SEC boss ruffled over insider-trading, wants transparency

The Trinidad and Tobago Securities and Exchange Commission is still very concerned about the possibility of illegal insider trading on the local stock market, said Chairman of the SEC, Osborne Nurse.

Nurse was speaking at a seminar on proposed take-over by laws at the Hilton Trinidad, last week. He said as a result of this suspicion, the SEC had issued a statement discouraging selective disclosure and will also be publishing guidelines on the handling of price sensitive information. Nurse said the Commission has been looking closely at transactions that took place between 2001 and 2002, to weed out any possibility of insider trading. If evidence of illegal activity is found, said Nurse, the SEC will have to determine what steps need to be taken to ensure that the appropriate sanctions are applied. “Similarly, we recently advised brokerages that the practice of pooling of trades does not allow for an adequate level of equity and transparency in brokers’ dealing with clients and that therefore, the practice should be terminated,” said Nurse. He said in order to adequately handle this situation, the SEC has advised the TT Stock Exchange to speed up the implementation of automated trading, which is scheduled for 2004. Nurse said the Commission is also concerned with the fact that the regulating of the securities market is shared amongst the Central Bank, the Registrar of Companies and the SEC. He said this allows for regulatory arbitrage. “This is one of the serious deficiencies of the existing legislative framework that we intend to address in the proposed revision of the SIA. Consequently. Our proposed revision will include specific provisions for amending the Companies Act, for bringing all aspects of securities regulation under the TTSEC and for facilitating collaboration with the Central Bank as well as foreign regulators,” said Nurse. He said there was an increasing concern about the availability for the sale of foreign securities which do not come under the jurisdiction of the Commission and about the activities of visiting securities sales persons that are also not regulated.

Nurse also addressed the issues of collective investment schemes/mutual funds; compliance; regulatory ration-alisation/integration and regulatory strategy. Nurse said the issue of regulatory rationalisation and integration was an interest matter. Currently, he said, the Commission, the Central Bank and the Registrar of Companies oversee different aspects of the operations of players in the securities market. “This shared responsibility leaves many gaps in the regulatory process, allowing for the possibility of regulatory arbitrage.” He said this was one of the serious deficiencies of the existing legislative framework that we intend to address in the proposed revision of the Securities and Industry Act (SIA).The Trinidad and Tobago Securities and Exchange Commission (TTSEC) has relatively few tools to lead and encourage market growth and development in the country. Speaking at a seminar on the proposed Take-over By Laws, SEC chairman, Osbourne Nurse said the local and international banking and financial services sectors best practice is defined through standards established by the Basle Committee, while in the securities industry, such best practices standards are established by the International Organisation of Securities Commissions (IOSCO). He said the IOSCO standards are intended to lead to and encourage market growth and development, particularly through instilling confidence, among investors, market participants and issuers of securities alike, that the risks in the market are known and that the playing field is level for all participants, even though it may not be smooth.

Nurse lamented the fact that the  TTSEC has very few “tools” to achieve these broad goals. “The first and most important of these is an appropriate enabling legislative framework that recognises the importance of the goals of market regulation and that empowers the regulator to take the necessary steps to achieve those goals.” He said the TTSEC has been engaged over the past year in a comprehensive exercise to review, modernise and revise the legislation in order to bring it up to international best practice standards.