The Trinidad and Tobago Stock Market is evolving and diversifying, according to Eva Mitchell, chief executive officer of the Trinidad and Tobago Stock Exchange (TTSE).
Mitchell made these comments while discussing “Unveiling the Blueprint: Building a Well-Diversified Stock” during a panel discussion at the TTSE’s Capital Markets Conference last week Wednesday.
Other panel speakers included managing director of the Jamaica Stock Exchange Dr Marlene Street-Forest, chief executive officer of NCB Merchant Bank (Trinidad and Tobago Ltd) Marli Creese, and group deputy chief executive officer Business Generation at First Citizens Jason Julien.
Emphasising the importance of the Stock Exchange, Mitchell highlighted the critical need for diversification.
“Diversification of the stock market is important; basically that’s what investors want. They want to be able to diversify their investment options, diversify their risks and also get returns that will basically match them…You have to diversify. The market is evolving. Most of the speakers…touched on technology, innovation, and innovative products. The way the products are coming to market itself offers you that diversification.
“If we don’t diversify as a stock exchange or as a regional market, what is going to happen is the investments will continue to decrease,” Mitchell explained.
She further stated that the TTSE recognises the importance of diversifying not only its product offerings but also its investor base.
“One heavy concentration of the investor base and a shift in that investor base can cause problems—that’s what we are actually facing now,” she commented, adding: “Not only do we have to diversify our product offering, we must diversify our investor base. That is why we have decided to place a specific focus on meeting investors.”
Mitchell emphasised that it is also essential to ensure the regulatory environment supports this diversification.
“We do have a renewed relationship with the new CEO of the SEC (T&T Securities and Exchange Commission). It has been very refreshing to get that sort of collaborative approach and feedback…. Rome wasn’t built in a day; it is a patient process,” Mitchell said.
She said the organisation has embraced the need for diversification, and all its efforts are being directed toward fulfilling that mandate.
Drawing from her experience with the Jamaican stock market, Street-Forest said growing the number of retail investors is crucial.
“That is where your movement is in terms of interest in the market. It is going to encourage others to come to market as well,” Street-Forest said.
She stressed the necessity of increasing the number of investors in the market.
Touching on the current challenges in driving diversification in the market, Creese said that a big part of it would involve “the willingness of those companies who are in fact eligible and have strong businesses that have the correct corporate governance, and have that growth trajectory to conform.”
Referring to one of its clients, Eric Solis Marketing Ltd, Creese said a big part of what they would have done with that company “is to basically send a beacon to other companies and say: ‘Hey listen, this is a viable strategy and this is how it can be done.’
“On the individual side, the reality is that we have fantastic companies that are listed on the Trinidad and Tobago Stock Exchange in virtually every sector. However, there are only so many shares of any one particular company that an individual or even an institution investor can buy.”
Creese maintained that a crucial aspect of diversification is introducing new companies and business models to provide people with additional alternatives that were previously unavailable.
From a banking perspective on diversification, Julien noted that the challenge for investors lies not only in the quantity of products but also in their complexity and variety.
Julien said he believes there is a space for all.
“I think also there is a step even before listing as an investor …because you think about a capital market, there are different types of capital available. Larger markets, you know, you hear terms of venture capital, private equity…there is a space for venture capital and private equity, so as a banker, I think that whole spectrum we are available to support. People think about us because we dominate the capital market space,” he said.
TTSE making strides
Mitchell highlighted in an earlier address that the TTSE is making significant strides in several areas.
She also pointed out that as a market regulator, “we understand the importance of maintaining an environment that encourages both liquidity and transparency.”
“Over the past year,” she added, “we’ve made important amendments to our rules to better serve the market and its participants. Among the key amendments are the shortening of our settlement period from T+3 to T+2, implemented in April this year, to promote quicker transaction times, reduce risks associated with delayed settlements and bringing us closer in line with international standards. The last change of this kind was in 2006, 18 years ago.”
Additionally, she said, “changes to our closing price calculation, introduced in December 2023, aimed at preventing small trades from disproportionately affecting stock prices and adding more stability in pricing. An extension of trading hours to better serve the market, particularly the growing retail segment and emerging investors. This particular change is before our regulators so we look forward to it becoming effective soon,” she shared.
Moreover, she underscored that the TTSE’s role goes beyond that of a regulator.
“We are equally responsible for being a proactive facilitator in our market. We understand that we must also bring innovated options to the market that actively provide solutions and unlock new opportunities.”
Mitchell further emphasised that a key aspect of TTSE’s mission is to create a landscape that not only meets regulatory expectations but also fosters growth, encourages investment, and provides solutions to make the market accessible and dynamic. Mitchell also focused on dematerialisation of the bond market.
“Our efforts towards this have made some progress but we are still far from where we should be. As many of you would know, this is a key initiative of the stock exchange and one that we believe will transform how bonds are issued, traded and settled, bringing us closer in line with the more advanced financial markets,” she said.
She acknowledged that as with any significant shift, “we’ve encountered some hurdles which keeps us behind our regional counterparts who have already embraced digital systems.”
She stressed the need to move past the manual operations, adding that “they create inefficiencies and add unnecessary time and costs to the process. The initiative to digitise the bond market is not a matter of just keeping up with other markets, but it’s about laying the groundwork for a future where we lead in efficiency, innovation and accessibility.” “In a dematerialised market, in addition to higher levels of liquidity and better price discovery, issuers tend to experience lower funding costs.
“Further, such instruments are more suitable for collateral use and are often used for creating more auxiliary products such as repos and derivatives…leading to market deepening,” said Mitchell.