The announced restructuring of the management of the Jamaica Stock Exchange (JSE), which has been cast as an effort to enhance corporate governance and regulatory oversight, appears to us as a move in the right direction, notwithstanding the need for points of clarification.

The plan, as it has been reported, is to split the operations of the JSE into two relatively discreet functions. Marlene Street Forrest, the exchange's general manager, will continue to be responsible for the commercial aspects and, as we understand it, general day-to-day management of the market. In that regard, she will continue to report to the board of directors, headed by the JSE's chairman, Curtis Martin.

On the other hand, Wentworth Graham, formerly Mrs Street Forrest's deputy with responsibility for the exchange's market operations and trading division, has now been named the chief regulatory officer, to head a market regulatory division. The division will be responsible for policing the behaviour of listed companies to see that they follow the rules. His job, therefore, is to ensure, among other things, openness, transparency and, importantly, fairness, especially in their treatment of minority shareholders.

What is significant about this reorganisation is the reporting arrangements. Mr Graham will not report to the GM, but to a regulatory and marketing oversight committee of the board, made up of four newly appointed independent directors, chaired by attorney Hilary Phillips, QC. The decisions of that committee on oversight issues will be binding on the board.

It is a system, or variations thereof, that, as Mr Martin has said, has been employed by other stock markets. So, it is no reinvention of the wheel.

The practical benefit of this arrangement is to eliminate the commingling of the commercial and business aspects of the exchange from its regulatory and oversight functions.

Indeed, we, and others, believe that there is not only room for, but need to grow the listings on the exchange, if the JSE is to become a more significant player in the capital market and improve its efficiency through economies of scale. Driving this kind of growth is substantially a marketing job, demanding, in Jamaica's tough environment, hard and sustained effort. Moreover, there seems to be much work still to do to give life to a coordinated regional market.

It seems to make sense that the job of drumming up business and the surveillance of the behaviour of listed firms ought not to reside in the same person, if the two roles are to be aggressively pursued. Which, of course, is not a comment on either or both of the incumbents, but a statement of principle.

It is practical, too, that decisions about the behaviour of firms should be moved to independent members of the JSE board, rather than the stockbroking companies directors, who depend on the business of the firms they regulate.

But for the new arrangements to work well, there will have to be clear lines of demarcation between the two top officials of the exchange, even as they work closely together for the effective operation of the market.

What is not clear though, and is in need of further and better particulars, is the expected relationship between the regulatory division of the exchange, the board's oversight committee, and the Financial Services Commission, the body legally responsible for regulating financial markets.

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