sept-2016

108 September 2016 - Business View Caribbean

Business View Caribbean - September 2016 109

The Eastern Caribbean

Securities Exchange

Investing in the future

The Eastern Caribbean Securities Exchange (ECSE) is

a regional securities market established and licensed

under uniform regional legislation governing securities

market activities. It was designed to facilitate the buy-

ing and selling of financial products, including corpo-

rate stocks and bonds, and government securities, for

the eight ECCB member states of the Organization of

the Eastern Caribbean States (OECS) - Anguilla, Anti-

gua and Barbuda, Dominica, Grenada, Montserrat,

St. Kitts and Nevis, St. Lucia, and St. Vincent and the

Grenadines.

According to Trevor Blake, ECSE’s General Manager,

the ECSE came into existence as a result of a diagnos-

tic study made by the Eastern Caribbean Central Bank

in the 1990s. “That diagnostic identified a number of

gaps that existed in a fragmented financial system,”

he explains. “Amongst those was the need for other

forms of financing other than debt financing for com-

panies in the productive sectors that drive the econo-

my within the Eastern Caribbean. So, the Central Bank

set about creating the securities market, developed

the Exchange, the depository, the regulatory commis-

sion, and got the Securities Acts drafted for enactment

by the member countries. And in 2001, the Exchange

was launched.”

A securities market is like any other market where buy-

ers and sellers meet to exchange goods and services.

The buyers (investors) are individuals and institutions

who have money (capital) to invest. The sellers are

corporations, governments, and other investors. “The

Exchange provides a facility for people to buy and sell

securities, financial assets, including equities, i.e.

shares in companies, and debt securities, which are

bonds issued either by member governments, or by

corporations within the Eastern Caribbean Currency

Union – the eight member states of the OECS that are

members of the Central Bank and use a common cur-

rency - the Eastern Caribbean dollar,” Blake explains.

“We have a mix of institutional and retail investors.

The retail investors mainly are in the equities side of

the market; most of the institutional investors are ac-

tive in the debt side of the market.”

The ECSE provides both a primary and a secondary

securities market. In the primary market, a public

company or government (issuer) sells its securities for

the first time to investors to raise capital to support

its operations. The funds generated from this sale of

securities go to the issuer. In the secondary market, in-

vestors buy and sell securities among themselves. The

proceeds from this trading activity go to the investors,

not back to the original issuer.

Currently, the ECSE has 13 companies listed – 12 do-

mestic companies and one cross-listed company from

Barbados. “Our Exchange is slightly different from

many other exchanges in the rest of the CARICOM (the

organization of fifteen Caribbean nations and depen-

dencies) in that our listings are predominantly debt

securities,” Blake says. “We have a very active govern-

ment securities market and we have over 100 debt

instruments listed - a mixture of government and cor-

porate bonds; which is different from most exchanges

that trade predominantly equities.”

The ECSE is a fully electronic exchange, and according

to Blake, it was the first regional one established in the

Western Hemisphere. That means that all securities

are traded in a “dematerialized” form – investors do

not need to hold physical certificates to confirm proof

of ownership as all shares are held in electronic form

at the Eastern Caribbean Central Securities Registry

Ltd. (ECCSR), a subsidiary of the ECSE. “And that lends

itself easily to cross-border operations,” Blake states.

“Trading is done remotely by brokers on their various

islands, logging onto our application. And all securities

traded in our market are completely dematerialized -

there are no physical securities; they’re all held and

traded fully electronically across boundaries.”

Recently, Blake says that the ECSE has been working

on restructuring some of its functions in order to pro-

vide better service for its clients. The consolidation of

AT A GLANCE

WHO:

The Eastern Caribbean Securities Ex-

change

WHAT:

A regional securities market for the mem-

ber states of the OECS

WHERE:

Headquarters in Basseterre, St. Kitts

WEBSITE