Mark Laquis, Managing Partner, Pollonais, Blanc, de la Bastide & Jacelon, on the financial services regulatory framework

Trinidad and Tobago has not been immune to the effects of the recent global crisis on the financial services industry. The energy sector – the largest contributor to the local economy – has also been significantly affected by the global downturn, culminating in the sharp fall in oil prices over the last year.

Shrinkages in the manufacturing and distribution sectors were also noted. Rising unemployment and a slow-down in the real estate and construction sectors provided a sharp contrast to the situation a few years earlier, when all sectors were performing well. As a result, we have seen a decrease in financing facilities and even residential mortgages.

Despite the recent economic challenges, mainly fuelled by the energy sector, T&T remains the business leader in the Caribbean region. The recent focus has been on generating interest in investment, with plans to develop industrial downstream programmes in methanol, ammonia and renewable energy. It is the hope that such investments will revitalise the economy and create avenues for long-term sustainable development. Interest in investment in T&T in these areas has come from many countries, including the US, the UK, India, Europe, Japan and China.

Thanks to lessons learnt from the global crisis, T&T’s financial system has witnessed rapid structural and regulatory change over the last decade, both in the financial services sector and in the securities market. The financial services sector is stable and consistently regulated, comprising commercial banks, which are licensed with the Central Bank of T&T to conduct the business of banking, and non-banking financial institutions, which are licensed to conduct business of a financial nature. Most of the local banks have expanded their presence throughout the Caribbean region.

The financial products and services that are currently being offered by the financial services sector in T&T are wide ranging, and there is a large variety of instruments available to investors in the market, such as savings and investment instruments, local and foreign exchange funds, money market instruments, trade and asset financing, project financing, in addition to bonds and commercial paper.

With respect to the securities market, the Securities Act Chapter 83:02 was proclaimed into law on December 31, 2012 and is aimed at encouraging fair and efficient securities markets, as well as fostering greater confidence in the securities industry in T&T. The act also seeks to reduce systemic risk and, perhaps most importantly, enhance investor protection from unfair, improper or fraudulent practices. To achieve the latter, the act has increased the range of market actors required to be registered, and in so doing has affected foreign dealers and advisors’ ability to access the local securities market. Under the previous securities legislation foreign market actors were permitted to facilitate trades in foreign securities markets for and on behalf of local investors, including providing investment advice to local residents without the need to be registered with the T&T Securities and Exchange Commission (TTSEC).

The act now requires all such foreign market actors to register with the TTSEC. An act, advertisement or negotiation relating to a distribution of securities that is solicited by the foreign market actor, will be considered to be carrying on the activity in T&T and require registration. However, the Amendment Act provides that a market actor should be able to provide its services to persons in T&T, on the basis that such services are not solicited by the foreign market actor but by the local client.

Indeed, it is important to note here that the Amendment Act also goes further to explicitly permit the foreign equivalents of broker-dealers, investment advisers and underwriters, who are registered in a “designated foreign jurisdiction”, to both solicit and conduct business locally in given circumstances. Having said that, no foreign jurisdictions have as yet been identified as “designated foreign jurisdictions”.