactivity, the changing nature of our trade patternwhichisshiftingtowardsAsiaespecially

China in which transactions are mostly conductedon cash basis, the absence of correspondentbanking between Ghanaian banks and their Asian counterparts. This contributed to the reliance oncash,andthespeculativeactivitybyforeignexchangetraderstryingtoprofitfromthedepreciationofthecurrency. Consequently, other market participantstriedtohedgeagainstfurtherdepreciation,therebyexacerbatingthesituation.Externalsectorconditionssuch as the euro zone crisis also reduced the netcapitalflowsintotheeconomy.


4CAPITAL MARKET REVIEW

The Accra bourse continued to contribute greatlytothedevelopmentofthecapitalmarketinGhana.By the close of 2011, there were thirty-four (34)listed companies, one (1) depository share, one(1) preference share, one (1) corporate bond, onehundredandsix(106)GovernmentofGhanabonds,and nineteen (19) stock-broking firms licensed to

trade on the Ghana Stock Exchange. Trading on the Exchangecontinuedtotakeplacefivedaysaweek,fromMonday to Friday between 9:30am and 3.00pm,exceptonpublicholidays.(Seetablebelowforcurrentstatisticsonthemarket:December2011)

Table4.1.SecuritiesontheGhanaStockExchange

Listed Companies 34

Total Number of Trading Days 246

Listed Shares:Ordinary shares 34 Depositary shares 1 Preference shares 1

Listed BondsCorporate 1 Government - 2-year 91 3-year 8 5- year 3

Source: GSE Market Statistics, 2011

The year 2011 saw the replacement of themarketindex, the GSE All-Share index, with the GSE Composite Index (GSE- CI) and the introduction ofthe GSE Financial Stocks Index (GSE- FSI). While the Composite Index,much like itspredecessortheAll-share index, measures the performance of all thecompanieslistedonthemarket,theFinancialStocksIndex measures the performance of only financialsectorcompanieslistedonthebourse.Thecreation

of a separate index to track financial stocks wasimportantbecauseofthehighvolumesandvalueoftradingthesectorrepresentsontheexchange.BothindiceshavetheirbasedateasDecember31,2010andtheirbasevalueas1,000.

BeginninginJanuary2011,theGhanaStockExchange(GSE) also introduced a newmethodof calculatingclosingpricesofequitiesonthemarket.Closing


pricesoflistedequitiesarenowcalculatedusingthevolumeweighted average price of each equity foreverygiventradingday.Hitherto,closingpricewasbasedonthelasttransactionpriceofalistedequity.During the year, the GSE Securities Depositorycontinued its educational drive towardsimmobilization of share certificates. At the end ofDecember2011,approximately49.37%oftotallistedshareshadbeenmobilizedand64,845accountshadbeenopenedbyinvestorsintheDepository. Rules for Exchange Traded Funds (ETFs) were approved by the Securities and ExchangeCommission (SEC) in 2011. It is expected that theRuleswillpavewayfortheadmissionofETFsonthelocal stock market.

An electronic surveillance system, which wasacquired by the SEC tomonitormanipulation andabuses in the stockmarket in real time, was alsoinstalled and tested during the year. Efforts areunderwaytomakeitfullyoperationalby2012

STOCK MARKET REVIEW

Stock markets the world over experienced adifficult year as the global economy continued toplunge, with growing anxiety over the euro zonedebtcrisisandtheslower-thanexpectedeconomicrecovery in the US. Ghanas stock market was noexception. Despite strong local fundamentals andanimpressivefirsthalf-year,themarketendedtheyearwithanegativereturnonitsindices.Investorsinfinancialstockswerethehardesthitsufferingalossof13.69%ontheir investments inthemarket.Other stocks on the market, as measured by the GSE-CompositeIndex,declinedslightly invalue,byabout3.1%. Thisnotwithstanding,tradingvolumeandvaluesfortheyear2011wassignificantlyhigherthan those recorded in 2010.

Thecomposite indexat1,057.14points in JanuarywentonacontinuousrisetotheendofJunewhenit registered 1,188.91 points, - a rise of 18.8% forthe first half of the year, which was better thanyieldsonTreasuries.Thereafter,theindexwentonadownwardtrend,endingtheyearat969.03points.The Financial Stocks Index, on the other hand, gained 16% in thefirsthalfof theyear,butplungedevenmoredeeplyinthesecondhalf,endingtheyearat863.09points.

