By Al Edwards, Financial EditorTHE country's securities dealers are seeking clarity on a number of regulatory measures imposed by the Financial Services Commission (FSC), the Financial Gleaner understands.
The new President of the Jamaica Secuities Dealers Association (SDA), Peter Bunting, will be seeking to ascertain greater clarity from FSC boss Brian Wynter on the parameters by which dealers can operate their businesses and to that end a meeting was scheduled to take place yesterday between the two men to shed some light on a number of pertinent issues.
Perhaps of particular concern to the FSC is the fact that although the financial industry in Jamaica is relatively small, the assets under management are not. Peter Bunting's predecessor as head of the SDA, Peter Chin, has said that dealers are handling some $280 billion assets under management as opposed to the commercial banks figure of $240 billion. There are some industry players who feel that there is too much of an overlap between the two entities and that grater clarity is needed.
Many dealers are balking at the high level of capital adequacy required from the FSC and point to the fact that though the larger dealers can meet the capital adequacy figure, there are many who can not.
FEE STRUCTURE REVAMPED
To compound matters the FSC has revamped its fee structure in the belief that the industry should pay for supervision. The new fees now mean that Capital & Credit Merchant Bank with assets of over $27 billion could face a bill of approximately J$3.8 million or Pan Caribbean Merchant Bank holding assets of around $3 billion is looking at $1.2 million in fees.
Then there is the vexing question of intermediation. There is a point of view that dealers are encroaching on the traditional role of commercial banks. More often than not, dealers buy a Government security, fund it by repo, say 90 days, and claim the underlying asset. The call is for dealers to act more like brokers and refrain from actively competing with the banks. The new President has made it clear that while a number of issues should be under discussion, the dealers are not adverse to regulation; in fact they welcome it.
