An­tho­ny Wil­son

The black, lam­i­nat­ed, rec­tan­gu­lar in­vi­ta­tion with a lan­yard that land­ed on my desk on Mon­day re­mind­ed me of an is­sue that has been both­er­ing me for some weeks and that I had been mean­ing to raise in this space. The in­vi­ta­tion, which was la­belled VIP pass on the front, was for a First Cit­i­zens In­vest­ment Ser­vices func­tion that was held yes­ter­day af­ter­noon to launch a new in­ter­na­tion­al trad­ing plat­form. The plat­form promised "a world of op­por­tu­ni­ties," with the tagline be­ing "glob­al in­vest­ment so­lu­tions." This com­men­tary is be­ing writ­ten be­fore the event so I am on­ly spec­u­lat­ing that this in­ter­na­tion­al trad­ing plat­form gives lo­cal in­vestors the op­por­tu­ni­ty to place or­ders for Ap­ple, GE, Dis­ney and oth­er in­ter­na­tion­al stocks as they sit at their desks dur­ing the day or from their home com­put­ers at night. If this is what was launched yes­ter­day, I ap­plaud First Cit­i­zens In­vest­ment Ser­vices for be­ing the first lo­cal fi­nan­cial in­sti­tu­tion to mar­ket with such a prod­uct.

But the is­sue that was raised with a non-ed­i­to­r­i­al col­league, when he en­quired whether the in­vi­ta­tion had been re­ceived, was the same is­sue that has been buzzing me for some time: Would this new in­ter­na­tion­al trad­ing plat­form al­low lo­cal in­vestors to buy and sell lo­cal stocks on­line from the com­fort of their liv­ing rooms or their work spaces? The ques­tion is be­ing broached in the con­text of the fact that many lo­cal in­vestors al­ready have ac­cess to in­ter­na­tion­al trad­ing ac­counts with var­i­ous for­eign fi­nan­cial in­sti­tu­tions, which fa­cil­i­tate on­line trad­ing of in­ter­na­tion­al stocks. And there are many oth­er lo­cal in­vestors who now place buy or sell or­ders for in­ter­na­tion­al stocks by tele­phone through lo­cal fi­nan­cial in­sti­tu­tions that of­fer this ser­vice dis­crete­ly (mean­ing that this is not some­thing that is wide­ly ad­ver­tised, for what­ev­er rea­son). The is­sue, there­fore, is why are lo­cal in­vestors who are in­ter­est­ed in trad­ing lo­cal stocks not be­ing giv­en the op­por­tu­ni­ty to do so on­line. I am fair­ly sure that the First Cit­i­zens In­vest­ment Ser­vices prod­uct would re­quire in­ter­est­ed in­vestors to place the sum that they wish to in­vest in an ac­count at the bro­ker­age house or link their in­vest­ment ac­count to their First Cit­i­zens bank ac­count.

It is my un­der­stand­ing that the in­vestor would then be set up with a user name and a pass­word that would give them ac­cess to their in­vest­ment ac­count, which would come with built-in lim­its that re­strict the in­vestor to trad­ing based on the amount of mon­ey in the ac­count. The in­vestor is then giv­en the op­por­tu­ni­ty to go in­to the on-screen menu of the ser­vice provider, do re­search on the par­tic­u­lar stock that they wish to buy, and make their pur­chase or­der by hit­ting the buy but­ton. It is my un­der­stand­ing that some of these on-line in­vest­ment ser­vices even show the cal­cu­la­tions for the amount of com­mis­sion and fees charged so that the trad­er knows ex­act­ly how much is go­ing in to (or out of) their in­vest­ment ac­count. Some of these on-line in­vest­ment providers even al­low the lo­cal in­vestors to set up their ac­counts so that the div­i­dends they re­ceive can be au­to­mat­i­cal­ly re-in­vest­ed in the stock they have pur­chased. Such on-line ac­counts al­so al­low the lo­cal in­vestor to view the rise and fall of their in­ter­na­tion­al stocks al­most in re­al time based on the chang­ing prices of the shares in their port­fo­lio.

All of these on-line in­vest­ment providers, I am in­formed, have two things in com­mon: strict se­cu­ri­ty cri­te­ria so that the in­vestor is fair­ly sure that their ac­count can­not be eas­i­ly hacked and quite ex­ten­sive re­search on the shares that are com­mon­ly trad­ed (and even those that are not). These op­er­a­tions, it seems ob­vi­ous, are ex­pen­sive to set up and main­tain but are prof­itable based on the num­ber of in­vestors that are at­tract­ed to the ser­vice and the amount of mon­ey that they are will­ing to in­vest.