0

200

400

600

800

1000

1200

1400

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Graph 4.1. GSE COMPOSITE INDEX JAN-DEC 2011

GSE COMPOSITE INDEX


Turnover

Notwithstandingthegeneralatmosphereofinvestorapprehension on stock markets, the total volumeand value of shares traded on the Ghana StockExchange went up by 27% and 295% respectively,overlastyearsfigures.Dailyaveragevolumeswere1.70millionsharesatanaveragevalueofGH1.82million.

Volumetradedstartedlowas itusuallydoesatthebeginningoftheyear,andpeakedattheendofthefirst quarter at 140.63million shares as a result ofinvestorsoffloadingtheirsharesonthemarketprior

to the delisting of Accra Breweries Ltd (ABL) andCFAOLtd.Itthenwentbacktonormallevelsofbelow50millionsharesuntilDecemberwhenitroseto73million shares.

ValuetradedremainedintherangeofGH10to36millionformostoftheyearuntilDecemberwhenitpostedGH235millionduetoabloctradeinEcobankGhana(EBG)shares.

Total volume of shares traded on theGhana StockExchangein2011wasthus419,791,082representingatotalvalueofGH446,561,496.69.

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000


VOLUME

VALUE

Graph 4.2. Total Volume And Value Traded Jan-Dec 2011

Market capitalization

TheGhanaStockExchangesawitstotalmarketcapitalizationmorethandoublefromGH20,386.02millionat the beginning of the year 2011 to GH 47,347.23 million at the end of the year 2011. This huge growth (136.59%)wasaresultofthesuccessfullistingofoilgiantTullowOilPlconthebourseinJuly2011.


-

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00


Graph 4.3. Market Capitalization (GHC Million)

2010 2011

MONTH 2010 2011JAN 15,997.03 20,386.02 FEB 15,970.37 20,055.66 MAR 17,815.51 19,979.30 APR 18,225.15 20,015.97 MAY 18,672.79 20,262.64 JUN 18,239.68 20,450.82 JUL 18,270.11 48,370.88 AUG 18,655.66 48,221.03 SEP 18,982.61 47,869.25 OCT 19,962.79 47,347.23 NOV 20,087.18 47,170.36DEC 20,116.70 47,347.23

Table 4.2. - Market Capitalization (GHC Million)

*MarketCapitalizationfiguresareasattheendofthemonth.


Market Performance by Sector

Amongthemajorcontributorstomarketliquiditywerefinancialstockswhichaccountedforabout44%ofthevolumeandover70%ofthevaluetradedontheGSEin2011.OtherequitieswhichrecordedimpressivetradeswereFood&Beveragestocks,andAgriculturalstocks.ThetablesbelowdepictthemarketmoversfortheperiodJanuarytoDecember,2011.

Table 4.3. Top 10 Volume Leaders (January December 2011)

Ticker Traded Volume % of Total Volume ABL 67,436,590 16.1EBG 66,208,197 15.8CAL 52,790,703 12.6PBC 48,450,270 11.5BOPP 28,174,662 6.7UTB 21,451,498 5.1FML 19,620,957 4.7ETI 16,955,373 4.0SIC 15,513,432 3.7GCB 13,442,779 3.2

Table 4.4. Top 10 Value Leaders (January December 2011)

Ticker Traded Value (GHC) % of Total Value EBG 231,630,912.47 51.9FML 55,176,474.69 12.4GCB 34,883,806.95 7.8BOPP 23,372,255.27 5.2SCB 20,130,135.12 4.5CAL 15,056,236.53 3.4PBC 12,234,189.71 2.7ABL 8,766,727.90 2.0SIC 7,498,076.88 1.7UTB 6,862,481.93 1.5


Table 4.5 Top Sectors by Volume (January December 2011)

Top Sectors by Volume Volume Traded % of Volume Traded FinancialFood & BAgricultuOther seTotal

Beverage ure ctors

186,361,98287,057,547

76,624,932 69,746,621 419,791,082

442118 17

100

Source:SEC/GhanaStockExchange

Foo

Agriculture18%

O

Graph

od & Beverage21%

Others17%

h 4.4 Sec

e

ctor PerfoTrade

Financial 44%

ormance ed

by Volumme

Financial

Food & Bever

Agriculture

Other Sectors

rage

s


Table 4.6 Top Sectors by Value (January December 2011)

Financial

Total

Food & BBeverage Agricultuure Other Sectors

316,061,649.88

63,943,202.5935,606,444.9830,950,199.24

446,561,496.69

71 14

8 7

100

Value Traded (GHC)Top Sectors by Value % of Total Volume

Source:SEC/GhanaStockExchange

Food & 14

Graph

Beverage4%

Agric.8%

Othe7%

4.5. Sect

ers

tor Perfo

Financial71%

rmance bby Value TTraded

Financial

Food & B

Agricultu

Other Sec

everage

re

ctors


Bond Market

Atthebeginningoftheyear,thetotalnumberofGovernmentofGhanabondslistedontheGhanaStockExchangewas104withatotalvalueofGH3,536million.

