The gov­ern­ment adopt­ed in 2004, a White Pa­per on the Fi­nan­cial Sys­tem, which has al­so been tabled in the par­lia­ment. It rep­re­sents the au­thor­i­ties' de­tailed as­sess­ment of the cur­rent state of the leg­isla­tive frame­work, reg­u­la­to­ry ar­chi­tec­ture, and su­per­vi­so­ry prac­tices re­lat­ing to the fi­nan­cial sec­tor. It elab­o­rates on changes re­quired there­to and a time frame of im­ple­men­ta­tion, for the full re­al­i­sa­tion of the coun­try's goal to be­come a pan-Caribbean fi­nan­cial cen­ter and a high-in­come econ­o­my by the year 2020. Es­tab­lish­ing T&T as a re­gion­al fi­nan­cial cen­tre will re­quire im­prove­ments in eq­ui­ty mar­ket trans­paren­cy and gov­er­nance, fur­ther cross-list­ings, and ad­di­tion­al sup­ply of lo­cal list­ings. The de­vel­op­ment of elec­tron­ic trad­ing, and T&TSEC stan­dards and sur­veil­lance ca­pa­bil­i­ties, should im­prove mar­ket trans­paren­cy and re­duce trans­ac­tion costs.

Pri­vati­sa­tion of pub­lic en­ter­pris­es could con­tribute to in­creas­ing the sup­ply of lo­cal list­ings. A deep­er sec­ondary mar­ket for bonds would al­so sup­port the growth and sta­bil­i­ty of the fi­nan­cial sec­tor. Pri­ma­ry mar­ket ac­tiv­i­ty in fixed in­ter­est se­cu­ri­ties in T&T has been im­pres­sive, but sec­ondary mar­ket trad­ing has been much less so. Sec­ondary mar­ket ac­tiv­i­ty could be stim­u­lat­ed by chang­ing reg­u­la­tions tend­ing to pro­mote buy-and-hold strate­gies by in­sti­tu­tion­al in­vestors, and by con­sol­i­dat­ing gov­ern­ment-guar­an­teed debt un­der a cen­tral bor­row­ing au­thor­i­ty to max­imise their liq­uid­i­ty. The depth of the sec­ondary bond mar­kets could al­so be as­sist­ed by ex­tend­ing the ma­tu­ri­ty of short-term gov­ern­ment se­cu­ri­ties and ex­plor­ing the de­vel­op­ment of an in­ter­est rate swap mar­ket.

De­vel­op­ment of the do­mes­tic cap­i­tal mar­ket would al­so ben­e­fit the in­sur­ance and pen­sion sec­tors. In­creased sup­ply and liq­uid­i­ty in do­mes­tic cap­i­tal mar­kets would fa­cil­i­tate port­fo­lio di­ver­si­fi­ca­tion by in­sur­ers and pen­sions, and make it eas­i­er to es­tab­lish fair mar­ket val­ues for se­cu­ri­ties af­ter is­sue. Eas­ing lim­its on in­vest­ments in over­seas as­sets would al­so fa­cil­i­tate port­fo­lio di­ver­si­fi­ca­tion and re­duce in­cen­tives to ac­quire im­pru­dent­ly large hold­ings in lo­cal com­pa­nies, in­clud­ing af­fil­i­ates.