The TT investment market is fundamentally risk averse, but the Securities and Exchange Commission (SEC) is hoping that armed with the right information, a new breed of savvy market players can help it evolve.
“The way the investment market evolved was in the context of protected mutual funds where the return to the investor was fixed and protected, either by a fixed price or by an implicit guarantee… the developments of the other segments of the market — bonds, equities, and so on, have been influenced by how that (risk-averse mutual fund) market evolved,” SEC CEO Hayden Gittens told Business Day. For example, net asset value on mutual funds are often fixed in TT guaranteeing a set return as opposed to more flexible returns in other markets, which adds slightly more volatility to the investment, but can see higher earnings.
The SEC, through the Securities Act, has oversight over the local stock exchange and the central depository as well as the market generally, including mutual funds, bonds, repurchase agreements, and registering and regulating stock brokers and other market players.
Since part of its mission is to help encourage and oversee a healthy and thriving securities sector in TT, the SEC has launched a semi-annual bulletin filled with relevant data and updates to help educate the investing public so they can make better decisions.
“It’s about improving the understanding among market participants. The aim is, I think, to build that confidence and knowledge. Because as the local market evolves, the whole relationship between risk and return starts to get more conventional (in relation to markets in other jurisdictions),” Gittens added.
The bulletin, then, gives an update on what’s happening in the market and major segments, like bonds, equities (stocks) and mutual funds, and how much those investments may be influenced or at risk to exposure to other elements in the economy — and vice versa.
“We look at all segments of the market — there’s a part we are starting to pay attention to, for example, contagion risk from the securities markets that can spread into the wider market, something other countries are looking at and we are starting to as well,” said SEC’s policy manager Dr Earl Boodoo, alluding to the financial crisis of 2008-2009.
“We want to ensure that given the risks we see, for instance a number of pension funds and credit unions are starting to hold particular types of instruments, some of which are in foreign jurisdictions, we can inform the market of the risks in the market. When people know and are aware, they will be better informed and can make more reasoned investment decisions,” he said.
The first edition of the bulletin was launched last September, and the latest, this September, but Boodoo expects the next one to be in April 2019.
Aside from regulations, one of the SEC’s functions in investor education, Boodoo said, and it has done a considerable amount of work on that. Its website has information to suit a wide range of investors, from young, old, single, newly married, retirement planning and family planning.
“Everything in life is about understanding. If you went to buy a car, you’d do research, Investing is the same. We want the investing public to know (their options) and understand they have an active regulator who shares information regularly with them, providing advice so they can make informed decisions,” Boodoo said.
For more information, visit the SEC's website at www.sec.org.tt