Address by Hon Winston Jordan
Minister of Finance
Hon Minister of Business Mr. Dominic Gaskin
Mr. Nikhil Ramkarran Chairman of GASCI
Mr. George Edwards General Manger of GASCI
Mr. Marlon Yarde Managing Director, Barbados Stock Exchange
Representatives of the Media
Distinguished Ladies and Gentlemen
Let me begin by saying that I am very happy to be here today to witness the signing of this Memorandum of Cooperation between the Barbados Stock Exchange and Guyana Association of Securities and Intermediaries Inc. (GASCI). Facilitating the growth of securitized financing in Guyana as well as strengthening the banking system has featured prominently in our economic development. There is general recognition of their central role in ensuring adequate financing for growing enterprises and in promoting domestic investment and wealth creation.
I still recall our early attempts to establish a stock exchange in Guyana, in the 1980s. As things stand, we were the last of the territories in the CARICOM grouping to set up a stock exchange. I believe that it was not until June 30, 2003 that trading began on the Guyana Stock Exchange. In spite of the passage of time, the arrangement is still primitive, by Caribbean standards, with trading being done weekly, via word of mouth on the trading floor, supported by an electronic limit order book.
Distinguished ladies and gentlemen, the swift advancement in technology and globalization has impacted the manner in which stock markets, globally, conduct business. Cross- border listing, which has proven to have many advantages, has now become a common practice in many stock markets. In the case of the Guyana Stock Exchange, Trinidad Cement Limited became the first to do so, in January 2007. And so, today, I am happy to witness an attempt at the integration and expansion of Guyana’s stock exchange, and I want to congratulate GASCI for taking this step.
As a Government, we have been placing much emphasis on financial sector reform and development, and we have been addressing the issue in a holistic manner, to ensure that a diverse financial system is established – one that includes a capital market and a banking sector that is efficient, stable and equipped to respond to shocks. It is in this context that we have recently enacted legislation and amended existing laws to strengthen the Bank of Guyana, as the regulatory authority for the commercial banks and the non- bank financial institutions. In the same vein, while measures in support of the development of the local stock market are already in place – for example, the exemption of dividends from withholding tax – the Government has received support from the Commonwealth Secretariat to re-write the Securities Industry Act of 1998. This Act governs the operations of Guyana Securities Council, which regulates the Capital Market in Guyana. The draft bill and accompanying regulations have been with the Attorney General Chambers for final review, for some time now, and we expect that these can be finalized and presented to the National Assembly for passage, before the end of 2019.
The idea of re-writing the existing laws stemmed from the need to ensure that the capital market operates in a fair and efficient manner, with minimum systemic risks and a high level of protection for investors. The new law is consistent with international best practices, including the principles adopted by the International Organization of Securities Commissions and the CARICOM Model Securities Legislation. It provides a modern and robust framework for the development and operation of the Securities sector, and puts greater emphasis on oversight and supervision, reduction of systemic risks and financial stability.
I must add, ladies and gentlemen that, as part of the overhaul and strengthening of the financial architecture, the World Bank is currently providing financial and technical assistance to the Government of Guyana to implement a modern and electronic Payment System. Two key deliverables of this Project are a Real-Time Gross Settlement System, and a Central Securities Depository for electronic record keeping and electronic settlement of securities. These features will reduce transaction time; reduce the risks involved in the trading of securities; and make trading more convenient for all market participants. An electronic payment mechanism will be new to Guyana, but I have noticed that the Barbados Stock Exchange has been operating under a fully electronic trading regime since 2001. This, to my mind, provides an opportunity for Guyana to learn from Barbados’ experience.
Ladies and gentlemen, the impressive developments in the petroleum sector and the expectation of first oil in early 2020 – there is talk that this timetable could be advanced to the last quarter of 2019 – set the tone for an economic transformation in Guyana. The transformation process, however, requires significant inputs from the local private sector. The Government is developing an appropriate local content mechanism; however, in order for local industries to equally participate in the provision of goods and services at all levels of the oil and gas value chain, access to affordable and adequate financing must be readily available. An efficient stock market can play a critical role in this process, by providing financing that serves as a complement to the more traditional forms such as commercial bank lending.
Another area that it is crucial to the development of our stock market is financial literacy; indeed, financial literacy is important to the proper functioning and intermediation of the financial system. There is no doubt that financially-literate businesses will choose to lower the cost of borrowing by issuing shares, and investors with a high level of financial literacy will diversify their investment portfolio by purchasing shares in profitable businesses. I therefore, urge GASCI to narrow the financial literacy deficit in Guyana, by undertaking a financial literacy programme to ensure that Guyanese in the near and far reaches of the country are made aware of the benefits of participating in the local stock market.
As CARICOM Member States, while this initiative will deepen the integration process, it will also provide other benefits for both countries. There is no doubt, ladies and gentlemen, that it will provide an expanded pool of finance for investors, and will provide the opportunity to benefit from, and be a part of, successful businesses in both jurisdictions. The issuer’s recognition can also be strengthened and the image of the company’s product enhanced in both jurisdictions.
As we seek to integrate our capital markets, we must be cognizant of the serious threat that financial crime poses to the system. As a region, we have been placing much emphasis on measures to combat all forms of illicit activities, because some of our member states are still affected by the impact of derisking and blacklisting. I, therefore urge GASCI to ensure that adequate due diligence is conducted on all market participants, so as to safeguard the integrity of the local stock exchange. I also urge the Guyana Securities Council to undertake enhanced surveillance and intensify its efforts to put mitigation measures in place.
Let me once again congratulate GASCI, for taking this bold step, which I am sure, will create a long- term relationship, and provide new prospects for business and investment opportunities in both jurisdictions.
I thank you.