JSE blocks nonconforming accounts
THE JAMAICA Stock Exchange (JSE) has blocked trading on several accounts that lack mandatory information, action it took without informing the holders of the accounts.
Managing Director Marlene Street Forrest said more than 5 per cent of over 200,000 accounts had been affected.
But she insists the JSE had good cause for the action taken, in response to a complaint that initially came from financial analyst and investor John Jackson.
“Why on earth in a little ‘dibby dibby’ country like Jamaica – you can go to one end to another in three or four hours – why on earth everybody has to set up a bureaucracy to control things? It does not make any sense,” said Jackson at the JSE’s annual meeting last Thursday.
“It would appear to me that the stock exchange treats investors as probably worse than secondary. People go and try to trade shares only to be told that the trades can’t go through. Nobody communicates with the individual investor,” he charged.
But, speaking with the Financial Gleaner, Street Forrest said the accounts were blocked after a six-year campaign to update information on the accounts at the
Jamaica Central
Securities
Depository.
“All accounts must have a
TRN – it’s not new,” she said.
“We have been trying to implement this since 2012. We have approached the brokers time and time and time again, until we said ‘that’s it’. The account must have the right information – that is the central securities depository – so they took the decision and they provided the brokers with proper warning to say effective ‘x’ date, the accounts without proper information would be suspended. If an account is suspended you can’t trade.”
Street Forrest said the five per cent that were blocked included accounts that were not active.
She also reported that the action taken by the JSE has prompted some brokers to come forward with missing information, while pushing back on the criticism levelled by Jackson, who also charged that the JSE appeared to prioritise listed companies and brokers over stockholders.
The JSE deals directly with memberbrokers, and it is the latter’s responsibility to deal with their clients, she said.
“When Mr Jackson stated that the exchange took that decision, what he really ought to be saying is that we do not control the investor ... we communicate to the broker to say these are the steps we will be taking. The brokers had adequate lead time,” said the JSE boss.
During the meeting, Jackson also charged that small investors were getting a raw deal, and suggested to the JSE and the brokerage community that they consider eliminating charges on trades below a certain threshold.
Deputy Chairman Gary Peart, who chaired the AGM in the absence of JSE Chairman Ian McNaughton, said both the JSE and brokers would consider the issue.