Deeping the Regional Capital Markets: Investment Options Revisited Presented to CAIB 37 th AGM & Conference By TREVOR E BLAKE General Manager ECSE Group 10 November 2010

2 Overview Introduction Role of Capital Markets Regional Markets Deepening the Markets Conclusion

3 Introduction Banks dominate Financial Sector Banks necessary, but not sufficient to meet needs of modern economy Sound banking system AND liquid capital markets drive growth Liquid stock markets drive growth regardless of state on banking system!

4 Role of Capital Markets Capital markets developed primarily to for efficient mobilisation and allocation of resources Markets expected to channel financial resources to productive purposes to attract for foreign investment and international savings to reduce the over-dependence on bank financing to encourage ownership of productive assets by small savers to provide investment opportunities

5 The State of Regional Markets 6 Exchanges/markets in CARICOM Bahamas, Barbados, ECCU, Guyana, Jamaica, Trinidad & Tobago 6 Regulators Fragmentation legal & regulatory framework systems listing rules disclosure standards, etc

6 Regional Capital Markets

7 Regional Market with Selected Comparators EXCHANGESMarket Cap (US$ million) Market Cap as % of GDP Equity Trades as % of GDP NYSE & NASDAQ42,209, LSE2,342, BM&F/BOVESPA623, SANTIAGO38, TTSE8, JSE6, BSE4, ECSE

8 The State of Regional Markets low level of activity on ECSE market is narrow and thin strong ‘buy and hold’ culture no effective Institutional Investors underdeveloped Intermediary function small public float narrow product range

9 Deepening Capital Markets Regulatory Infrastructure Legal Framework Prudential Supervision Accounting & Auditing Standards Corporate Governance

10 Deepening Capital Markets Market infrastructure Meeting International Standards IOSCO; CPSS; WFE Enhancing Role of Institutional Investors NIS/SSS; Mutual Funds Widening Retail Investor Base Mutual Funds; Investment Clubs Product Innovation Repos; Swaps; Securitisation

11 Deepening Capital Markets Market infrastructure (Cont’d) Short Selling & Securities Lending Expanding Product Range IPOs; Privatisation Corporate Debt; RGSM Enhancing the Intermediary Function market-making; underwriting

12 Deepening Capital Markets Enabling environment/supporting infrastructure Liberalising Capital Controls Providing Incentives for Listing Strenghtening Public Debt Management Enhancing Financial Literacy Effective, sustained, comprehensive campaign ECCU Public Education and Information Program Integrating the Markets

13 Conclusion Regional Capital Markets still developing Some Progress is being made Still a long way from delivering real benefits that would impact growth Achieving benefits of markets require collaboration of all parties Is market integration necessary?