Duringtheyearunderreview,thegovernmentredeemedfifty-twoofits2-yearbonds,two3-yearbondsandone5-yearbond.TheGovernmentduringtheyearissuedandlistedforty-eight2-yearfixedratenotes,three3-yearbondsandone5-yearbondontheGhanaStockExchangebringingthetotalnumberoflistedgovern-mentbondsattheendoftheyearto102withatotalvalueofGH3,987.44million(seedetailsinthetablesbelow).

Attheendoftheyear,HFCBankhadonecorporatebond(HFCHousbond)listedontheexchange,thevalueofwhichwas3.9millionUSD.

Table4.7.GovernmentBondActivityin2011

GovernmentofGhanaBonds

Bond term

2-year 48

3

1

52

2

1

3-year

5-year

No. of new Issues/ Listings No of Redemptions

Table 4.8. Listed Bonds at the end of 2011

Corporate Bonds

5 Year Government of Ghana Bonds

Bond Description

Bond Description

ISIN

ISIN

Value ( million)

Value (GHmillion)

HFC Series J Dollar

Issue No.

5001 GHGGOG012501

GHGGOG013632

GHGGOG025438

5002

5003

GH0000000862 US $3.9

142.38

50.73

305.34

13.67

15.00

14.25

11/06/2012

12/10/2012

25/07/2016

6 mths USD Libor + 100 basis point

Coupon % Maturity

Coupon % Maturity

03/07/2012


3YearGovernmentofGhanaBonds

2YearGovernmentofGhanaBonds

Bond Description

11541162117411821191121112211226

GHGGOG012501GHGGOG020496GHGGOG021510GHGGOG022203GHGGOG022997GHGGOG024464GHGGOG024860GHGGOG025073

310.89345.50216.64123.46512.10401.20320.00216.38

19.0014.9915.6514.2513.3013.4512.3913.00

14/01/2013 03/11/201306/03/201329/07/201330/09/201317/02/201428/04/201428/04/2014

ISIN

Value (GHmillion)

Issue No.

Coupon % Maturity

1151 GHGGOG019670 123.07 23.50 26/12/20111152 GHGGOG019753 21.50 23.10 01/02/20121153 GHGGOG019837 4.34 22.00 01/09/20121154 GHGGOG019910 34.27 21.00 16/01/20121155 GHGGOG019977 50.61 20.50 23/01/20121156 GHGGOG020025 32.26 20.00 30/01/20121157 GHGGOG020108 26.10 19.25 02/06/20121158 GHGGOG020181 40.47 19.00 13/02/20121159 GHGGOG020272 64.76 18.75 20/02/20121160 GHGGOG020355 65.15 18.25 27/02/20121161 GHGGOG020439 26.80 18.00 03/05/20121162 GHGGOG020538 18.06 17.50 03/12/20121163 GHGGOG020611 10.99 17.00 19/03/20121164 GHGGOG020694 28.17 16.75 26/03/20121165 GHGGOG020777 28.30 16.50 04/02/20121166 GHGGOG020850 23.04 16.25 04/09/20121167 GHGGOG020934 38.49 16.00 16/04/2012

Value (GHmillion)

Issue No.

