Let ordinary people trade stocks, unlock billions of capital


Business



Local and regional stock exchanges should do more to enable ordinary people to invest, especially in online platforms. – Photo file

If the central bank and stock exchanges make it easy and transparent for ordinary people to trade local stocks and bonds, and break the oligopoly of brokerage houses and fund managers, we can potentially unlock hundreds of millions. dollars of capital and boost economic dynamism at the same time. when we really need a change.

Negotiating local securities is practically a Sisyphus task. If you want to do this, you have to start by opening a brokerage account with one of our old brokerage firms or banks, filling out reams of paper, and paying a hefty fee. Transactions are not easy.

The only other option is to donate your money to a fund manager or a mutual fund, which manages your funds for a share.

If you are a small worker with a few less savings, forget it. Local commerce is a club affair. The concept of insider trading barely exists when most of the business is done in the islands above the scotch and soda.

The end result: Most people remain shut out of one of the few remaining ways to earn returns on local currency, at a time when billions of excess cash are stranded in the bank. This has ripple effects: the capital is therefore relatively more expensive, the volumes on the stock market are tiny and the market is as liquid as the vats of molasses at Angostura.

No wonder the vast majority of businesses, especially family businesses, never bother to register on either the senior or the junior stock exchange (the latter being intended for medium-sized companies). The ripple effects continue – fewer listings and less liquidity means fewer opportunities for potential private equity investors. It depresses investment throughout the economy and pushes ordinary people into the same pretty Ponzi schemes that the government is trying to stamp out.

The good news is that fixing this problem is extremely easy. The Central Bank and Securities Exchange Commission simply need to authorize trading platforms like RobinHood or Fidelity in the US, which allow people to sign up in seconds and start trading.

In addition, it should be a joint regional effort to allow people to buy shares in regional stock exchanges in Jamaica and Barbados.

Now I can already hear the chorus of voices saying that we are an unsophisticated market with low financial literacy and people should be protected from sharks. They fear to encourage a culture of play.

Meanwhile, the well-established interests of banks, brokers and mutual funds have of course little interest in democratizing our markets, and anyone can walk into a barber shop and sit down. any slot machine.

Of course, it’s understandable that regulators are wary of the hordes of day traders that have flooded US markets, with tweets and memes being the currency of the day. Sure, there are a lot of crazy things going on, but these things are taking hold and consumers are learning some valuable lessons along the way.

It is time for regulators to abandon their overly paternalistic attitudes. How can you care about financial literacy when ordinary people don’t have the chance to learn and practice their knowledge?

I recently met Carlos Guayara, co-founder of trii, a recently launched trading platform in Colombia that seeks to take control of Latin America. Another winner of one of the Financial Times’ five Sustainable Development Goals awards, he has seen huge traction in his local market. In Colombia, Guayara says there is a huge demand from its users for finance lessons, especially since many of them are dipping their toes for the first time. This is a huge opportunity to improve financial inclusion.

Companies like trii or RobinHood are emerging in developing countries. I know of at least one person from Trinidad and Tobago who is considering a Caribbean government bond platform. There is no reason why an exciting new generation of Caribbean fintech companies cannot spring up and lead the charge, building knowledge and capacity in the country along the way.

This is a perfect project for John Outridge, the state agency head of the TT International Finance Center, who tracks the TT Stock Exchange and its dynamic new CEO Eva Mitchell’s adoption of new technology. for brokers allowing rests and even the buying and selling of tokenized digital assets (although it remains to be seen if this will actually be linked to this platform). There is still time for our regulators to move from the bad guy list to the good guy list!

Kiran Mathur Mohammed is an economist and co-founder of medl, a laboratory of the IDB, Microsoft, WHO and a health technology company supported by FT, winner of the TT Chamber Champion of Business Technology award. Send your comments and feedback to [email protected]


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