Understanding the Stock Market

The Trinidad and Tobago Stock Exchange

What is the Trinidad and Tobago Stock Exchange?
How does a Stock Exchange work?
What are the trading hours for the TTSE?

Investing in the Stock Market

What are Shares?
What are the different types of Shares?
What is a Closed-End Mutual Fund?
What are the risks and rewards of investing in the stock market?

The Trinidad and Tobago Stock Exchange

1. What is the Trinidad and Tobago Stock Exchange?

The Trinidad and Tobago Stock Exchange (TTSE) operates under the Securities Industry Act 2012. It is a centralized market for the trading (buying and selling) of stocks (shares) that are listed with the TTSE.

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2. How does a Stock Exchange work?

The Stock Exchange provides for an orderly means of trading listed stocks and ensures that the prices being bid and asked for are properly disclosed to the public.

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3. What are the trading hours for the TTSE?

The TTSE is open for trading every weekday from 9:30am to 12:00 noon. There is no trading on weekends, public holidays or on Carnival Monday and Carnival Tuesday.

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Investing in the Stock Market

1. What are Shares?

Shares represent ownership in part of a company. When you buy a share in a company you become a joint owner of the business along with other shareholders and share in the future (profits or losses) of that business. Shares are also referred to as equity or stocks.

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2. What are the different types of Shares?

There are primarily two types of shares listed on the TTSE. They are Ordinary Shares and Preference Shares.

Ordinary Shares

These are shares that represent ownership in a company and give the shareholder a vote at shareholders meetings and a proportionate but unspecified claim on profits.

Profits are paid out to all shareholders as dividends.

Ordinary Shareholders have the following rights:

A right to dividends if declared by the Board of Directors.

A right to information about the company in which an investment is made.

A pre-emptive right, which is simply the due right of a shareholder to maintain his proportionate share of ownership in a company.

A right to vote at the company's annual general meeting and any other meeting of shareholders duly authorized by the Board of Directors.

A right to share in the assets in the event of dissolution.

Preference Shares

These shares entitle the shareholder to certain rights and privileges not enjoyed by ordinary shareholders. The major privilege is that preferred shareholders are entitled to dividends at a predetermined rate which must be paid out of earnings before any dividends are paid to ordinary shareholders.

Preference Shareholders have the following rights:

Priority over the common stockholders as to dividends.

No pre-emptive rights (see above)

No right to vote at the annual general meeting.

Do not have any of the rights of creditors.

In the event a company decides to liquidate its business such shareholders are usually entitled to a stipulated portion of the assets in preference to common shareholders.

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3. What is a Closed-End Mutual Fund?

A closed-end fund is a publicly traded investment company that raises a fixed amount of capital through an Initial Public Offering (IPO). The fund is then structured, listed and traded like a stock on a Stock Exchange.

Also known as a "closed-end investment" or "closed-end mutual fund."

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4. What are the risks and rewards of investing in the stock market?

Stocks are an effective way to generate returns from capital gains and dividends. As a general rule the higher the potential return on an investment the greater the risk. The stock market is generally fickle, as share prices move up and down. Before investing in the stock market you should understand your risk tolerances and financial objectives. WISE stands ready to assist you in this regard.

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