Department of Financial Markets

1. Mandate

The mandate of the Department of Financial Markets is to manage the country’s reserves and develop domestic money and capital markets. The Central Bank of Lesotho (the Bank) through the Department promotes the development of financial markets in Lesotho through managing official foreign reserves, implementation of monetary policy through Open Market Operations, and contracting and managing the Government’s domestic debt through issuance and redemption of Treasury Securities. Recent establishment of Maseru Securities Market trading platform will go a long way in deepening the market and enhancing secondary market activities.

2. Divisions

The Department consists of FOUR (4) Divisions namely; Reserves and Market Operations, Market Risk and Development Division, Domestic Market Division, and Treasury Operations Division.

a) Reserves and Market Operations Division

Through the Department of Financial Markets, the Bank is mandated by section 6 (f), of the Central Bank of Lesotho Act of 2000 to own, hold and manage its official international reserves. The primary motive of the Bank for holding reserves is to maintain the value of the Loti (LSL) and to be in a position to settle the country’s international obligations promptly.

The functions of the Division include the following:

• To undertake securities’ auctions to support monetary policy operations.
• To coordinate all trading and other related activities on the trading floor and provide support to broking and dealing clients; and
• To Maintain and manage the foreign exchange reserves at adequate levels to facilitate the foreign transactions for Lesotho;

b) Market Risk and Development Division

The functions of the Division include the following:

• To initiate and manage developmental projects to domestic financial markets.
• To monitor the risk exposure of reserves against set risk parameters in line with the Bank risk tolerance; and
• To prepare and monitor strategies for portfolio management;
• To provide analytical support to reserves management function in order to meet the objectives of holding of reserves;

c) Domestic Market Division

The functions of the Division include the following:

• To promote investor education and public awareness.
• To ensure proper conduct of all licensed persons and market institutions/intermediaries; and
• To protect investor interests;
• To implement regional and international standards and best practice in securities markets and securities regulation;
• To create, maintain and regulate, through implementation of a system in which the market participants are self-regulatory to the maximum practicable extent, of a market in which securities can be issued and traded in an orderly, fair and efficient manner;
• To register prospectuses and other offering documents under which securities are offered to the public and listed on the exchange;
• To promote the issuance of the capital market products (bonds, shares etc);
• To promote development of all aspects of the capital markets through research on new products and institutions, with particular emphasis on the removal of impediments to, and the creation of incentives for, long term investments in productive enterprise;

d) Treasury Operations Division

The functions of the Division include the following:

• Confirmation, Settlement and Accounting of foreign deals as initiated by front office;
• Settlement and accounting of domestic securities issued in support of the monetary and fiscal policy;
• Processing of foreign currency denominated payments and receipts for the Bank and Lesotho government;
• Management of Correspondent banking relationships as maintained for holding international reserves;
• Confirmation, Settlement and Accounting of foreign deals as initiated by front office;
• Settlement and accounting of domestic securities issued in support of the monetary and fiscal policy;
• Processing of foreign currency denominated payments and receipts for the Bank and Lesotho government; and
• Management of Correspondent banking relationships as maintained for holding international