The realisation of a regional capital market for Caribbean countries is becoming more of a reality following successful talks between representatives of Caribbean and Latin American countries in Port-of-Spain, Trinidad earlier this month.
Keith Davies, acting chief executive officer for the Bahamas International Securities Exchange, attended the conference, which was organised by the Caribbean Latin American Action (CLAA) and the West Indies’ Institute of Business along with Hillary Deveaux, secretary of the Securities Commission.
The aim of the one-day conference was to define public policy changes needed to integrate and harmonise the capital markets of the Caribbean with the ultimate aim of making the region more attractive to foreign investors.
In an interview with the Guardian on Friday, Mr. Davies described the meeting between the different country representatives as very positive.
“I think there was a consensus that yes this is a good idea. Yes this is something that we should strive towards… and continue to talk about,” said Mr. Davies.
Mr. Davies stressed that collectively the region looks more attractive to the rest of the world but individually, the markets are considered too small for international investors.
He said individually, the Caribbean exchanges total capital base would pale in comparison to the capital base of a single company in a more developed country. By linking up, the market capitalisation would consist of all the countries. “When they see that we can attract them.”
Mr. Davies said he was not in agreement with all the objectives of the conference.
“I don’t necessarily agree with having what the conference is focusing on, one stock exchange,” said Mr. Davies because this would relegate the activities of all the exchanges to one entity.
He revealed that disagreements already arose concerning the possible location of such an exchange and who would pay for the development of this entity. “Cross listings from my perspective are the way to go,” he said.
According to Mr. Davies, the establishment of a single exchange should be a long-term goal and the more reachable goal of linking the exchanges should be the focus right now. “The principal should be we want to link the exchanges. If at some future time you are going to established one entity that’s a much longer proposition.”
Mr. Davies also said the linkage would involve establishing a code of conduct that every country would have to subscribe to. “Basically it sets the bar and everyone raises their limits to it and if you fall below it you can’t participate.” Once similar rules, regulations and standards are present, cross listing companies should become easier, he said.
He continued that the alternative to establishing a common code of conduct was a company having to meet the individual standards of each country the company desired to be listed in. “That can become cumbersome for a company… and that doesn’t make sense or is cost effective,” Mr. Davies said.
The idea for the development of a regional stock exchange market first emerged in 1989 through an initiative by the Government of Jamaica and by 1991 the Barbados Securities Exchange, the Jamaica Stock Exchange and the Trinidad and Tobago Stock Exchange all entered into an arrangement for cross border equity trading.
Currently four securities are cross-listed on these exchanges: FirstCaribbean International Bank Ltd., Barbados, Grace Kennedy and Company Ltd, RBTT Financial Holdings Ltd and Trinidad Cement Ltd. However the four securities are largely ignored in their host countries and trade primarily in their home markets according to Roy Johnson, chairman of Jamaica Stock Exchange.
Mr. Davies said the linking of the exchanges has the ability to be completed fairly quickly as the technology was already in place but he advised caution be exercised in this development. “I believe cautious review, analysis and looking at the situation before taking any steps would be required from a policy, governmental and operational view.”
By Martella Matthews, The Nassau Guardian
