SSL creates new cambio, remittance subsidiary
Stocks and Securities Limited (SSL) has announced the pending launch of a new cambio and remittance subsidiary, but the central bank, which regulates both market segments, said Tuesday that the company does not yet have the requisite licences.
The Bank of Jamaica (BOJ) said in response to Wednesday Business queries that it is still weighing the application for the cambio licence and is yet to approve it. The BOJ also said SSL had not applied for a remittance licence.
SSL is a securities dealer whose business was downsized in 2013 - a process that was overseen by the Financial Services Commission (FSC).
The company sold off its repo business to JN Fund Managers Limited but retained its more sophisticated clientele.
On Monday, SSL issued a release through its publicists announcing the creation of Dolla Financial Services Limited.
SSL president and CEO Mark Croskery told Wednesday Business that the new subsidiary would allow his company to separate the investment and advisory services from its existing cambio operation called SSL Express.
The reorganisation comes alongside reports that several of SSL's senior managers and accounting team members had exited the company two weeks ago.
Croskery said the retrenchment was a decision made by the SSL board of directors, and was part of an ongoing realignment of the company's cost structure.
"Without the repo book, naturally, we have less administration. We appointed a new board in January and we are engaged in building a strong leadership team," he said. JN Fund Managers reportedly acquired 500 of SSL's client base.
SSL is headquartered on Hope Road in Kingston, but Croskery said Dolla Financial would be located elsewhere, at the Barbican Business Centre, and would have its own general manager and a separate board of directors.
BOJ requires all cambio locations to be licensed, but the central bank said that while it has Dolla's application for Barbican Business Centre in hand, "the application is currently being processed, and, therefore, the location is not yet licensed".
SSL's news release said Dolla Financial represented an expansion of the firm; that it "already has a Transfer of License approval" from the central bank and expects to be operational within a month "contingent upon inspection approval".
Croskery said SSL's cambio operations contribute less than five per cent of total gross operating revenue and that Dolla is meant to grow the foreign exchange trading business.
The company's release indicates that SSL is reorganising the cambio side to get around restrictions "imposed by most commercial banks, which make it prohibitive to have a securities dealers and cambio licence in the same company name".
Other investment companies have previously taken a similar route, after National Commercial Bank Jamaica, and, before it, the former RBC Royal Bank Jamaica began cutting ties with money services companies.
"To our knowledge, a lot of the commercial banks say that their US correspondent banks have issues of concern with cambio dealers," said Croskery.
Regarding the BOJ's assertion that Dolla is not a licensed remittance operator nor has it applied for a remittance licence, Croskery said the remittance licence would be pursued at a time to be determined by the new company's general manager, whom he identified as Stacey Yee-Edwards.
He said the FSC was not engaged in last year's restructuring exercise at SSL but added later that the company has been working closely with the regulator.
A request to the FSC for an update on its oversight of SSL was unavailable up to press time. Its last publicised action was a 'directive' to the securities dealer in October 2013 that certain of its dealings, which were unspecified, would require FSC's prior approval.
The FSC implied no wrongdoing or breach by SSL, saying only that the directive was for the protection of the company's clients. The company at the time was in discussion with its bondholders on a bond due to mature on October 31, 2013.
Croskery said that he expects Dolla Financial to be up and running in 30 days or by monthend September.
"Our shareholders will see increased benefits from SSL segmenting our cambio and remittance services to DOLLA, while increasing attention to our core services for clients. Our cambio and remittance services currently represent less than five per cent of our annual gross revenue, so this shift will have no financial impact on SSL," said Croskery, as quoted in the release.
The company noted that SSL recorded operating revenue of $124.9 million for the six months ended June 2014.