BoG pushes for stronger legal framework to deepen financial market growth
The Bank of Ghana (Bank of Ghana) is stepping up efforts to strengthen the legal and operational foundations of the country’s financial markets as it works to deepen liquidity, expand the fixed-income space and reduce systemic risk through the adoption of globally recognised repo and derivatives frameworks.
Speaking at a market training programme organised in collaboration with Frontclear on the Global Master Repurchase Agreement (GMRA) and International Swaps and Derivatives Association (ISDA) documentation, First Deputy Governor Zakari Mumuni said the rapid growth of Ghana’s financial markets must be matched by stronger legal certainty and improved risk management standards.
“Volumes tell us how active the market is, and documentation, risk frameworks and legal certainty also tell us how safe this environment is,” he said. “Today, we gather to close the gap between market activity on one hand and market resilience on the other.”
He noted that Ghana’s evolving fixed-income market is becoming increasingly sophisticated, requiring stronger institutional structures to support efficient trading and investment activity.
Dr Mumuni explained that a well-functioning repo market is a key feature of modern financial systems, supporting short-term liquidity management, collateral use, and effective monetary policy transmission.
However, he stressed that these benefits depend on market participants fully understanding the legal, operational, and risk frameworks that govern transactions.
The GMRA provides the global legal standard for repurchase agreements, while ISDA documentation governs over-the-counter derivatives, both of which are widely used in advanced financial markets.
According to the Bank of Ghana, wider adoption of these frameworks is expected to strengthen legal enforceability, reduce counterparty risk, and boost investor confidence in Ghana’s financial system.
Dr Mumuni explained that GMRA agreements clearly define counterparty rights and obligations, including provisions for default management, margining, and close-out netting, while ISDA documentation performs a similar function in derivatives markets by setting out payment terms, collateral arrangements, and risk mitigation mechanisms.
The central bank has in recent years introduced repo market guidelines endorsing GMRA as the standard framework for transactions, expanding eligible participants and securities while promoting structures that improve efficiency and reduce credit risk.
A further boost came in August 2024, when the International Capital Market Association issued a GMRA legal opinion confirming the enforceability of netting provisions under Ghanaian law — a development seen as critical for attracting international market participants.
Analysts say this strengthens Ghana’s appeal to foreign investors by providing greater legal certainty in financial transactions.
Dr Mumuni also urged closer coordination among treasury, risk, legal, and operational teams within financial institutions to ensure stronger market discipline and compliance.
“We have deliberately structured this programme to bring together the treasury, risk and legal functions within your institutions,” he said, adding that no single function can operate effectively in isolation.
He stressed that Ghana’s financial market integrity must be anchored on enforceable agreements, sound operational processes, and well-informed professionals.
“The integrity of Ghana’s financial market cannot rest on informal conventions or ambiguous documentation,” he said. “It must rest on legally enforceable agreements, operationally sound processes and professionals who understand precisely what they have signed.”
The Bank of Ghana said it will continue working with stakeholders to strengthen financial market infrastructure, deepen liquidity, and align domestic practices with global standards as part of broader efforts to rebuild investor confidence and improve market efficiency.
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