Oran Hall | Buying stocks in Jamaica from Japan
QUESTION: I am thinking of starting investments at this point in my life at 29. I currently have a stable income and would like to make that grow to some level of financial independence, but since I am unable to meet with a broker personally, and I don't want to put this off for another two years when I may or may not return, I would like to know how to proceed.
Please let me know if you have any information about brokers that may be able to help me set up an investment portfolio while I am away.
FINANCIAL ADVISER: There are 13 stockbroking companies authorised to trade on the Jamaica Stock Exchange. They have their individual websites, which carry valuable information on how to open an account as well as the forms required to do so. The procedure is about the same for these broker members/member dealers of the Jamaica Stock Exchange
Generally, though, there is little difference between a Jamaican resident and a non-resident buying stock in Jamaica, and pretty much the same rules and processes apply regardless of the stock being bought.
A resident of a foreign country who is investing in Jamaican stocks must first open an account with a local stockbrokerage firm. Client agreement forms are available online. The form must be printed and sent to the brokerage house with an original signature. The following are also required: a notarised copy of your identification, two references, proof of address, and a copy of the card that is the equivalent of our Taxpayer Registration Number (TRN) card or the card bearing your social security number.
For a list of the stockbrokers, see the website of the Jamaica Stock Exchange: www.jamstockex.com. It also has a wealth of information on the market. You can also source information on the market from the websites of the 13 broker members of the exchange and from the stock market reports published in the press.
Here is some general information. Trading takes place on the JSE from Monday to Friday between 9:30 a.m. and 1 p.m. on a computerised platform. Transactions are settled three days after the execution of the order by your broker, who will supply you with a contract note giving details of the trade.
It is advisable to put all instructions to your broker in writing and to monitor your account regularly. Expect your broker to ask for a deposit of about 50 per cent of the cost of your order when you place an order to buy ordinary stocks. Expect also to share your banking information with your broker and to get the broker's banking information to facilitate the settlement of transactions.
Although you may request a physical certificate, today's norm is for holding securities in electronic form, which is facilitated by the Jamaica Central Securities Depository (JCSD). This enables transactions to be processed by book entry. Your broker will set up an account for you at the JCSD from the information you provide to set up your broker account.
It is a convenient way of changing the ownership of securities between seller and buyer. The depository is able and willing to confirm what it is holding for each client and issues regular statements of the holdings of its clients.
If you expect to have a challenge to manage your portfolio, I suggest that you enter into a formal arrangement with a licensed securities dealer offering such services to manage it on a discretionary or advisory basis. Should you decide to do so, be careful to establish clearly and firmly how this arrangement will work to avoid issues in the future and make sure such a contract is in writing.
- Oran A. Hall, principal author of 'The Handbook of Personal Financial Planning', offers personal financial planning advice and counsel. Email: firstname.lastname@example.org