Transcript Cross Border Settlement Presented by: Mrs. Beulah Johnson Equity Operations Manager About the JCSD  A wholly owned subsidiary of the Jamaica Stock Exchange (JSE)

Cross Border Settlement
Presented by: Mrs. Beulah Johnson
Equity Operations Manager
About the JCSD
 A wholly owned subsidiary of the Jamaica
Stock Exchange (JSE) and is located in
Kingston, Jamaica W.I
Began its operations in June of 1998
45 companies listed on the Exchange with over
60,000 clients in the JCSD
How Cross Border
relationships began
GraceKennedy Limited created history by
becoming the first Jamaican company to
be listed on the Barbados Stock Exchange
and the Trinidad & Tobago Stock
Exchange
How Cross Border
relationships began
 Other cross-listed companies on the Barbados, Jamaica and
Trinidad and Tobago Stock Exchanges are:– Jamaica Money Market Brokers Limited
– National Commercial Bank Jamaica Ltd.
– Dehring, Bunting & Golding Ltd
– Capital & Credit Merchant Bank Limited
How Cross Border
relationships began – Part 2
 Other cross-listed companies on the Barbados, Jamaica
and Trinidad and Tobago Stock Exchanges are:-
– First Caribbean Int’l Bank
– RBTT Financial Holdings Ltd.
– Trinidad Cement Limited
– Guardian Holdings Limited
Current Settlement
Process
 Optimization of market opportunities required speedy
movement of shares across borders
 Inter-CSD process evolved
 Shares transferred immediately after confirmation of
ownership
 Physical certificates required to complete process
Caribbean Exchanges
Network (CXN)
Region actively pursuing establishment of a
Caribbean Exchanges Network (CXN)
First phase involves an alliance of three
exchanges Barbados, Jamaica and Trinidad and
Tobago
Basic Objectives of the
CXN
To provide an additional channel for
encouraging and mobilizing domestic
savings
To foster the growth of the domestic
financial services sector
Basic Objectives of the
CXN – Part 2
To provide savers with greater
opportunities to protect themselves
against inflation
To increase the overall efficiency of
investment
To help reduce corporate dependence on
borrowing and improve the gearing of the
Regional corporate sector
Structure of the CXN
 Currently made up of 3 Member
Countries – Barbados,
Jamaica, and Trinidad &
Tobago
 Exchanges utilize a common
trading and settlement
platform - represents phase 1
of the CXN
 Connection to each exchange
is via high speed link
 Local markets continue to exist
in present form
CXN
Network
Structure of the CXN
Part 2
 Facilitate trading in other
jurisdictions
 Members are bound by
agreements and CXN
Access rules
 Open to other Regional
countries through a Deed
of Accession. Brokers to
establish accounts in the
respective Depositories to
facilitate trading and
settlement
CXN
Network
Role of the Depositories
 Facilitate clearance and settlement of regional
trades through:– Settlement agreement with the chosen
settlement bank
– One common Inter-CSD Depository
Agreement to cover treatment of
securities, clearance and settlement
– Risk Management, including
Reconciliations and Reports
Role of the Depositories –
Part 2
– Only upon fund settlement will
transfer of securities will be done
– CSD will guarantee settlement if
member defaults and will assume
market to market risk, then look
to recover from the member
– A Common Settlement Cycle T+3
– Funds Clearance will be CSD to
CSD , CSD to Members
Fund Settlement
 CXN will enter into an agreement with a
settlement bank similar to the Central
Bank
 Settlement bank must have branches or
affiliates in all participating regions
 Each CSD and Broker will have account (s)
with bank in their country
 Each CSD will also have an account in the
settlement bank of the other regions
Fund Settlement - Part 2
 The bank will act upon instructions from
the respective CSDs for transfer of funds
CSD to CSD, CSD to Broker
 Notification may be in the form of email,
fax, or any other electronic method that
is agreed on between the parties. The
respective CSDs would provide a
settlement report
Responsibility of
Broker, CSD and Bank
after a trade
Illustration: Barbadian investor purchases stock
listed on JSE
 Trade confirmation is received by Barbadian
Broker
 Barbados Broker funds his BCSD account
domiciled in the settlement bank for his net
to pay value
 The settlement bank sources the requisite
currency for settlement and deposits to the
JCSD account in Barbados
 On T+3 the bank then transfers the funds
into the JCSD account in Jamaica
Responsibilities after
a trade - Part 2
The JCSD verifies the transfer and
instructs the bank to distribute to
the Jamaican Broker account for his
net to receive value
Trades will be settled T+ 3
Fund Settlement Overview
Jamaican Broker
Account at Settlement
Bank in Jamaica
J$
Barbadian Broker
Account at Settlement
Bank in Barbados
JCSD Account at
Settlement Banks in
the participating
countries
J$:B$
(Barbados/Jamaica/Trinidad)
BCSD Account at
Settlement Banks in
the participating
countries
BD$
(Barbados/Jamaica/Trinidad)
B$:TT$
TT$:J$
TTCSD Account at
Settlement Banks in
the participating
countries
(Barbados/Jamaica/Trinidad)
TT$
Settlement Bank Conversion and Transfer of Relevant Currency.
NB. CSDs may have to maintain two accounts if deemed necessary
T&T Broker Account at
Settlement Bank in
Trinidad & Tobago
Who has jurisdiction
over a trade?
 The domiciled Exchange on which the trade is
executed and settled has jurisdiction
 Purchase / Sell Transaction would be recorded
in the primary market with the purchaser paying
and the seller receiving
Inventory Positions
In respect to client holdings:
Client needs to establish accounts in all
jurisdiction for trading
All positions would be held in the depository of
the country where the security is traded
Clients will get a statement through their own
broker and the CSD
Benefits for Cross
Border Trading
Access to 100+ stocks in 3 markets
Larger pool of investors
 No need to transfer shares across borders