One prominent businessman is putting forward the idea of one financial services regulatory agency and one stock exchange within the Caribbean Community (CARICOM).
Gervase Warner, President and Chief Executive Officer of Massy Holdings Ltd., made the suggestion recently while stating that the CARICOM Single Market and Economy (CSME) was not delivering on its promise decades after it has been established.
He argued that unless more was done to create economies of scale and make it easier for businesses to operate with more ease across borders “we will continue to stymie the potential that we have in our small developing states”.
Warner was responding to questions during the opening of the 41st annual review seminar of the Central Bank of Barbados, which was held under the theme Rebuilding Economies for the Future: Opportunities for Resilience Through Diversification.
Asked whether the cross-listing of Massy Holdings Ltd. on the Jamaica Stock Exchange (JSE) was contributing to the group’s resilience and competitiveness, Warner answered in the affirmative while explaining that the Trinidad and Tobago Stock Exchange (TTSE) was not as vibrant as it once was.
“The Trinidad and Tobago stock exchange is a less active stock exchange than it has been in the past for international investors. International investors are unable to repatriate the proceeds of their sales of locally listed shares in Trinidad and Tobago.
This is a great nuisance to any sophisticated financial institution that is moving money back and forth,” he explained.
“This is a good example of a breakdown that makes Trinidad and Tobago less competitive. In the Jamaica Stock Exchange we see a very dynamic exchange that is attractive to international investors like the Trinidad and Tobago Stock Exchange once was, and [it is] a place where we see that we can get and invite more shareholders, more institutional investors, more traders to participate in the Massy Holdings share.
For us it represents another step in this integration of the Caribbean in the mindset of what we created in CARICOM,” said Warner.
The CSME was established to remove restrictions and allow for free movement of goods, services, skills and labour, capital and technology. Under the CSME individuals are also able to establish a business in participating member states.
However, Warner decried the difficulty in getting business done across borders in the Caribbean, suggesting that having one stock exchange and one financial and insurance services regulator would make a major difference.
“If you talk to any publicly traded entity that operates in multiple jurisdictions in CARICOM, we would all prefer for us to have one stock exchange where we could all be traded and have a good economy of scale and a platform that could apply benefits that is more robust than having all of these multiple small exchanges and small participation in individual island.
“If you would ask any of us would we like to have one financial services commission or one financial services regulator for bank and insurance companies, absolutely.
“It is a great nuisance to deal with 14 different regulators particularly with all of the new regulations that are coming out that are really internationally driven and affect us as small entities,” said Warner.
In January 2017, Massy Holdings delisted from the Barbados Stock Exchange, citing the low levels of trading in the company’s shares that did not justify the costs of maintaining the cross-listing.
Officials of the company have long complained about the lack of harmonisation of laws and regulations between jurisdictions, which has led to high costs of doing business.
“We don’t understand as a region that we make ourselves uncompetitive, that is why the Canadian banks are withdrawing, because it is just not worth it to operate in all of these little islands with different regulators. It just doesn’t make a lot of sense,” insisted Warner, who also pointed to too much duplication.
However, Advisor to the Governor of the Central Bank of Barbados Michelle Doyle said she believed the issue of sovereignty would prevent the Caribbean community from establishing a single financial services regulator. “I think what is more practical is that we have standardisation of some of our regulatory requirements across territories,” said Doyle.
“So I do think there is scope for us to standardise the requirements and regulations that we adopt in such a way that there is less friction in terms of entities that have a regional footprint that have to operate in different territories . . .
“I think there are various tools we can employ in terms of ensuring that level of standardisation and the means by which to make it easier for business facilitation across the region,” she added.
More than three years ago, CARICOM leaders agreed to the establishment of a regional integrated stock exchange. While the decision is said to still be on the table, such an integrated capital market will require the creation of a supranational securities commission that would regulate such activity.
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