turn to the second pillar for financial sector development, namely markets. markets the development of the financial sector cannot be envisaged without the promotion of strong, well - functioning and deep financial markets. significant progress has been achieved in positioning the domestic stock market on the international financial arena. the stock exchange of mauritius ( sem ) is endowed with a state - of - the - art trading infrastructure and, as a result of its good performance, was the second african exchange after the johannesburg securities exchange ( jse ) to attain membership status of the world federation of exchanges ( wfe ) in november 2005. moreover, in about a month, on 1 october 2008, the mauritius stock exchange is scheduled to join the dow jones wilshire global index. in 2007, market capitalisation in us dollars on the sem increased by 70 per cent year - onyear, with non - residents ’ gross inward investment in the equity market registering a record high. the remarkable track record of the sem should induce the private sector to take better advantage in securing long - term funding. the amendments brought in 2007 to the securities act 2005 could give a boost to securities trading on the stock exchange. there is significant room for improvement with regard to development of fixed income markets, which have remained rather shallow and illiquid despite recent interest from foreign investors. traditionally, fixed income markets are important channels through which public and private institutions avail of financial resources for medium - and long - term projects. bond markets also constitute good investment opportunities for long - term investors such as pension funds and insurance companies. there have been a few bond issues lately – including one launched by the european investment bank – and this should be encouraged for the benefit of all stakeholders. in the light of limited success experienced with the secondary trading of treasury bills on the stock exchange of mauritius, the bank of mauritius is currently undertaking a review of the primary dealer system. the central bank is also working on the issue of benchmark bonds in collaboration with bankers. a commodity exchange, named global board of trade ( gbot ), is scheduled for launch in mauritius in january 2009 with the collaboration of financial technologies india ( fti ) ltd. this commodity exchange, which intends to trade commodities and derivative products in metals, oil and agriculture, shall take the mauritian financial system a step further by enabling better enterprise risk management and financial planning. mauritius will also seriously need to contemplate the development of full - fledged currency futures in the near future – that would assist in formation and

may opt to exclusively conduct islamic banking or offer islamic financial products through a window. through the finance act 2008, non - bank deposit taking institutions have also been authorized to offer shariah compliant financial products. islamic banking in mauritius should become a reality in the near future. a proposed insolvency bill seeks to amend and consolidate the law relating to insolvency of individuals and companies and the distribution of assets on insolvency and related matters. moreover, a netting and intermediated securities bill provides for the validity and enforcement of close - out netting arrangements and giving effect to the hague securities convention on the law applicable to certain rights in respect of securities held with intermediaries. with a view to promoting mauritius as a reputable and clean financial centre, the bank of mauritius reviewed its guidance notes on anti - money laundering and combating the financing of terrorism ( aml / cft ) in july 2008 in the light of recommendations made in the report on the evaluation of the aml / cft regime of mauritius by the financial sector assessment program ( fsap ) mission of the imf / world bank. technological infrastructure the technological infrastructure – exchanges and systems used to clear and settle market trades or cash obligations – plays a critical role in the development of the financial sector. with the advent of modern technology, payments, clearing and settlements are effected in real - time. the bank of mauritius launched in december 2000 a real - time gross settlement system with guaranteed finality of payment known as the mauritius automated clearing and settlement system ( macss ). ongoing efforts have since been made to modernise the payments system. recent initiatives include the port - louis automated clearing house ( plach ) set up in 2002, which performs netting on cheque data that are sent to the clearing house by electronic means and the settlement at each clearing cycle on the macss. the bank of mauritius is currently working on a cheque truncation project, whereby clearing and settlement of a cheque will be done through images of cheques instead of physical cheques. the stock exchange of mauritius also operates a central depository system ( cds ), which allows for delivery versus payment of stock exchange transactions on a t + 3 rotating basis via the macss. at a cross - border initiative level, the bank of mauritius is also participating in the comesa regional payment and settlement system ( repss ) which will allow cross border payments between comesa countries. the objective is two - fold : to reduce costs of transactions