Fostering a vibrant capital market

The establishment of Barbados' Securities Commission in 2003 was a critical step forward in Barbados' bid to position itself as a leading international investment hub.

Sir Neville Nicholls, chairman of the Securities Commission of Barbados

The Securities Commission was set up as an independent regulatory body with a mandate to ensure that the securities industry operates in a transparent, fair and efficient way, observing the best international practices.

"Previously, the securities industry was regulated by itself," Securities Commission chairman Sir Neville Nicholls explains. "The Barbados Stock Exchange was itself the regulator for the industry. But a decision was taken by the government to appoint an independent regulator in the form of the Securities Commission."

The agency has assumed regulatory responsibility for the entire Barbadian capital market with the primary objectives of administering and enforcing legislation, protecting investors from fraud and ensuring that the sector operates fairly and efficiently.

General Manager Virginia Mapp is confident that the framework and structure are now in place for the market to operate efficiently: "Our legislation was reviewed by the US Securities and Exchange Commission and they have confirmed that we have good legislation. Furthermore, we do have the computerized and electronic trading platform and a computerized settlement system, so those are not the greatest challenges. The greatest challenge is to get the market educated to use the facilities and the system that we have, because the structure is very good."

Virginia Mapp, general manager of the Securities Commission of Barbados

The educational effort, which is led by the Barbados Stock Exchange, is targeted at not only private investors but also the predominantly family-owned companies that are hesitant to raise capital by way of equity due to the requirements of information disclosure.

While investors' confidence has been improving, as evidenced by increasing activity in the stock market, the Securities Commission would also like to see the arrival of investment banks and more institutional investors and dealers to stimulate competition in the sector.

Moreover, foreign companies are welcome to list on the Barbados Stock Exchange.

"They register with us, of course. We then do the due diligence, ascertaining that they are regulated in their country of domicile, and as long as the due diligence comes out OK, they can list and trade on the stock exchange. Now that the stock exchange is fully computerized with an electronic trading platform, there is nothing to prevent them from doing American depositary receipts (ADRs) and global depositary receipts (GDRs) on the stock exchange," Mapp says.

Commenting on the prospects of establishing a regional stock exchange, Mapp notes that progress has indeed been made. "It has been decided that Barbados, Trinidad & Tobago and Jamaica will start the process by linking the three exchanges, because they can speak already in terms of the depository and their interconnectivity; they have the same trading platform. The other exchanges in the region will come on eventually."

On the prospects of Barbados strengthening its position as an international investment hub, Nicholls says, "The infrastructure is there; the regulatory regime is there. But what would be needed is to publicize what is available in Barbados."

(Shanghai Start 02/01/2007 page2)