Oct 2009 Financial News

Call for more innovative financial products

Oct 26, 2009

Local banking and finance experts have called for more innovative products, an encouraging regulatory environment and a willingness to take risks in this country’s capital market to develop.

These views were expressed at the Chartered Financial Analysts Society of TT which held a one day seminar at Hilton Trinidad on “Capital Market Developments–Outlook 2010” as part of Accountants Week.

Ram Ramesh, principal advisor KPMG said regulators need to look at where the market is heading when drafting regulations instead of responding when something happened and “scramble to the Parliament to pass all kinds of legislation.”

He said the regulations had to be relevant to the market. In addition, Ramesh said the market had to become more innovative in what it was offering to investors.

He said the absence of controls for foreign exchange meant that money tends to flow out of the country quickly in times of crisis and this can put significant pressure on the local economy.

“We need to see how we can develop local TT dollar denominated products so that significant part of the currency remains here and goes intro productive investment in the country and that is where a capital market is created,” he said.

He said not enough opportunities are being provided for investors.

President of the Bankers’ Association Dennis Evans disagreed that there was not enough innovation and said “the question is whether people are willing to pay.”

Illustrating this, Evans said right now may look like a good time to invest in a fixed interest rate and noted there was no free lunch and a cost was attached if a client wanted to hedge.

Ian Narine, managing director of Scotia Investments said the local capital market should not be underestimated, noting that investors from other Caribbean territories were coming here to raise money.

Narine said regulation and an enabling environment were key issues. “If you are under-capitalised regulatory wise and market wise, as a firm you may not be able to take the types of risks which the market may require.”

Timothy Hamel-Smith of Hamel Smith and Company said the regulatory framework had to be flexible and enable a “level playing field.”

However, he said regulators had to be open when innovative products come to the market. “You cannot legislate for everything which may happen. The market is very dynamic and changing all the time. A fixed set of regulations will not cover you when things changed six months down the road.”

Daryl White, Head of Investment Banking RBTT Merchant Bank, said it was imperative for value and wealth to be created in TT. He said the private investor making an investment in US dollars was taking a risk and hoping it will not lose value.

If capital continues to go outside TT “in the end the same capital that created wealth for local investments, business, pension funds will not be there to create wealth and we may start to erode our wealth,” he said.


Source:
Lara Pickford-Gordon
Trinidad Newsday
Monday, October 26 2009

http://www.newsday.co.tt/news/0,109834.html