Q&A with CMMB Securities

Q. With the banks heavily into information technology to make life easier for customers, what’s the Stock Exchange doing in terms of making trading easier?

A: Globalisation has led to greater levels of integration and organisation of the world’s financial markets. As a result, local banks and other financial service providers have begun to rely on “Electronic Communication Networks” or ECN’s. This is apparent with the new features being introduced such as online-banking and “tele-banking.” The Trinidad and Tobago Stock Exchange (TTSE) is making efforts to update its systems and procedures given the current trends in technology. Two main undertakings have been the introduction of the Trinidad and Tobago Central Depository (TTCD) as well as an electronic trading system, which is scheduled to come on stream this year. The TTCD allows investors to buy and sell shares on the TTSE and to settle such trades using a computerized book entry system.

This means investors no longer need to settle trades with the actual delivery of physical stock certificates. This system enables more efficient transactions as there is less room for error or lost certificates and the settlement cycle is now much shorter. The TTSE is also moving towards an electronic trading system, similar to that of Nasdaq or the over-the-counter market in New York. The proposed system will create a continuous market where trades are settled as quickly as they are placed. Additionally, brokers will no longer be restricted to specific trading days or times. Again, this innovation should facilitate a more streamlined and efficient market with more active trading.

Q. What’s the difference between an investment manager and a financial adviser?

Rakeem,  San Juan

A: While some people may use both terms interchangeably, the roles and duties of a Financial Adviser when compared to an Investment Manager are inherently different. A Financial Adviser’s primary duty is to act in an advisory capacity. He or she is usually involved in making investment recommendations to clients based on mutually agreed upon risk-return parameters in exchange for a fee or commission. Financial Advisers, in the purest definition, may also be involved in developing long- term financial plans for individuals, which can encompass a wide range of issues such as pension funds and estate planning. In addition to advising on strategies,  one can employ a Financial Advisor to manage your existing portfolio.

An Investment Manager, on the other hand, is the person responsible for the actual investment of funds as well as implementing the investment strategy, and generally managing the day-to-day trading on the portfolio. He or she will carry out trades and investments based on the investment policy that is already decided on. Therefore, while the Financial Adviser is primarily involved in working with the client to advise, monitor and make recommendations to create an investment policy statement, the Investment Manager is involved in actual trading and executing the said recommendations to meet the portfolio’s objectives.

Disclaimer for Articles:

“All information contained in this article has been obtained from sources that CMMB believes to be accurate and reliable. All opinions and estimates constitute the Author’s judgement as of the date of the article; however neither its accuracy and completeness nor the opinions based thereon are guaranteed. As such, no warranty, express or implied, as to the accuracy, timeliness or completeness of this article is given or made by CMMB in any form whatsoever. CMMB and/or its employees or directors may, where applicable, make markets and effect transactions, or have positions in securities or companies mentioned herein. Neither the information nor any opinion expressed, shall be construed to be, or constitute an offer or a solicitation to buy or sell.”