Street-Forrest

The Caribbean Exchange Network (CXN) is now expected to be commissioned in the second half of 2010 at a cost exceeding $15 million, allowing stock market investors to trade across country borders.

The network will include three countries - Jamaica, Trinidad and Tobago, and Barbados - in the first phase implementation, but will be extended to other jurisdictions under a timetable that is yet to be determined.

"A few of the operational proce-dures have been harmonised, for example, all exchanges have five days trading. In the area of settle-ment, we have a T+3 settlement cycle," said Marlene Street-Forrest, general manager of the Jamaica Stock Exchange (JSE). "Overall, our local stock market rules remain intact with each domiciled exchange continuing to operate independently."

Timetable derailed

The CXN implementation time-table has been derailed over the last two years pending final approval from securities regulators in the three participating countries.

"CXN required that all (securities regulators) review and determine that the procedures required for the CXN, which are contained in the constitutive documents, are not in violation of the domiciled securities commissions," said Street-Forrest.

Approval was granted by all the securities commission just last month, November 13, with phase one of the user acceptance tests already completed.

But final testing and connectivity of the system, as well as in independent evaluation, are still to be done ahead of the 'go live' date.

"Critical to starting is the broker and traders registration with the respective securities commissions. We need to resensitise - through workshop and other means of communication - the various players, that is brokers, investors, listed companies and other interested persons," said Street-Forrest.

Few issues

"There are a few issues to be completed also, as it relates to the final testing of the system and connectivity, and finally we will be conducting an independent evaluation of our procedures ahead of 'go live'."

With the implementation of the CXN, investors will have available to them a wider basket of securities on all exchanges which are a part of the CXN.

The three exchanges has more than 100 stocks listed, with the JSE having the most expansive board of 43.

Investors will be able to buy cross-border securities via local brokers, but will have to transact the business in the currency of the home market of the listed security - for example, a Jamaican buying a Trinidad and Tobago (TT) stock, would have to settle in TT dollars.

"This can be done just by asking his/her broker to conduct the transaction on his behalf. The broker will enter the trades on the investor's behalf as he would any other trade in the local market," said Street-Forrest.

Scotiabank, which has a regional network, has been contracted as the settlement bank.

Through the network, brokers in member countries will be able to trade securities on all three exchanges, in real time, as if they were operating domestically.

The JSE has 11 member dealers with Street-Forrest noting that there have been enquiries about membership but no applications.

At the same time though, the JSE head said consideration for new member dealer licences would not happen until 2010.

While Street-Forrest did not disclose the cost, if any, to be incurred within the second phase of CXN's roll-out, she said it will include consolidation of order books, fine-tuning of other processes involved in trading to make it a seamless process, as well as connectivity for other regional exchanges.

sabrina.gordon@gleanerjm.com

The Jamaica Stock Exchange on Harbour Street, Kingston. - File