Investment schemes hit TT$34B

Investment schemes under the Securities and Exchange Commission (SEC) at the end of 2005 stood at about $34 billion and the tempo expected to pick up, according to SEC chairman Osborne Nurse at the launch of SEC’s new offices on Dundonald Street in Port-of-Spain last week.

Nurse said much of the Commission’s regular work involved the registration of new securities issues.

“In the financial year ended September 2005 we registered 21 new market participants and 100 new securities issues including ten new collective investment schemes.

“Of these new issues, 45 were equity issues, including management and employee stock ownership plans, accounting for 130 million shares, valued at $837 million. There were also 45 issues of debt and debt derivative securities accounting for $13.8 billion, while funds under management in collective investment schemes were estimated to increase to $34 billion by the end of 2005.”

The opening of the offices marked a milestone in the development of the Commission, he said, noting the Commission began operations in 1997 following the proclamation of the Securities Industry Act of 1995 and operated initially from facilities in Chacon Street and then moved in 2001 to the 12th Floor of the Central Bank building.

As the SEC developed its own operating systems and became more active in the regulation of the capital markets, more physical and human resources were needed, he said.

“All of this signifies a very active and expanding capital market notwithstanding the fact that activity on the stock exchange, which receives much more public attention, has been very slow during the year with the level of trading, prices and values and the composite index all showing declines during the year,” he said.

He said the more active role in the regulation of the market on which the SEC has embarked has generated the need for “farmore contact, collaboration and discussions with market participants.”

“The need for more active engagement with our stakeholders is the prime motivator for our move to this new building,” he said, noting additional meeting rooms. In this regard, he said the recruiting of general manager Terrence Clarke, a former Scotia bank manager, was needed for the Commission.

The Commission, he said, has also focused on developing its enforcement capacity in response to the increased market activity.

“Consequently, we have been active in ensuring that our registrants comply with their continuous reporting obligations under the Act by filing their financial statements and Annual Reports in accordance with the requirements of the Act and By-Laws,” he said. In 2004, he said the Commission initiated enforcement action that was completed in 2005 has led to the imposition of penalties totalling $1.2 million on 62 registrants who failed to comply with their continuous reporting obligations.

“We continue to monitor the level of compliance with filing obligations and continue to be concerned that the level of compliance is still unsatisfactory. We cannot emphasise too much that compliance with continuous reporting obligations remains an important element in the discharge of the Commission’s function to ensure the protection of investors,” he said.

He said the SEC have also been concerned with the observance by registrants of their obligations to file notices of material changes or material facts immediately on the development of such material changes.

“We have begun actions in three or four cases where material facts were filed late or not at all,” he said, noting the filing of material changes is an important part of the framework for protecting investors “by having the market provide prompt information to investors so that they would always be well equipped to make the best investment decisions.”

He said the SEC had just concluded the formal investigation into matters related to the trading of Trinidad Cement Limited shares in 2002, the Report having been delivered to the General Manager today.

“It is left now for determinations to be made as to what, if any, further action may be required. At the same time we embarked in 2005 on two additional investigations and are awaiting the final reports on these two,” he said.

On the Fantasy Tours investment scheme, he said while not complete, had progressed to the extent that the scheme was terminated and investors have been repaid a part of their original investment.

On the SEC’s legislative framework, he said the SEC has submitted to the Minister of Finance its own recommendations in the form of a draft for a new Securities Act 2006.

The Commission, he said, will also be inviting participants in the mutual fund and Collective Investment Scheme industry to discuss the draft proposals for regulating the industry on which guidelines will soon be published.

Nurse told guests that the Commission has also completed and brought into force the Take Over By Laws, which, he said, took effect in March 2005.

He said the the Commission has recommended that additional flexibility be provided to allow for the appointment of temporary Commissioners “who may be able to assist in the discharge of the Commission’s functions, particularly in regard to any hearings that may be required.”

The Government, he said, has also approved a new schedule of fees that is designed to ultimately bring the Commission to a higher level of self-sufficiency in a model that requires the market to ultimately bear the full cost of its regulation.