Geisha Kow­lessar-Alon­zo

Se­nior mul­ti­me­dia re­porter

It is ex­treme­ly dif­fi­cult to ac­cess for­eign ex­change for port­fo­lio in­vest­ing pur­pos­es.

There­fore, what if a dig­i­tal as­set or dig­i­tal as­sets can be cre­at­ed that track the price move­ments of a for­eign as­set class and have that price de­nom­i­nat­ed and trad­ed in TT dol­lars?

This is the pro­pos­al from chair­man of the T&T Stock Ex­change (TTSE) Ian Nar­ine as he too not­ed that in T&T, there is a chal­lenge with the avail­abil­i­ty of for­eign ex­change.

How­ev­er, he said, “What isn’t dis­cussed at all,” is the ex­treme dif­fi­cul­ty in ac­cess­ing for­eign ex­change for port­fo­lio in­vest­ing pur­pos­es.

Nar­ine made the com­ments at the TTSE’s 2024 Cap­i­tal Mar­kets con­fer­ence which took place at the Hy­att Re­gency on Wednes­day. He made a sim­i­lar pro­pos­al dur­ing his ad­dress to the con­fer­ence last year

Ad­dress­ing the au­di­ence this week, Nar­ine pro­posed, “What do you think about be­ing able to trade dig­i­tal as­sets on the T&T Stock Ex­change? There have been lots of dis­cus­sions around a dig­i­tal econ­o­my, but this means more than just e-pay­ments, dig­i­tal mon­ey and dig­i­tal­i­sa­tion.

“Dig­i­tal al­so means things like frac­tion­al­i­sa­tion, to­keni­sa­tion and the de­vel­op­ment and trad­ing of dig­i­tal as­sets. These top­ics have been ab­sent from our con­ver­sa­tions. Un­til now.”

He said many lo­cal in­vestors look long­ing­ly at the 21 per cent in­crease in the US bench­mark S&P 500 in­dex over the course of 2024. That long­ing, he said, al­so cre­ates a de­mand for US dol­lars.

“So what if lo­cal in­vestors can hold an as­set de­nom­i­nat­ed in TT dol­lars that would al­so have ap­pre­ci­at­ed by ex­act­ly 21 per cent be­cause the as­set price, tracked the changes in the S&P 500 in­dex. That ladies and gen­tle­men is the prize,” he added.

He said the TTSE is of the view that it can ac­com­mo­date a dig­i­tal prod­uct.

“We have as­sessed it is prac­ti­cal to har­ness a live ex­ter­nal feed and plug it in­to our trad­ing plat­form. This will al­low the dig­i­tal as­set to track the price of the un­der­ly­ing in­dex trans­par­ent­ly and con­sis­tent­ly.

“We have as­sessed that the best frame­work at this time, to al­low this type of as­set to be trad­ed, is what is known as a ‘spot mar­ket’ trade,” Nar­ine ex­plained.

He added the TTSE has draft­ed trad­ing rules to this ef­fect and has sub­mit­ted it to the reg­u­la­tors for dis­cus­sion, adding that those dis­cus­sions have been con­struc­tive to date.

The TTSE chair­man fur­ther ad­vised that to prop­er­ly man­age in­vest­ment risk there must be di­ver­si­ty in­to for­eign mar­kets while res­i­dent in T&T.

“If a dig­i­tal as­set so­lu­tion works then it helps to ad­dress the de­mand and al­lo­ca­tion of scarce US dol­lar re­sources. If it works then it can al­so pos­i­tive­ly im­pact in­sti­tu­tion­al pen­sion plans and those in­di­vid­u­als seek­ing to in­vest for their re­tire­ment. These are some of the pos­si­bil­i­ties,” he de­tailed.

Stat­ing this con­cept can raise a few ques­tions, Nar­ine said the first one can be whether this might have a neg­a­tive im­pact on lo­cal stocks as in­vestors show a pref­er­ence for own­ing the US stock mar­ket, which is what the S&P 500 rep­re­sents.

How­ev­er, he ex­plained, “Less than three per cent of the lo­cal pop­u­la­tion is di­rect­ly in­vest­ed in the T&T stock mar­ket. The ma­jor rea­son why they don’t par­tic­i­pate to a greater ex­tent, is be­cause in a ris­ing mar­ket they can’t get the shares that they want and in a falling mar­ket they quite un­der­stand­ably, pre­fer not to try to catch a falling knife. So, they stay out.

“Now imag­ine if dig­i­tal as­sets can draw the pub­lic in to par­tic­i­pate. Imag­ine hold­ing a core port­fo­lio of the dig­i­tal S&P 500 in­dex and then be­ing able to add lo­cal stocks to your port­fo­lio as you go along.”

Hence, he said the an­swer to that ob­jec­tion is that it is like­ly to have a pos­i­tive im­pact on lo­cal stocks through greater av­enues for in­vestor par­tic­i­pa­tion and port­fo­lio di­ver­si­fi­ca­tion.

TTSE con­tin­ues to grow from strength to strength

Chief ex­ec­u­tive of­fi­cer of the T&T Stock Ex­change, Eva Mitchell, who al­so spoke out­lined the work of the TTSE so far in 2024.

She said this year has been a no­table one in terms of list­ings, stat­ing that the TTSE wel­comed two new ad­di­tions which brought over 1300 new in­vestors in­to the mar­ket, demon­strat­ing that even in chal­leng­ing times, op­por­tu­ni­ties for growth con­tin­ue to emerge.

Turn­ing to mar­ket ac­tiv­i­ty, Mitchell re­port­ed a surge in new client bro­ker­age ac­counts, ap­prox­i­mate­ly 3,000 this year, dou­bling in the same pe­ri­od last year.

What’s more im­pres­sive, she added, is that re­tail clients now ac­count for 80 per cent of the to­tal num­ber of trades with ac­tu­al trade val­ue of $500 mil­lion year to date.