THE Jamaica Stock Exchange (JSE), it seems, has created an unbalanced market in the way it disseminates information from the companies listed on the exchange.

Rule 410 of the JSE’s Main Market Rule Book states that prior to or concurrent with any public announcement, every listed company shall forward to the JSE information regarding dividends, profits, issues, and expansion programmes in order to avoid the establishment of a false market in the company’s securities. When this information is sent to the JSE, it is modified and filtered to meet the desired publication standard before it is released on the news section of its website.

However, before this information is released to the general public it is sent to brokers by the JSE’s trading operation desk in a Word document organised into a table. Though this information is subsequently posted on the website, the information might be posted on the following day or not at all. The original information might be further diluted for public users of the website while the brokers are afforded the full disclosure.

On March 23, 2020 the JSE posted a notice about First Rock Capital Holdings Limited (FRCH) in which it said it would be acquiring majority ownership in Dolla Financial Services Limited. However, on April 2, 2020 another broker posted on its website that the acquisition was done for US$500,000. Except for this broker’s publication, no other member of the public, including shareholders, would have known the transaction cost until First Rock Capital Holdings’ 2020 audited financials which were published on May 12, 2021, a whole year later.

There are other cases where a broker will publish a dividend consideration notice but that information was never published in the JSE’s news section. This indirectly creates an advantage for brokers since they are afforded information in the truest form while the public tends to get a release which has been significantly reduced.

This issue came full circle recently as Ideal Securities Broker Limited, Broker #11, was the newest JSE participating broker effective November 15, 2021. This information had been afforded to brokers but not to the general public or prospective investors. On June 8, 2021 NCB Merchant Bank (Trinidad and Tobago) Limited was registered as the seventh brokerage firm with the Trinidad and Tobago Stock Exchange (TTSE). This information was furnished in a public news release by the TTSE on the day it occurred.

In response to the investigation, Dr Marlene Street Forrest, managing director of the JSE, refuted the findings and explained the process for posting information.

“There is no process where information from listed companies are compiled into a document and submitted to the brokers. The information that the brokers receive from the JSE is through the website and from the company news that is emailed with trade and summary reports daily. The daily news that is emailed with the daily summaries is from the advisories posted on the JSE website. The news is updated to the website after the market closes at 1:00 pm and in the mornings before trading at 9:30 am,” stated Dr Street Forrest.

Though the JSE has started to post revisions on company posts the day they are released, it begs the question of who verifies information to protect investors. NCB Financial Group Limited (NCBFG) is cross-listed on the TTSE and JSE, which means information is sent to both exchanges. A connected party of NCBFG bought 5,801,420 shares on the JSE on August 30, 2021. The TTSE had these exact details but the JSE’s release said August 31. When the Jamaica Observer checked the JSE’s data and screenshots of the trade in question, it was executed on August 30 and not August 31, as per the JSE release.

Another example of the verification of information is a disclosure by Jamaican Teas Limited. A May 31 disclosure stated that a director purchased 12 million shares on May 28 despite the volume traded for the day being 803,886 shares. The disclosure was later amended to state that it was done pursuant to the company’s long-term share option, which was exercised by the director on the day.

When asked about measures to prevent the indirect addition of information as seen with Supreme Ventures Limited and PROVEN Investments Limited last week, Dr Street Forrest explained, “Based on investigation it was found that the draft version of the document was published. We have since put in procedures to ensure that only documents that are marked as “pending” are uploaded. Also, as soon as the error was discovered, the advisory was pulled from the website.”

The Regulatory and Market Oversight Division (RMOD) is an independent arm of the JSE which is supposed to monitor market conduct and collate information sent to them as per JSE listing requirements. The RMOD enforces the JSE rules up to what they identify as a breach from their merit but might not identify breaches based on what is deemed relevant per their role. As a result, a company might send information to the RMOD which is then processed to the brokers but the information isn’t always published on the news section or checked to detect errors since that is not within its current scope.

“The JSE, as much as possible, verifies information received from listed companies. However, the JSE cannot guarantee that it will identify all errors prior to publication, although an effort is made. In fact, no exchange can guarantee accuracy on all disclosures. In more developed markets where companies publish their information to a portal, no verification is done and the information is received by the market. This would be impossible with markets of those sizes. The JSE has taken the view, so far, that verification is necessary in a less mature market and have decided that there should be quality over expediency. We are only able to process the information before publishing because the market is small,” Dr Street Forrest closed on the matter.