Raphael John-Lall
Regulatory, legal and compliance officer at the T&T Stock Exchange, Joy Ramlogan, is assuring the public that good corporate governance can contribute to strengthening the role of not only the T&T Stock Exchange but stock exchanges in general.
She spoke on the topic of developing good corporate governance for running an effective stock exchange at a webinar hosted by the Caribbean Corporate Governance Institute on January 24, 2025.
“There are rankings about the best performing stock exchanges which have the best indices, there are a lot of different metrics. However, a successful stock exchange, in our context in T&T, would be one which is growing and expanding. That is where we would like to be. So, we would like to get more participation by both local and regional companies to list on our exchange, to expand their range of products on the exchange as well as to expand the investor base. Besides the macroeconomics of the country of course which would have huge impact on people’s willingness to come to the capital markets. It really does depend on whether you can give the access to capital which people normally want,” she said.
She also emphasised the importance of investor confidence in a successful stock exchange.
Ramlogan noted that the TTSE launched in 1981 in order to formalise trading in shares in T&T. It was the second such formal exchange in the Caricom region. By 1995, all the functions were under the Exchange and then there was a separation, with the T&T Securities and Exchange Commission (TTSEC) taking over the regulation of the securities market. The T&T Stock Exchange is now responsible for trading and the depository for shares.
“That is very important in terms of looking at investor confidence because both organisations have investor confidence as part of their mission.
“The T&T Securities and Exchange Commission is charged with enforcing the law as well as ensuring that there is protection of investors from unfair and improper fraudulent practices. On the other side, our Exchange has the trading rules and it is particularly responsible to facilitate both efficient mobilisation and allocation of capital so we can have proper price discovery. So those are the good governance aspects inside there,” she said.
She also spoke about the development of the Small and Medium-Sized Enterprises (SME) sector and its relation to the T&T Stock Exchange.
“There are several local enterprises which are of the size that would have the benefit the SME market under certain tax incentives that we have. There was a launch in the market in the earlier part of the last decade and it came with new listing rules and a new governance framework for mentors to be appointed… so that the SMEs could be taken to market with expert advice.
“As well, we have been listening to the market and other changes brought to the SEC before approval to respond to the requirements of our companies. In doing that, we are hoping to get more companies listed so that there are more options available for investors. As well, while we pursue investor education and to get more investors interested in coming to the market and expanding the base,” said Ramlogan said.
She added that good governance for stock exchanges is not identical to corporate governance in the rest of the corporate world.
“There are all these studies on good governance in stock markets and they look at the normal shopping list of good governance that you would expect in terms of how boards operate, how they communicate to stakeholders etc. Particularly for stock exchanges, I think that good governance is not the same as the internally focused corporate governance that people think about which has got more externally because we think about the economic, social and good governance goals and those types of indices.”
She also said the legal regime is extremely important for the operation of a stock exchange.
“We are a self-regulatory organisation so having the correct structure and laws tend to be much stricter in terms of moving with the market, which is excessively important. So that we have communication not only with the market and listening to the market but we also having that stakeholder engagement with our regulators and not just the TTSEC, but critical stakeholders in that regulatory environment, including the Central Bank and the Ministry of Finance. This is in order to have the changes that we need to make the stock market more responsive and to address the key issues that we see arising.”
She gave the example of the liquidity index that the T&T Stock Exchange is developing.
“For example, at our conference, there was a launch of the liquidity index which we are developing, which will hopefully give more information to the market about the status of liquidity in the market and hopefully about different stocks. So, communication, we think is key as well as adherence to good governance practices because the last thing you need is Ponzi schemes like Bernie Madoff in the market or bad accounting practices like the Enron and WorldCom disasters.
“The New York Stock Exchange is known to be well documented and well-regulated but those came like nuclear bombs. So, in small markets, there is the need to scan the market and to use the formal information that we see in the data. So we are online now and we have been electronically since 2005 so we have a lot of information and we have been doing a lot data mining, data scanning, data analysis to understand what is driving the various trends that we are seeing in the market.”
She concluded by saying they encourage participants in the market to follow good corporate governance practices.
“That is how we have partnered with the T&T Chamber of Industry and Commerce and the Caribbean Corporate Governance Institute for the new T&T Corporate Governance Code. In fact, the first governance code was also a joint initiative with the T&T Chamber of Industry and Commerce and the Caribbean Corporate Governance Institute. So, we have a great stake in improving governance in T&T.”
Basic business
principle
Managing director on the Barbados Stock Exchange, Marlon Yarde who also spoke during the webinar said the stock exchange business is like any other business in the financial world.
“We buy information and information is the key to a well-functioning capital market and we sell that information to the investing public so that they could make decisions about their investments. In my view, the successful stock exchange is built on a foundation of efficiency, transparency, trust and adaptability to the changing needs of the marketplace. The market needs to be efficient, judged by the liquidity in the market, it needs to be transparent as people need to know what is going on in the marketplace particularly the companies that are listed on the exchange and developments in the overall economy. This in turn builds trust and we do what we need to do to adapt to the marketplace. We need to do what we need to do so that we do not undermine that confidence and trust.”
He also said that the stock exchange acts as a catalyst for economic growth by facilitating an efficient allocation of capital and investment opportunities.
“So, there are a number of features of a successful marketplace. Like any other business, we need to have systems in place, we need good accounting functions, good management in place, separation of duties, anything that you would see in any other business happens at a stock exchange. But one of the things that is unique to stock exchanges is that we are highly regulated bodies and we have the responsibility as a self-regulatory organization under the Securities Act to make rules for our brokers and for the persons listed on the stock exchange.”