JSE Chairman Optimistic About Continued Growth of Financial Sector

Jamaica Stock Exchange (JSE) Chairman, Julian Mair, says he is optimistic about the continued growth of the financial sector, particularly the securities industry, in light of Government-programmed changes to the regulatory framework consequent on recent developments.

Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, on Monday (January 23), announced that a Twin Peaks model of financial sector supervision and regulation of deposit-taking institutions (DTIs) and non-bank financial institutions is being pursued for implementation within 18 to 24 months.

The arrangement will see DTIs, inclusive of commercial banks, building societies, merchant banks, and credit unions, along with non-bank financial institutions, comprising securities dealers, insurance companies and pension funds, falling under the Bank of Jamaica’s regulatory and supervisory oversight.

The Financial Services Commission (FSC) will be designated to oversee market conduct and consumer protection for the full spectrum of financial services.

These changes are being undertaken in the wake of the alleged multibillion-dollar fraud being investigated at investment firm, Stocks and Securities Limited (SSL).

Speaking at the 18th JSE Investment and Capital Markets Conference at The Jamaica Pegasus hotel in New Kingston, on January 24, Mr. Mair said the regulatory changes announced represent the most significant ever undertaken, adding that he is optimistic that the growth of the sector will continue to be strong and stable.

The Chairman pointed out that although “change is scary” in some instances, it also represents an opportunity to be exploited, while emphasising that “there are exciting new days [ahead]”.

Mr. Mair contended that the BOJ is “more than capable” to assume the roles with which they have been tasked.

He indicated that the Central Bank has always played an important role in the capital markets and the security dealers industry.

“Bringing them to the position of handling the prudential requirements of the industry doesn’t mean [it’s] a change that needs to be necessarily feared. It needs to be carefully and very deliberately put in place in a format that allows for our industry to continue to grow and expand,” he argued.

The Chairman maintained that growth and expansion will not materialise “on top of a weak framework”.

Mr. Mair highlighted the numerous structural safeguards that have been implemented by the JSE and BOJ to protect client interest and the integrity of the overall securities industry.

These include the establishment of JSE subsidiary, the Jamaica Central Securities Depository (JCSD), JCSD Trustees Limited, the Central Securities Depository, and the Real Time Growth Settlement (RTGS) system.

He said the services provided through these have been placed on a technological platform that allows clients and institutions to, among other things, be able to see, in real time, the movement of securities and funds.

“Every one of you who is a client of a broker dealer in Jamaica, probably has the ability to go into your account and check it online. You also have the ability to check with the JCSD and check that… securities registered at the JCSD are there in your name, because that’s how they are held, with your unique identifier being your taxpayer registration number (TRN). That’s across all of the brokers,” Mr. Mair pointed out.

“We did not build a $1.6 trillion industry by chance; this is diligently built and is the envy of the region… . It is through our deliberate actions. It is our duty to protect it. We’re standing on a very solid platform from which we can build,” he added.

Mr. Mair acknowledged the learning curve that the BOJ will have to undergo to understand the securities industry, “more completely than they do now”.

“We welcome the opportunity to work with them and ensure that we have a smooth transition,” he said.

Mr. Mair also acknowledged the work that the FSC undertook within the securities industry over the past 20 years to develop the rules and guidelines, which, “despite the current news, have served our clients and the entire investment ecosystem and financial system, overall, very well.”

“Your contribution to the development of the capital market is recognised and appreciated. We recognise that your role will change, and under the new regulatory paradigm we look forward to working with you within the context of your new mandate,” the Chairman said.