What are the impediments to smaller, family-owned companies in the oil and gas sector listing on the exchange?

It is an entrenched business ethic for smaller companies not to go public in Trinidad. For the smaller, family-owned companies, it is much easier to take bank loans than to list on the exchange. We are working to educate the market about the advantages of raising capital in the money markets and embracing a larger stakeholder group. It is much easier to convince companies with a professional management structure to list; family-owned companies often do not understand the benefits.

Is it possible for the exchange to provide the financing needed to meet companies’ needs?

The market can certainly provide one to two billion TT dollar issues. The banking sector has over five billion TT dollars of excess liquidity. There is no doubt that we can provide the adequate amount of financing to meet companies’ needs. A couple of major market interventions, including the Clico Investment Fund, make me optimistic about 2013. There is also the likelihood of the First Citizens Bank coming to list in the first quarter of 2013, which could be an 800-900 million dollar issue. Two or three other smaller issues should be coming to market in 2013 as well. We are optimistic about this kind of activity and hope that it will serve as a benchmark for further activity down the road.

What is the reason for the disconnect between the oil and gas sector and the financial sector’s ability to service it?

Most service companies are being serviced by the local banking system. We started to promote the concept of depository receipts three or four years ago when we sold Trinidad’s biggest bank to RBC Canada. Part of that transaction had RBC commit to the depository receipts program; however, this program has now been frozen because the SEC has not put the regulations in place. If we had a DR program, we could have tied the companies entering Trinidad to local participation. We ought to give nationals some avenue for participation in the spoils of extraction.

How can the mindset be changed to encourage greater market activity?

We need to further educate the market and convince companies of the benefits of listing. However, companies will also need to implement good governance structures and separate ownership from management. We need to work on changing people’s mindsets so that they no longer see the stock exchange as a risky option.

Could you elaborate on the SME platform in 2011-2012 that was meant to encourage smaller companies to go public?

We tried to build our model off the success of the Jamaican exchange, where the junior market was provided with fiscal incentives (a 60% tax break) to go public and the stock exchange received about 14 new listings. However, the investment ground in Trinidad and Tobago is not as fertile as in Jamaica. The big challenge, as I mentioned, is for companies to transition from a family company to a public one. It is not cost-effective to raise five or ten million dollars in the capital markets, so the SME market targets companies with a capital base between five and 50 million. The facilities are in place, and the SEC has approved our listing requirements for the SME sector. However, companies that want to go public must show us that they are ready for the governance challenge.