Coupon % Maturity


1168 GHGGOG021015 6.47 16.00 23/04/20121169 GHGGOG021098 20.93 16.00 30/04/20121170 GHGGOG021171 119.41 15.50 05/07/20121171 GHGGOG021254 22.30 15.25 14/05/20121172 GHGGOG021346 17.30 14.95 21/05/20121173 GHGGOG021429 5.04 14.90 28/05/20121174 GHGGOG021502 3.94 14.50 06/04/20121175 GHGGOG021619 5.98 14.30 06/11/20121176 GHGGOG021692 0.21 14.00 18/06/20121177 GHGGOG021775 0.07 13.90 25/06/20121178 GHGGOG021858 1.79 13.80 07/02/20121179 GHGGOG021940 4.40 13.70 07/09/20121180 GHGGOG022021 1.12 13.60 16/07/20121181 GHGGOG022146 1.22 13.50 23/07/20121182 GHGGOG022195 16.53 13.70 30/07/20121183 GHGGOG022286 2.04 13.60 08/06/20121184 GHGGOG022369 0.42 13.55 13/08/20121185 GHGGOG022443 2.39 13.45 20/08/20121186 GHGGOG022534 2.11 13.40 27/08/20121187 GHGGOG022617 0.92 13.35 09/03/20121188 GHGGOG022708 0.02 13.30 09/10/20121189 GHGGOG022781 20.47 13.30 17/09/20121190 GHGGOG022864 0.23 13.10 24/09/20121191 GHGGOG022989 3.05 13.00 10/01/20121192 GHGGOG023045 10.53 13.00 10/08/20121193 GHGGOG023169 10.15 13.00 15/10/20121194 GHGGOG023243 0.07 12.95 22/10/20121195 GHGGOG023326 0.30 12.90 29/10/20121196 GHGGOG023409 0.10 12.90 11/05/20121197 GHGGOG023490 0.03 12.80 11/12/20121198 GHGGOG023573 0.02 12.80 19/11/20121199 GHGGOG023656 0.07 12.75 26/11/20121200 GHGGOG023748 1.58 12.70 12/03/20121201 GHGGOG023839 2.47 12.70 12/10/20121202 GHGGOG023912 0.12 12.70 17/12/20121203 GHGGOG023961 0.03 12.70 24/12/20121204 GHGGOG024001 1.13 12.70 31/12/20121205 GHGGOG024068 0.12 12.65 01/07/20131206 GHGGOG024100 0.17 12.65 14/01/20131207 GHGGOG024159 0.08 12.60 21/01/2013

Value (GHmillion)

Issue No.

Coupon % Maturity

2YearGovernmentofGhanaBonds(contd)


Value (GHmillion)

Issue No.

Coupon % Maturity

1208 GHGGOG024241 0.45 12.55 28/01/20131209 GHGGOG024324 0.04 12.55 02/04/20131210 GHGGOG024415 0.09 12.52 02/11/20131211 GHGGOG024456 0.16 12.50 18/02/20131212 GHGGOG024506 0.04 12.50 25/02/20131213 GHGGOG024548 10.07 12.50 03/04/20131214 GHGGOG024589 0.09 12.47 03/11/20131215 GHGGOG024621 9.22 12.50 18/03/20131216 GHGGOG024670 0.01 12.50 25/03/20131217 GHGGOG024720 0.04 12.50 04/01/20131218 GHGGOG024761 0.27 12.50 04/08/20131219 GHGGOG024803 0.21 12.50 15/04/20131220 GHGGOG024852 3.05 12.50 22/04/20131221 GHGGOG024902 72.14 12.43 29/04/20131222 GHGGOG024944 3.08 12.40 05/06/20131223 GHGGOG024985 11.89 12.35 13/05/20131224 GHGGOG025024 0.05 12.25 20/05/20131225 GHGGOG025065 10.04 12.20 27/05/20131226 GHGGOG025115 16.59 12.15 06/03/20131227 GHGGOG025156 20.32 12.10 06/10/20131228 GHGGOG025198 30.11 12.10 17/06/20131229 GHGGOG025230 20.08 12.10 24/06/20131230 GHGGOG025271 0.07 12.05 07/01/20131231 GHGGOG025313 0.60 12.00 07/08/20131232 GHGGOG025362 14.18 12.00 15/07/20131233 GHGGOG025412 0.08 11.95 22/07/20131234 GHGGOG025479 0.04 11.70 29/07/20131235 GHGGOG025529 0.12 11.50 08/05/20131236 GHGGOG025560 0.04 11.30 08/12/20131237 GHGGOG025602 1.58 11.00 19/08/20131238 GHGGOG025644 0.98 11.50 26/08/20131239 GHGGOG025685 0.46 11.30 09/02/20131240 GHGGOG025727 12.64 12.00 09/09/20131241 GHGGOG025776 2.24 11.90 16/09/20131242 GHGGOG025818 3.10 11.70 23/09/2013


Table4.9.StockMarketPerformanceAgainstRateofInflationin2011

MONTH

YEAR-TO-YEARCHANGE IN GSE

COMPOSITE INDEX

INFLATION RATES (%)

REAL RATE OF RETURN (%)

