The Editor, Sir:

In relation to the present debate on foreign exchange schemes I want to make a few points.

In the United States, the regulators developed a new, and separate, regulatory framework to deal with these new forex financial products. They do not fall under the traditional banking products set (regulated by the Federal Reserve) nor the securities, stocks and investment product set (regulated by the Securities and Exchange Commission). The forex industry is regulated under the National Futures Association (NFA), a separate and distinct agency from the SEC.

The NFA covers regulation for commodities, futures, forex in the United States.

My understanding is that the local FSC (which is the Jamaican version of the SEC) is fighting tooth and nail to define the local forex trading industry and activities as securities activities and as falling under their umbrella, when clearly they do not. In fact, the definition of securities, as drawn from the FSC website, describes securities as "stocks, promissory notes, bonds, certificate of participation, investment contracts and other documents commonly called securities". Therein lies the dilemma. The legal mandate of the FSC does not extend to, nor cover, these new forex players and these new forex instruments.

What is needed, and quickly, is for the Government of Jamaica to create a new regulatory framework, analogous to the NFA in the U.S., to be designed for the Jamaican marketplace and provided with oversight of this new industry and for these forex instruments. That's where the focus should be. Until that is done the FSC is merely spinning wheels.

In the U.S.A., the SEC does not regulate the forex market, in the U.S. Forex is not securities.

Non-emotional answers

I would encourage your paper, as a public service, to invite the FSC to provide structured, non-emotional answers to these issues, perhaps through your medium. You could collate and synthesise the issues raised, and then invite the FSC to respond in a one page Q&A.

I recommend three questions:

a. Is the international US$ 2 trillion per day forex market a Ponzi or pyramid marketplace ?

b. Does the definition of securities in Jamaican law, envelop these newer financial instruments such as futures, commodities and forex trading or would new or modified legislation be needed?

c. Have any formal complaints been lodged with the FSC by members of the public on any aspect of their business relationship with the forex trading entities deemed 'alternative investment schemes', and has the FSC consequently been forced to initiate any formal investigations into these schemes, based on complaints by the general public ?

I am, etc;

HAROLD CLARKE

policyteam@moveupjamaica.org

Kingston