Securities Exchange to leverage success of IB sector
Thursday September 15 2011 | 07:07 AM

There is always much to be said about what steps should be taken to improve the trading volume of the Barbados Stock Exchange and attract more local companies to list. 

The creation of the junior market which – in the words of one politician – has seen “limited success”, and the fact that there is not yet significant enough attractions for companies to see the exchange as a worthy alternative to raise capital – such like the corporate concessions and exemptions available in some of the other regional territories – are also points of charged discussion. Amongst the gamut of recommendations put forward by various stakeholders is a recent call from Dr. Trevor Carmichael to explore whether the current trading which takes place on the exchange might be enhanced by internationalising the process. 

Dr. Carmichael, Principal Attorney-At-Law of the law firm Chancery Chambers, was the featured speaker at the recent Barbados Stock Exchange 25th Anniversary Lecture and Reception. In his address entitled “The Barbados Stock Exchange: Charting a Path to International Success”, he pointed out that one needed to recognise the framework within which Barbados’ International Business (IB) sector has been promoted, developed, and experienced resounding success.

“One of the overriding elements in this sphere has been the aim to develop a series of international financial service products, which could and would progressively include Barbadians,” Dr. Carmichael remarked. 

He stated that as a result of the country being a low tax jurisdiction as opposed to one that is zero tax, many Barbadians have been “part and parcel of the process of the work force of the international business companies, international banks, captive or exempt insurance companies, societies with restricted liability, mutual funds and, when they did exist, the foreign sales corporations”. Added to that, local involvement has been encouraged by making it possible from the start for Barbadian nationals and residents to own international banks and societies with restricted liability.

On amendment, he explained, it also became possible for Barbadians to not only manage international business companies, but also to form and own such entities. “The reality is that some Barbadians when educated to the possibility, have actively used such ownership together with the assistance of our wide treaty network to significant personal and national benefit.”

Dr. Carmichael also touched in his discourse, on how Barbadians were already involved in engaging in investment management activities and benefiting from transfer of technology skills from their locally residing overseas counterparts. He highlighted skills transfer in areas such as insurance management, achieved by the sophisticated reinsurance entities “now and for long operating in Barbados, and engaged in the delivery of complex insurance products such as catastrophe cover, [and] quota share insurance arrangements”.

In light of the above, Dr. Carmichael reasoned that the cultural and institutional framework was welcoming for Barbados to benefit further from the internationalising of the Securities Exchange and submitted that it had been further enhanced by the professional connections which had been forged over the carefully guided development of the international business sector.

“Law firms, hedge funds management and investment counsel are some of the key actors who for long have successfully interacted within Barbados’ international service providers, such that an earned level of confidence now allows [for] participation in the large venture of an international trading floor on the Barbados Stock Exchange.”

Referencing the successes of the stock exchanges of Bermuda, the Cayman Islands and the Channel Islands – islands which he classified as being in the Tier 1 of global international finance centres – he showed how these exchanges leveraged the success of the countries’ already thriving international business sectors, offering trading opportunities from international and domestic issues of equity, debt depository receipts and insurance securitisation, to sophisticated vehicles and structures such as Eurobonds, international equity and derivative warrants.

According to Dr. Carmichael, Barbados should seek to respond and chart its stock exchange future bearing in mind these models, and all of the other varying financial and regulatory attributes which we had in common with these very successful international financial centres.

“Barbados will and must respond since the groundwork has been laid, not only in having fashioned a very successful international business sector and climate, but also in making important advancements in the local Stock Market Structure itself,” he urged. 

“[That] response must be quick and all of the necessary legislatory amending work needs to be fast-tracked using volunteer efforts where available and which will surely not compromise the plan, but only add to its efficiency and speed. The new [international trading] floor will be firm and flexible, never compromising the integrity which imbues the jurisdiction... [building on the] attributes, cultural mores and institutional linkages [of our past and current trade and inter-national business framework] so as to produce an international trading floor uniquely Barbadian, which blends the home-grown with the imported, thereby creating strength, and may I say, beauty.”