THE Jamaica Stock Exchange (JSE) will on Tuesday open its 19th Regional Investments and Capital Markets Conference amidst plans to introduce or accelerate the introduction of new products and services as it seeks to boost a market reeling from the impact of higher interest rates. The conference this year will be held under the theme ‘The Drivers of Capital: From Concept to Growth’

and will continue Wednesday and Thursday. The conference is also being held in the 55th year of the JSE’s founding.

“Normally we have the conference at the beginning of the year, and it is no mistake because what we want to do is set the agenda, and hear from those who are in charge of setting the economic agenda as to what is the plan for the ensuing year,” Marlene Street-Forrest, managing director of the JSE, told the
Jamaica Observer in an interview last week.

She said the conference, which will bring together market participants and Government leaders to share information and to look at the trends and the products and services within the capital markets, aims to deepen the market and grow participation.

This year’s conference will include speakers such as the prime minister who normally delivers the keynote address on the opening night set for Tuesday at the Jamaica Pegasus hotel in New Kingston, St Andrew. Other participants include Guyanese President Mohamed Irfaan Ali while a slew of ministers from the region and business leaders from around the region and the world will also present.

“In the last few years, we have not had problems getting panellists of speakers. In fact, we have so many people now contacting us from September wanting to be on the agenda and to tell their story,” Andre Gooden, manager for group business development at the JSE, added as they reflected on the growth of the conference over the years.

The JSE said it expects speakers to focus on issues with impact such as environment, social and governance (ESG) and the changing regulatory framework as Jamaica transitions from a sectoral regulation of the financial sector to the twin peaks model of regulation. Data protection is also an area that the conference will tackle.

“Every year it’s different, because the capital market landscape changes and changes so rapidly. These are some areas and you’ll notice that they are honing in on what is going to strengthen the capital markets to gain in confidence,” Street Forrest added.

“We have been shaken a little in terms of confidence in the market, so this year, we will be showcasing all of the things that not only the stock exchange is doing, but also the wider financial sector is doing to shore up that and it’s steep in regulations.”

Successes

Street Forrest said amongst the successes garnered so far in past conferences is the networking that takes place and ideas to broaden the capital markets.

“What we have found is that we have been able to make significant links right across the world and the players in the market have said to us…that they have within conferences cut deals.”

“We have seen also the introduction of new products to the market, for example, it was out of the conference that we have been able to identify who we want to work with in respect of the digital assets market. Granted, it is not launched as yet, but these things take time,” she added.

But she said, the successes do not stop there.

“For the listed companies, they have brokered relationships with external parties in terms of broadening their product line and services. That alone to me would be satisfactory.

“As it relates to brokers, in terms of capital raise and linkages overseas, they have been able to make those links. As it relates to investors themselves, the learning, we must not forget the knowledge improvement that happens at conference and I believe taking away from this, many of our new investors, because I see them at conference, have gained so much in terms of understanding the market, and that’s a critical element.”

New products and services

Digital Asset Market: The digital assets market mentioned by Street Forrest aims to trade digital assets but the JSE managing director said digital currencies such as cryptocurrencies will not be traded. However, data, images, video, written content, and so on, which have long been considered digital assets with ownership rights and can be stored digitally, will be traded.

“For example, a basketball player might decide that his digital image of himself is an asset he wants to monetise, and as a result of that, having the ability to monetise that gives you the ability to invest in your image right,” Street Forrest noted.

The global market for digital assets is expected to reach US$80 billion this year, according to Statista, a German online platform that specialises in data gathering and visualisation. No date has been set for the JSE to launch its version of the digital asset market, though Street Forrest pointed out that the Financial Services Commission (FSC) has already provided the brokers with the regulatory requirements.

“There are some areas that we want to flesh out a little bit more with the FSC…but it is a go to launch the market,” she added, hinting that the launch may be sooner rather than later. Rules are already developed for the market and mirrors those for the equity market.

Andrea Kelly, general manager, JCSD & JCSD Trustee Services, said the new service will give investors and issuers another avenue to raise capital through electronic means.

“There is a platform that we are using through blockchain technology to raise capital and this will also give persons, not just residents here, but also international issuers an opportunity to raise capital on the market using the blockchain technology,” Kelly pointed out and added that the blockchain uses a distributed ledger which will see purchases being allocated immediately. The JSE said it expects traditional companies to be the first to market their digital assets.

But mindful of money laundering and terrorism financing, the JSE said measures are in place to mitigate the risk.

“Within the system base, it has information on any name that would be on a watch list. It also scans for information on a client to see if they are fit and proper and all of that is done digitally and automatically. That is why we want to move towards that, because that is where the world is moving. And what we want in terms of the capital market is speed, efficiency and safety. That’s the three things we are aiming at,” Street Forrest continued.

Short-selling: Another product on the table is short-selling. Riccalya Robb, manager for market operations and trading at the JSE, said this new service will be introduced by April. With short-selling, a seller opens a short position by borrowing shares, usually from a broker-dealer, hoping to buy them back for a profit if the price declines. To close a short position, a trader repurchases the shares — hopefully at a price less than they borrowed the asset — and returns them to the lender or broker.

“It’s going to be a full short-selling service,” Robb added but she said ‘naked shorting’ will not be allowed. Naked shorting is the practice of short-selling a stock or other security without borrowing or arranging to borrow the shares to sell short from one’s broker. The practice of naked shorting is prohibited in the United States but not in all trading jurisdictions.

Direct market access: This is where the JSE wants more investors participating directly in overseas market through its own exchange. The service was launched in 2o21, but has so far not taken off as hoped. Still, the client base is being built and the brokers are coming on board, though slowly.

“The direct market access is where we have created a platform that links our local brokers to foreign brokers so that investors can access foreign jurisdictions. Right now we are in Canada and we have two participating brokers who allow investors to trade in Canadian securities currently. But we are also looking to move out to other markets,” Kadyll McNaught Hermitt, manager for registrar and depository services for the Jamaica Central Securities Depository (JCSD), told
Sunday Finance. “We want to go to the US, we want to go to the Caribbean, we want to go right across the world, so this is something we are also pushing for 2024 so more people, investors and brokers, can participate.”

“The value proposition for the direct market access is transparency and the ability to independently verify what you actually own. Currently what happens, when an investor invests in another jurisdiction, you would have to depend on what the broker tells you. But with the direct market access platform, you can actually log on to our JCSD portal and actually generate your statement and it can give you exactly what you own and the value of what you own. and gives confidence building in the market.”

Commodities: This is another area the JSE said it is looking to go into.

“As it relates to the commodities market, as we look at regional growth, we believe that with our relationship throughout the region, that is one area we ought to explore,” Street Forrest said.

“We believe that agriculture will be one of the drivers of the commodities market…It will be looking on things like our staple coffee, it will be looking at cocoa; from Guyana, for example, we will be looking at rice and minerals. There is enough within our region to allow our region to have a commodities market, hence we believe that come next year, we will be putting in place the various discussions that drive the start of this market.”

Altogether, the JSE said it is moving away from just plain vanilla equities. It recent years it has launched a US dollar market, a market for trading bonds, introduced a junior market, created the social exchange and the e-campus and improved services for its investors and broker-dealers.

“We began with just one market, a main market, a vanilla market and we have now moved to several markets to cater to several investors. The growth is tremendous, but we stick to our knitting which is very critical to our strategy and does not go out of it. So we continue with all things financial, because the idea is that we should be involved in all financial transaction, that is our aim, to be involved in every financial transaction, not just equities,” said Street Forrest.