PM: BARRIERS TO REGIONAL CAPITAL MARKET

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Prime Minister and Minister of Finance, David Thompson

“There are many hurdles that confront us as we survey the way ahead for the harmonisation of our capital markets”.

This view was expressed yesterday by Prime Minister and Minister of Finance, David Thompson, as he delivered the feature address at the fifth annual conference of the Caribbean group of securities regulators at the Accra Beach Hotel.

One such obstacle, Mr. Thompson noted, was the harmonisation of legislation and rules in independent jurisdictions, including prospectus requirements and exemptions, shareholders’ rights, disclosure reporting and conflicts of interest.

He observed that in a perfect world, a harmonised regional capital market structure for Caribbean self-regulation would be based on a common statutory scheme with each country’s support.

“Unfortunately, however, each of the countries in the region is at a different stage of development, and the securities laws are somewhat disparate. We must, therefore, forge ahead with what we have and help to bring others to the minimum required for us to move to the next stage,” the Prime Minister stated.

Inconsistencies in individual country’s rules and procedures were listed as another barrier to harmonisation of market rules. Mr. Thompson said, for example, that only some of the countries of the region had eliminated capital gains tax on securities and investments.

“Another issue is the policing of cross border risk management, especially systemic risk arising from issues relating to trading, clearance and settlement of transactions,” he added.

The currency of settlement was also mentioned as a major concern by the Prime Minister, who noted that a single currency was absolutely necessary. He pointed out that the three exchanges, namely Jamaica, Barbados and Trinidad and Tobago, settled in US dollars. He stressed, however, that the fundamental question was whether the CSME would precipitate the need for a single Caribbean currency or whether the markets would continue to rely on the US dollar.   

Mr. Thompson observed that in addition to the challenges, there were common considerations which were prerequisites for the harmonisation of Caribbean capital markets. These included the use of modern technology to ensure compatibility of trading platforms and facilities for clearance and settlement, and legislation to support the exchange of information between regulators and other stakeholders.

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