Transcript Inaugural Regional Conference on Investment and The

Deeping the Regional Capital
Markets: Investment Options
Revisited
Presented to
CAIB 37th AGM & Conference
By
TREVOR E BLAKE
General Manager
ECSE Group
10 November 2010
Overview

Introduction

Role of Capital Markets

Regional Markets

Deepening the Markets

Conclusion
2
Introduction




Banks dominate Financial Sector
Banks necessary, but not sufficient to meet
needs of modern economy
Sound banking system AND liquid capital
markets drive growth
Liquid stock markets drive growth regardless of
state on banking system!
3
Role of Capital Markets

Capital markets developed primarily to for efficient
mobilisation and allocation of resources

Markets expected to

channel financial resources to productive purposes

to attract for foreign investment and international savings

to reduce the over-dependence on bank financing

to encourage ownership of productive assets by small savers

to provide investment opportunities
4
The State of Regional Markets
 6 Exchanges/markets in CARICOM

Bahamas, Barbados, ECCU, Guyana, Jamaica,
Trinidad & Tobago

6 Regulators

Fragmentation




legal & regulatory framework
systems
listing rules
disclosure standards, etc
5
Regional Capital Markets
Regional Exchanges' Listings & Brokers
60
50
40
30
20
10
0
BISX
BSE
Equities
ECSE
Debt
Funds
GASCI
Total Securities
JSE
TTSE
Brokers
6
Regional Market with
Selected Comparators
EXCHANGES
Market Cap
as % of GDP
Equity Trades
as % of GDP
42,209,460.5
108.4
299.0
2,342,820.4
122.5
107.5
623,350.5
77.8
39.6
38,102.1
144.1
23.6
TTSE
8,556.3
56.3
1.1
JSE
6,080.4
41.4
0.9
BSE
4,389.5
8.0
0.7
648.0
0.2
0.1
NYSE & NASDAQ
LSE
BM&F/BOVESPA
SANTIAGO
ECSE
Market Cap
(US$ million)
7
The State of Regional Markets
 low level of activity on ECSE

market is narrow and thin

strong ‘buy and hold’ culture

no effective Institutional Investors

underdeveloped Intermediary function

small public float

narrow product range
8
Deepening Capital Markets

Regulatory Infrastructure




Legal Framework
Prudential Supervision
Accounting & Auditing Standards
Corporate Governance
9
Deepening Capital Markets

Market infrastructure

Meeting International Standards


Enhancing Role of Institutional Investors


NIS/SSS; Mutual Funds
Widening Retail Investor Base


IOSCO; CPSS; WFE
Mutual Funds; Investment Clubs
Product Innovation

Repos; Swaps; Securitisation
10
Deepening Capital Markets

Market infrastructure (Cont’d)


Short Selling & Securities Lending
Expanding Product Range



IPOs; Privatisation
Corporate Debt; RGSM
Enhancing the Intermediary Function

market-making; underwriting
11
Deepening Capital Markets

Enabling environment/supporting infrastructure





Liberalising Capital Controls
Providing Incentives for Listing
Strenghtening Public Debt Management
Enhancing Financial Literacy

Effective, sustained, comprehensive campaign

ECCU Public Education and Information Program
Integrating the Markets
12
Conclusion





Regional Capital Markets still developing
Some Progress is being made
Still a long way from delivering real benefits
that would impact growth
Achieving benefits of markets require
collaboration of all parties
Is market integration necessary?
13