JAN 5.714 9.08 3.366FEB 5.183 9.16 3.977MAR 7.150 9.13 1.980APR 10.038 9.02 -1.018MAY 16.278 8.90 -7.378JUN 18.891 8.59 -10.301JUL 17.085 8.39 -8.695AUG 14.512 8.41 -6.102SEP 9.838 8.40 -1.438OCT 0.786 8.59 7.804NOV -1.274 8.58 9.854DEC -3.097 8.60 11.697

-5

0

5

10

15

20

JAN FEB

Graph

MAR APR M

h 4.6. Sto

MAY JUN J

ock MarkeIna

UL AUG SE

et Performtion in 20

EP OCT NOV

mance Ag011

V DEC

gainst Rate of

INFLATRATES

TION (%)

YEAR-TO-DATECHANGE INGSE-COMPOSITEINDEX %

Stock Market Performance Against Rate of Inflation


Table5.1.BrokerageClientele2007-2011

5BROKER- DEALERS

YEAR

2007

2008

2009

2010

2011

IC

1

1

NSTITUTIONCLIENTS

1,300

704

788

874

1,517

NAL % CH

- -

-45.90

11.90

11.10

73.00

HANGE RETAIL C

9,141

10,636

39,822

17,203

33,252

CLIENTS %

2

% CHANGE

16.35

274.41

-56.80

93.30

Source:SEC

At the end of the year 2011, there were 23 licensed broker-dealers although only 19 of them were active members of the Ghana Stock Exchange.

Total Value Traded

ThetotalvaluetradedintheGhanaStockExchangeamounted toGH888,724,242 compared to a totalofGH273,182,192in2010,anappreciationofover200%.ThiscanbeattributedtothelistingofTullowsstock on the Exchange which raised the aggregate valueoftransactionsontheGSE.EDCStockBrokersaccounted for52%of the totalmarketsvaluewithtransactions totaling GH 458,785,024. They werefollowed by Databank Brokerage with 18%marketshare and transactions totaling GH 163,085,676.ICSecuritiescameinthirdpositionwith8%marketshareandtransactionsworthGH67,352,178.

Total Volume Traded

Total volume traded on theGhana Stock Exchangealso almost doubled - from 489,946,456 sharesin 2010 to 835,639,497 shares in 2011. MerbanStockbrokersaccountedfor20%ofthetotalvolumeof shares traded on the market. EDC Stockbrokers and Databank Brokerage both accounted for 17%eachof themarket. ICSecuritiescontrolled10%ofthe total market.

Clientele

Thetotalnumberofclientswhoinvestedinsecuritieson the Ghana Stock Exchange via broker-dealersincreasedsubstantiallyfrom18,077in2010to34,769in2011,anincreaseofover90%fromthepreviousyear.Ofthe34,769clients,1,517were institutionalclients compared to 874 in 2010, and retail clientswere33,252comparedto17,203in2010.IC Securities controlled the largest proportion ofthe industrys clients. It had 8,052 clients. Following it was Cal Brokers with 6,509 clients and StrategicAfricanSecuritieswith5,453clients.

The table below shows brokerage clientele for the period2007-2011


African ASecuri

5%IC Securitie

Alliance ities

%

Databank Brokerage

18%

es 7%

OTH18

k

HERS8%

EDC Stockb52%

brokers %

Graph 5.1. Market Share Distribution of Brokerage Industry by Value of Trades

- Top 4 and the rest


6INVESTMENT ADVISORY SERVICES

At the end of 2011, there were 58 licensed Investment Advisers in Ghana compared to 51 in2010. However, of the 58 only 40 were activelymanagingfunds.Theremaininginvestmentadvisersprovidedadvisoryservicesonly.Totalfundsmobilizedby the industry grew from GH412,403,308 in 2010 to GH1,037,281,256 in 2011. Funds under management also increased from GH980,655,962in2010toGH1,776,574,620in2011,representingan81%growth.

Portfolio allocation

Fundmanagers inGhanagenerally invest in capitalandmoneymarketinstruments.About53%oftotalmanagedfundswereinvestedinthemoneymarket,withalargenumberoffundmanagersholdingover80%oftheirportfolioinmoneymarketinstruments.

Investmentinthecapitalmarket,ontheotherhand,was lower than expected because fund managersshied away from equities. Most traditionallyaggressivefundscutbackonequityallocations-toabout40%oftheirportfolio.Dominant players on the bond market were HFC

InvestmentServicesincreasingitsportfolioinbondsfrom76%lastyearto86.7%in2011.

EDC Investment Ltd. and IC Securities (Gh) Ltdhadthe most diversified portfolio across the variousinvestmentcategories.

