JAMAICA - Finance
Managing Director, Jamaica Stock Exchange
Marlene Street Forrest is the Managing Director of the Jamaica Stock Exchange and Director of both its subsidiaries. Her mandate is to continue the process of developing the JSE Group and particularly the exchange, in an atmosphere of transparency and fairness while utilizing appropriate technology in providing the greatest possible efficiencies to the market. Street Forrest has a wealth of experience having worked in senior management positions at varying private and public sector organizations in Jamaica and overseas. She studied management studies at the University of the West Indies, Mona, and later gained her master’s degree in business administration from the Barry University in Florida.
Our role is to facilitate capital formation and secondary market activities, and the role of the exchange is extremely important to the Jamaican economy. This is especially significant in light of the fact that it is very difficult in most cases for SMEs to get capital to grow, expand, and compete. When the interest rate is high, it is even more critical that the stock market plays a pivotal role in ensuring that these companies can be properly capitalized and that there is a place for them in terms of growing the economy. While we cater to all companies seeking to raise capital, since 2009 we have focused heavily on ensuring that the facility to raise capital is attractive and, as a result, have partnered with the government in terms of special dispensation for SMEs to raise capital on the market. The secondary market is also extremely important; we have an efficient automated trading platform to facilitate secondary market activity in a smooth and efficient manner. Again, going through the cycle from trading to settlement, we also have a securities depository. It is extremely important in this scheme of the capital market to encourage confidence, the raising of capital, and secondary market transactions.
In 2015, Bloomberg recognized us as the best-performing exchange in the world. In 2016, we were among the top 10, and in 2017 we continue to hold our own. In terms of the statistics, our results are not a flash in the pan but a result of the level of interest that people show in the market based on the fact that we have had a concentrated effort on market education. In addition, our 13 broker members have shifted their focus somewhat from concentrating too much on debt instruments to equities and galvanizing SMEs into taking advantage of the market. The fact is that every subscription since 2009 has been oversubscribed, which means people are also recalibrating their portfolio such that instead of concentrating heavily on fixed-income securities or banks, part of those funds are flowing into the capital market.
In 2009, we felt it was important to grow the equities market and our discussion with the government was on growing both the supply and demand side of the market. The government decided that on its end it would provide companies with a tax holiday. SMEs have a 10-year tax holiday, namely five years where they pay no corporate tax and another five years where they pay 50% of the prevailing rate. There is always the question of whether the government has the resources to forego those taxes; however, all the studies we have conducted have shown the move is tax positive. The government may provide relief on corporate taxes but PAYE, NIS, NHT, and GCT taxes all show tremendous growth for the government. Therefore, it is a win-win situation as companies become more compliant, those on the stock exchange are more sustainable, and there is significant growth seen when a company lists as there is immediate transformation and growth, no matter from the standpoint of corporate governance or profitability. Since that tax concession, we have had some stops and starts, where the previous government rescinded the tax concession. However, the program is back on and is entrenched in an income tax act. We have 32 companies listed on the junior market and 33 securities. We push after the companies listed to encourage them to look at other options since there is a restriction in terms of how large the participating equity capital should be; it should be between JMD50 and 500 million. In the event that those SMEs want to raise more than that band, they can return to the bond market or take other options.
We certainly do, which is why we have partnered with the Multilateral Investment Fund, an arm of the IDP. The idea was to promote access to equity capital and the project takes us to potential listing companies to talk about their appetite to come to market and see where their deficiencies are. We assist the companies in terms of their business plans, financials, corporate governance, and any other aspect that may prevent them from coming in. The project has been extremely successful, and we have in the pipeline many SME companies preparing themselves for market. This speaks of the sustainability of the exchange and speaks also of being in synch with the government’s thrust for growth.
We see ourselves as a securities market, and we thus have to move more to offering more products and services in the market. We want to increase our footprint as well as increase the number of products and services offerings to the market. We sit here in Jamaica; however, our market as far as we are concerned is global and for the coming years we will concentrate on leveraging the platform to allow for offerings such as ETFs, REITs, commodities, and more products and services. In the instance of looking at smaller companies, we will also look at how we use our platform within the context of crowd funding. We want to look at our platform in the context of engineering social change and will look at a social exchange. The economy is growing and the idea of a stock exchange is to provide the capital. Because we are an open country, competition comes from within and the idea, therefore, is to see how the stock exchange can assist both the government and private businesses to be more competitive and compete against other companies coming here. We want to give Jamaicans a stake in their own resources.