The Trinidad and Tobago Stock Exchange is the leading stock exchange in the Caribbean region. While it caters mainly to companies incorporated in Trinidad and Tobago, it also hosts cross-listing from other CARICOM nations. General manager Wainwright Iton spoke to The Report Company about the main priorities for the stock exchange, and his vision for a region-wide bourse in the future.
The Report Company: What have been the main priorities for you since you took up your role?
Wainwright Iton: The main priority always has to be growth. While we’re growing, we have to be offering the best possible service to our various publics, who are our listed companies, our broker members and the investing public. We have to line up a number of things simultaneously; our systems have to be right, our people have to be right and our promotional efforts have to be right.
Over the last four years, we’ve made a strategic shift from essentially an equities market to a securities market. We now have five or six different platforms that we service. We have the government bond market which was started in 2008, we’ve got the traditional equities market which was the mainstay of the exchange, we’ve got a corporate bond market which is relatively illiquid, we have a US dollar platform which we are now attempting to build out and we have a mutual fund market. We have built over the last year a repo platform but it’s still to be populated in terms of actual usage.
We have also paid attention to promoting the exchange and our efficiency and what we offer to the investing public. We haven’t been terribly successful in terms of getting new companies to list but that’s a difficult game wherever you go in emerging markets. Apart from the well-established conglomerates and big businesses, most of the companies are family-held and fairly tightly held. It’s difficult to convince them to give over that control.
TRC: What initiatives do you have in place to approach the SMEs?
WI: In 2011 we got the minister to embrace the SME segment. In Jamaica, they have a junior market and they have been hugely successful in terms of SMEs jumping on board. I don’t think our brokers are quite as aggressive as the Jamaicans. I also don’t think a lot of SMEs are quite ready for listed company status in terms of the governance challenges. You have to bring them up and nurture them. I anticipate that we will get listings next year. From my perspective, the big job is public education; convincing both the demand side and the supply side about why they should be coming to the public market to raise capital because the benefits accrue to everybody.
“Over the last four years, we’ve made a strategic shift from essentially an equities market to a securities market. We now have five or six different platforms that we service.”Tweet This
TRC: How does the Trinidad and Tobago stock exchange compare to others in the region?
WI: We’re all pretty much similar. We use the same software and our platforms are the same. We have a project that aims at integrating all the markets so that, say, a Jamaican broker can access our market when we’re trading and be a counterparty to Trinidadian trades and vice versa.
Of all of the English speaking Caribbean, Trinidad is the only country with fiscal space. There’s no doubt that Trinidad is the financial and business centre of the Caribbean and it’s the only economy with fiscal space as well as reserves. However, the only difference between our markets may be in the underlying economy and psyche. Jamaica’s always been a more aggressive market in terms of brokers going out there and drumming up business. It certainly has the greatest depth in terms of activity. Jamaica may do 80-90 percent of volume but that translates to at best 50 percent of value. Trinidad may do anywhere between eight and 15 percent of volume but invariably we’re the leader in value. We really should have had one stock exchange to start with.
TRC: Where do the opportunities lie for investors?
WI: Value is there in a number of senses. Every now and again I see glorious opportunities. The dividend yields have been good; the average yield last year would have been about 3.5 percent, dwarfing anything you would get from a bank.
TRC: How much has been done to encourage companies in the energy sector to list on the exchange?
WI: We have all the big international oil companies here, but they arrived to the country before we had a stock exchange, and if a company like BP needed real capital I doubt that we could supply it. Ideally, oil should have some connection to the market which would have given us greater growth but there’s really no value proposition for them.
“Of all of the English speaking Caribbean, Trinidad is the only country with fiscal space. There’s no doubt that Trinidad is the financial and business centre of the Caribbean and it’s the only economy with fiscal space as well as reserves.”Tweet This
TRC: What reforms do you think should be made to boost the financial sector in Trinidad and Tobago?
WI: Both recent governments have been doing a fair deal of re-engineering, certainly since the financial crisis. We got a new securities act last year and an insurance act is on the table. The credit union sector is also being looked after so the legislative agenda has been pretty full. I think we’re moving along; we’re not too far behind international best practice in a number of cases and I don’t see that there are major obstacles at the moment. There’s always room for improvement and tweaking but I don’t think there are any major impediments holding us up.
TRC: Where do you see opportunities for further regional integration?
WI: We have made some progress. Our capacity as a market is to some extent constrained by the size of our economies and our population. We need a single stock exchange; we don’t need five or six of the same because we are spending five or six times the amount of money to do the same work.
We have been ensuring that our platforms remain consistent across borders but we’ve confused it a little bit because every island now has securities legislation that is not exactly identical. We’ve got cross-listings and we get cross trading.
TRC: What is your outlook for the future and the evolution of the stock exchange?
WI: We’re going to try and grow. Strategically we’ve recognised that if the listings aren’t coming in the traditional market of equities, then we need to provide opportunities for all of the possibilities and diversify in terms of our revenue flows. As a result we now have a government bond market and we trade in fairly large chunks. I’m more than optimistic that we’re going to have a lot of growth and development over the next five, 10, 15 years. Our economic focus may need to be a bit sharper because unless there’s a whole lot of activity in the economy you don’t expect to have a booming stock exchange.
TRC: In the long term do you see a Caribbean-wide stock exchange?
WI: It will happen. It’s going to happen, but we’re going to have to get the mechanisms in place.