May 2011 Financial News

Capital & Credit looking to play US Broker Dealer card

May 02, 2011

CAPITAL and Credit Financial Group (CCFG) is hoping to leverage its US Broker Dealer's licence for which it is paying out approximately US$5,000 ($425,000) per month in fees, in any negotiation involving the acquisition of the Group.

Andrew Cocking, CCFG deputy president and CEO, International Business, said the licence which is held by Capital and Credit International Inc (CCII) is one of the key assets that financial institutions looking to engage in a strategic partnership or buy-out of the Group are interested in.

"Getting one of these licences is a very difficult thing and it is a very valuable asset," said Cocking.

"And as we intimated before, some of those entities that have an interest in Capital and Credit, while they have a particular interest in the bank, have a very big interest in the broker dealer because they see that as a way that they can expand their business outside of Jamaica, go into the Diaspora and provide a second tier of business that they never did before," he said.

The licence allows CCII to offer investment banking, sales and trading services to clients in Jamaica, and covers parts of the US, including Florida, New York, Georgia, Maryland, Texas, Washington DC and Virginia. According to Cocking, it is the only such licence held by a local financial institution and the intrinsic value is worth far more than the US$5,000-fee, as it opens up opportunities for expansion abroad.

"The opportunity cost is about US$5,000 per month. The value of it for somebody to get it, a Caribbean entity to say they would now go from scratch and try to acquire it is a very, very difficult thing... so the value of it is very high," he said.

In addition to making cross-border securities trading and cross-listings possible, the US broker dealer licence also allows the local entity to give its customers US debit cards and US chequing accounts.

"It allows us to buy securities world-wide on their behalf. It allows them to pay bills, if they have assets abroad it allows them to easily do business from here or from any part of the world," Cocking said.

He said, for this reason, there has been very keen interest from potential partners in acquiring the licence even though it would not simply be a matter of inheriting it.

"We are of the view that based on the strategic partners and potential investors that are talking to us now, they very much are interested in the broker dealer. Because what the broker dealer does is that you can now give your cadre of customers in any part of the world access to the US capital markets," said Cocking.

However, while CCII continues to hold the licence, Cocking said the company has suspended its operations overseas and transferred its customers to its US partner Blaylock Robert Van (BRV), in which CCII has a one per cent stake with an option to go up to 15 per cent. BRV is headquartered in New York City and is the second largest minority-owned broker dealer in the US.

"We still have the licence and because of the regulatory issues with the broker dealer, which is regulated by the SEC (Securities Exchange Commission) and by FINRA (Financial Industry Regulatory Authority), we have to have somebody there monitoring it. But while we are not trading in CCII, we have kept the licence because of strategic reasons," Cocking said.


Source:
BY ALICIA ROACHE
roachea@jamaicaobserver.com
Sunday Finance reporter
Jamaica Observer
Sunday May 1, 2011

http://www.jamaicaobserver.com/business/Capital-and-Credit-looking-to-play-US-Broker-Dealer-card_8724323#ixzz1LDCTJn71