Clientele

At the end of the year 2011, the total number of investors having their funds under managementleapt from 19,165 in 2010 to 171,616 constituting3,283institutionsand168,333retailclients.

Market Share Distribution

Intermsoffundsundermanagement,about55%oftheinvestmentadvisorybusinesswascontrolledby5 companiesnamely,DatabankAssetManagement(17%), Gold Coast Securities Ltd. (12 %), MerbanInvestmentHoldingsLtd.(12%),SICFinancialServicesLtd.(8%)andEcobankInvestmentManagementLtd.(6%).Asummaryofthemarketsperformanceisprovidedin the chart below.

Grap

Others45%

ph 6.1. MMan

EcIn

Market Snagers- T

Data

SIC FinaServi

8%cobank nv. Mgt

6%

Share DisTop 5 an

bank Asset Mg17%

GoSe

Merban Holdi

12%ancial ices

%

stributiond the re

gt

old Coast ecurities

12%

Invest. ngs

%

on of Fuest

nd


7COLLECTIVE INVESTMENT

SCHEMES

Collective Investment Schemes (CIS) in Ghana takethe formof either aMutual FundorUnit Trust.Attheendof theyear2011, therewere26CollectiveInvestmentSchemesinGhana,upfrom24in2010.Theycomprised14MutualFundsand12UnitTrusts.Ofthe26,ten(10)wereoperatingasEquityFunds,six(6)asBalancedFunds,nine(9)asMoneyMarketFundsandonlyoneasaRealEstateInvestmentTrust(REIT).

The total net asset value of funds under themanagement of Collective Investment SchemesstoodatGH226,112,000in2011,agrowthof16%from the 2010 figure of GH 193,307,218.MutualFunds contributed 75.8% of this amount, totalingGH171,437,179, while Unit Trusts contributed24.2%totalingGH54,674,820.

Total funds mobilized during the year appreciatedby 19% from GH101,344,796 in 2010 toGH121,346,143in2011.Thetotalamountmobilizedin 2011 represented 53.6% of the total net assetvalueofallcollectiveinvestmentschemesin2011.

TotalredemptionsalsoincreasedfromGH64,581,444in 2010 to GH91,651,360 at the end of 2011representinganincreaseof41.9%.ThedepreciationoftheCediinthelastquarteroftheyearmayhavebeen a contributory factor as investors redeemedtheirinvestmentstoinvestinforeigncurrencies.

The number of shareholders and unit holders rose from178,764 in2010to191,160at theendof the2011. This represented a6.9%growth.A summaryof the performance of the Collective InvestmentSchemeindustryisprovidedinTable3(AppendixC).

Mutual Funds

The total number of mutual funds licensed by the SEC in2011stoodat14ascomparedto12in2010.TheirtotalnetassetvalueincreasedfromGH149,946,866in 2010 to GH 171,437,179 in 2011, representingan increase of 14%. Databank Asset ManagementServices Limited was the market leader in the CISFundmanagementsegmentasitmanagedover80%ofthetotalnetassetvalueoffundsonthemarket.ItsMoney Market Fund (MFund) was the biggest fund with52%marketshare.Itsequityfund(EPACK),wasnext,controlling31%ofthetotalnetassetvalueofthemarket.TheIFund,managedbyEDCinvestmentsmaintaineditspositionasthethirdlargestcontrolling6%oftotalnetassetvalueofthemarket.

In terms of total number of shareholders, EPACKInvestmentFundhadthehighestsharewith73%ofthe industrys shareholders. They were followed by theIFundwith7%share.

In terms of performance, First Fund managed byFirstFundFinancialServicesscoreda20%annualizedyield,followedbytheMFundwitha12%annualizedyield.EPACKwasthebiggestloserinthiscategoryasthevalueof its funddippedby12%.HeritageFundalsosufferedasignificantlossinassetvalueof9.9%.

ThemostcostefficientmutualfundswereFirstFundandMFund with cost efficiency ratios of 0.23 and0.69 respectively. A summary of the performanceofthemutualfundsub-sectorisprovidedinTable5AppendixC.

Thechartonthenextpageshowsthedistributionoftotalnetassetvalueofthevariousmutualfunds.


MFUND52%

EPACK31%

IFUND6%

OTHERS11%

Grap

Annual Report 11

Documents

marketcapitalization

topsectorsbyvalue table4

topsectorsbyvolume table4

dec2011 graph4

marketcapitalization

constant prices table4

gsecompositeindex graph4

dec2011 graph3