Jul 2016 Financial News

Use of central depository falls as investors diversify asset class (Jamaica)

Jul 25, 2016

A fall in transactions involving Government of Jamaica securities and Bank of Jamaica securities resulted in an overall decline in the use of the Electronic Securities Depository (JamClear-CSD) during the last review year.

The value of securities held in JamClear-CSD as at year end-2015 was $836.8 billion and US$1.5 billion compared to $857.4 billion and US$1.6 billion at end-2014.

For 2015, the BOJ says in its 2015 annual report, a total of 121,145 transactions were processed in JamClear-CSD for both BOJ and GOJ instruments, representing a 19 per cent decrease relative to the 149, 801 transactions processed in 2014.

In 2015, total nominal values traded were $12.9 trillion and US$12.5 billion, reflecting respective declines of 6.0 per cent and 25.0 per cent when compared to 2014.

Investment and treasury managers to whom the Jamaica Observer spoke on Tuesday said that while there was no slowdown in BOJ issues last year, the market gravitated to corporate paper and equity issues which promised better returns during the period.

It was also noted that Government of Jamaica issues had slowed during the period.

The JamClear-CSD, run by the Bank of Jamaica, facilitates transactions including pledges, entitlement proceeds and repurchase agreements for participants and clients. It was implemented on 15 May 2009, replacing the paper-based issue of Government of Jamaica and Bank of Jamaica fixed income securities.

The central bank said that in 2015 JamClear processed an average of 483 securities trades each day, compared to a daily average of 597 trades in 2014. Jamaica dollar securities decreased by approximately $20.5 billion (2.0 per cent), while the US dollar nominal value decreased by approximately US$135 million.

Repurchase agreements accounted for the highest overall values for both Jamaica dollar and US dollar transactions during the review period.

Repos accounted for almost three times other transactions, also showing an increase over 2014 numbers.

Repurchase Agreements had the highest utilisation over the review period accounting for 27.2 per cent of the total volumes traded. Entitlement proceeds and pledges accounted for 24.7 per cent and 23.8 per cent, respectively.

The BOJ said that at end-2015, the number of participants in JamClear-CSD remained at 39, following the registration of one new participant and the voluntary de-registration of one secondary dealer.

The participants in the depository at the end of the review period comprised all six commercial banks, two merchant banks, eight primary dealers, twenty-two secondary dealers and one trustee — a new participant category which was established to facilitate the transition of retail repo transactions to a trust-based framework.

Source:
BY AVIA COLLINDER
collindera@jamaicaobserver.com
Business reporter
Jamaica Observer
Monday July 25, 2016

http://www.jamaicaobserver.com/business/Use-of-central-depository-falls-as-investors-diversify-asset-class-------_67909