The International Organisation of Securities Commissions has published a research note on market-based long-term financing solutions for small and medium enterprise and infrastructure in its quest to boost market-based financing for SMEs enterprises and infrastructure development.
The note is a compilation of recent examples of capital market solutions in developed and emerging markets that have contributed to the financing of small and medium enterprises and infrastructure projects.
According to IOSCO, the research describes inventive structures and products in equity capital markets, debt capital markets, securitisation and pooled investment vehicles that offer practical solutions to generally recognised challenges for financing of SMEs and infrastructure projects.
“The market-based financing solutions described in the note cover many jurisdictions across a wide geographical region, while several case studies reference cross-border activities and/or have regional reach,” said the global body, adding that the research also gives key takeaways from each example and identifies themes common to the innovations.
A statement by the global body explained that since the 2008 global financial catastrophe, the banking sector, which had conventionally been a major source of funding for long-term financing needs, had undergone a significant deleveraging process.
“This has increased the gap between supply and demand for LTF in many economies around the world. As governments implement austerity measures and face budget constraints, public funding for SMEs and infrastructure projects has been constrained,” it said.
In addition in acknowledgment of the mounting role that the capital markets play in the provision of LTF for SMEs and infrastructure, IOSCO established the Long-Term Financing Task Force in November 2013 to review the issues and challenges facing LTF and opportunities for growth.
The Co-Chair of the LTF Task Force, Mr. Howard Wetston, who is also Vice-Chair of the IOSCO Board and Chair of the Ontario Securities Commission, in his words said, “This research note reflects the important contribution that IOSCO is making in this area, as well as its expertise in terms of the oversight of the capital markets. The note contains concrete and practical capital markets-based solutions that address the increasing demand for long-term financing by SMEs”.
Also, the Co-Chair of the LTF Task Force, Ranjit Singh, who is also Vice-Chair of the IOSCO Board said, given the scale of long-term financing required globally, particularly for infrastructure development and SME financing, a sound market conduit that can successfully channel funds for economic growth and productivity is of vital importance.