Stock Exchange boasts $5M in profits

Increased after tax profits of $3 million has made 2003 the most profitable year ever in the history of the Trinidad & Tobago Stock Exchange Limited. This was the boast by chairman Kathleen Dhannyram in her year-end report and the Board has approved a dividend payment of 30 percent of the attributable profits, which will be paid to shareholders. Meanwhile, the Trinidad and Tobago Central Depository, a wholly owned subsidiary of the Stock Exchange, also showed profits in its first year of operations. It registered after tax profits of $862,258. Last year’s profits rose dramatically for the Stock Exchange from $2M earned in 2002 to $5M last year.

Revenue, according to Dhannyram, which is net investment income, was $11.5 million as against $4.8 million in the previous year. But due to the continued decline in interest rates, interest income dropped to $1.37 million as against $1.49 million in 2002. Major contributor to the income generated by the Exchange was the transaction charge – the 0.15 of one percent fee paid by investors on transactions done on the Floor of the Stock Exchange, which increased from $2.2M in 2002 to $7.4M last year. This, the chairman pointed out, is an indication of the significant increase in transactions done on the Floor. She said the operating profit rose from $850,751 to $5.2M, while the pre-tax profit jumped from $2.3M to $6.6M.

The Central Depository’s income, garnered from fees, subscriptions and charges totaled in its first year $3M, while investment income was $71,000. “While this is a noteworthy performance,” said Chairman Dhannyram, “shareholders must bear in mind that this includes one-off fees, which are significantly higher than the annual fees and as such, the fee income for the current and ensuing years would be substantially less.” She said the Exchange was fully aware that “while computerising its trading and settlement processes can bring some measure of relief to the tight liquidity that prevails on the stock market, it is imperative that other opportunities be made available to the investing public if the Exchange is to meet its objectives of facilitating the efficient mobilisation and allocation of capital.

“To this end,” continued the chairman, “The Exchange is keenly aware that it supplies only a miniscule portion of the investment needs of local investors and that it must of necessity, offer other instruments for trading.” She said the Exchange’s position was that while the trading mechanisms themselves would result in a more liquid stock market, it was imperative that it did all in its power to bring non-equity products to the market place. Continuing, Dhannyram said, “The present trading system does not allow for any form of share swap or options to be traded and with the advent of IAS 39, there is a growing need for owners of securities to switch into and out of specific securities depending on their needs and requirements while retaining an interest in the securities. “The Exchange is at present formulating rules and procedures to facilitate trading in such derivatives, while at the same time keeping within specific, clearly defined parameters,” she added.