The securities market in Latvia is regulated and supervised by the Finance and Capital Market Commission (FCMC). The FCMC conducts supervision of the securities market on behalf of the state in order to enhance the stability and reliability of the entire financial sector.
The objective of regulation is to ensure regular and lawful operation of the market. The main functions of the regulatory framework are:
- to protect the interests of investors
- to ensure lawfulness, reliability, efficiency and transparency of the market
- to reduce systemic risks
Nasdaq Riga performs supervision of market participants and issuers of securities traded on the market with regard to the price formation of the securities traded on the market, the conclusion and execution of transactions, and fulfillment of the provisions of the Rules and Regulations adopted by the Exchange. In the event of a failure to comply with the law, other regulations, or the Exchange’s regulations in general, the Exchange may take the case to the Management Board. In January 2007, the Nasdaq Riga Surveillance Committee began its work. Nasdaq Riga has delegated a part of its surveillance functions to an independent body in order to eliminate any potential conflicts of interest.
Nasdaq Riga has since the start of the delegated a part of its functions related to surveillance of the regulated market to an independent body – the Surveillance Committee. Previously only the Nasdaq Riga Management Board applied sanctions to issuers and members in case of breach of the Nasdaq Riga rules. The Surveillance Committee has the authority to take more serious surveillance decisions. The Committee consists of experts who are not related to Nasdaq Riga. Delegating some surveillance functions to an independent body eliminates conflicts of interest that may potentially arise when Nasdaq Riga is simultaneously both the market organizer and the surveillance body.
Surveillance Committee members are approved by the Nasdaq Riga Council. The committee consists of 7 independent experts with adequate education and expertise in the capital market and legal issues. At its first meeting, the Surveillance Committee elected Viktors Gustsons as Chairman and Edgars Līvmanis as Deputy Chairman.
Ongoing surveillance of issuers and members remains the duty of Nasdaq Riga specialists, who are responsible for preparing materials for the needs of Surveillance Committee. Decisions of the Committee may be appealed to the Financial and Capital Market Commission, arbitration or the court.
Comparable disciplinary bodies are already operational at OMX Nordic Exchanges. In the Baltic Market, Nasdaq Tallinn has a body with similar functions.
Surveillance Committee members
Viktors Gustsons – Compensa Life Vienna Insurance Group SE Latvia branch, Member of the Management Board
Lauris Liepa – Law Office COBALT, Managing Partner
Edgars Līvmanis – NCH Advisors Inc., Lawyer
Jānis Leja – SIA “JL Prospero”, Member of the Management Board
Māris Purgailis – University of Latvia, Faculty of Economics and Management, Professor
Rolands Paņko – AS “Attīstības finanšu institūcija Altum”, Chief Financial Officer, Deputy Head of Planning and Finance Management Department
Uldis Zelmenis – Balcia Insurance SE, Financial Investment Manager