These for­eign, on-line in­vest­ment ser­vices are every­thing that the lo­cal stock mar­ket is not:

• On the plus side, these ser­vices pro­vide lo­cal in­vestors with the abil­i­ty to make in­vest­ment de­ci­sions that can be ex­e­cut­ed in sec­onds. On the lo­cal stock mar­ket, it can still take weeks to buy or sell a stock, de­spite the many ad­vances that have been made un­der Wain Iton, the cur­rent gen­er­al gen­er­al man­ag­er of the T&T Stock Ex­change;

• The on-line ser­vices pro­vide lo­cal in­vestors with ac­cess to huge, liq­uid mar­kets in which mil­lions of trades are made every day, to­talling bil­lions of dol­lars. On the lo­cal stock mar­ket on Tues­day, there were 25 trades for a vol­ume of 33,444 shares to­talling

$373,466.40.

• On­line, for the most heav­i­ly trad­ed stocks, the mar­gin be­tween the buy­ing and sell­ing price is of­ten a frac­tion of 1 per cent, while on the lo­cal mar­ket this mar­gin can be as high as ten per cent;

• With the on-line ac­counts, the link­ing of the in­vest­ment ac­count and the bank ac­count or en­sur­ing that the in­vest­ment ac­count is al­ways ap­pro­pri­ate­ly fund­ed as well as the pre-set trad­ing lim­its on the on-line ac­counts, en­sure that bro­kers are paid on the set­tle­ment date for shares that are pur­chased. It al­so en­sures that the on-line client re­ceives the con­sid­er­a­tion in their in­vest­ment ac­count on the set­tle­ment day.

Lo­cal­ly, most in­vestors still pay their bro­kers by cheque for shares that they have pur­chased or re­ceive cheques for lo­cal shares that have been sold. For the sell­er of lo­cal shares, this means that there is an ad­di­tion­al pe­ri­od of wait­ing (some­times up to five days) for the cheque to clear-if the in­vestor hap­pens not to have the same bank as the bro­ker. On the neg­a­tive side, there is lit­tle doubt that on-line trad­ing of in­ter­na­tion­al stocks can be volatile and un­pre­dictable, un­like the quite se­date lo­cal stock mar­ket where price move­ments are gen­er­al­ly linked to quar­ter­ly re­sults. (There are many peo­ple who view the volatil­i­ty of the in­ter­na­tion­al, on-line trad­ing as a strength-al­though few would have made that ar­gu­ment when they were los­ing their shirt last year).

Here are some ques­tions for T&T's bro­ker­age hous­es:

• Giv­en the preva­lence of on­line trad­ing in T&T, why is it tak­ing so long for some­one to in­tro­duce on­line trad­ing to the lo­cal stock mar­ket?

• When will lo­cal in­vestors who are in­ter­est­ed in hav­ing a bal­anced port­fo­lio that in­cludes lo­cal shares go­ing to be af­ford­ed the ef­fi­cien­cy, speed, re­li­a­bil­i­ty and trans­paren­cy of on­line trad­ing?

• How dif­fi­cult can it be to ad­just a new, in­ter­na­tion­al trad­ing plat­form (like the one First Cit­i­zens In­vest­ment Ser­vices launched yes­ter­day) so that it can trade lo­cal stocks?

• What are the for­eign ex­change and oth­er eco­nom­ic im­pli­ca­tions of the wide­spread avail­abil­i­ty of in­ter­na­tion­al, on-line share trad­ing-es­pe­cial­ly in the con­text of the $70 bil­lion that is sit­ting in bank de­posit ac­counts?

• What are the im­pli­ca­tions for the lo­cal stock mar­ket of the launch of this new in­ter­na­tion­al trad­ing plat­form by a com­pa­ny that is whol­ly state-owned?

• If the Gov­ern­ment does go ahead with the promised par­tial di­vest­ment of First Cit­i­zens, the par­ent com­pa­ny of First Cit­i­zens In­vest­ment Ser­vices, would it be a case of First Cit­i­zens shares not be­ing avail­able for trad­ing on its sub­sidiary's in­ter­na­tion­al plat­form?

• If on­line trad­ing is ever in­tro­duced to T&T, will it be linked to the re­gion­al stock mar­ket plat­form called Caribbean Ex­changes Net­work so that an in­vestor in Port-of-Spain can buy the shares of Ja­maica's Las­celles de­Mer­ca­do and pay for it with mon­ey in a lo­cal in­vest­ment ac­count or a linked-bank ac­count?