First Heritage enters stockbrokering market, first for a credit union

A subsidiary of First Heritage Co-operative Credit Union Limited, FHC, has been granted a brokerage licence by the Jamaica Stock Exchange, becoming the fifteenth member dealer and the first credit union to achieve the status.

Through First Heritage Co-operative Credit Union Investments, or FHC Investments, the credit union has the greenlight to broker buy-and-sell share trades on the Jamaica Stock Exchange, with its 200,000 membership base serving as a ready source of business.

The brokerage licence was granted by the JSE a week ago, after 15 months of talks led by Karlene Mullings, who was given the madate when she was hired by First Heritage in March 2020. The former sales and client services manager at VM Wealth was tasked with doing her own assessment and coming up with a plan to address FHC Investments members’ needs and grow the investment subsidiary, said First Heritage CEO Roxann Linton.

The fourteenth JSE broker/member dealer, known as CUMAX, also emerged from the credit union movement, but unlike FHC Investments it was not created by a credit union, but by the umbrella association for the community banks, called JCCUL, whose monitoring role is being replaced by the central bank.

FHC Investments has been a securities dealer for a decade, offering fixed income, investment and portfolio management services to clients, under licence from the Financial Services Commission. The brokerage licence from the JSE opens up new avenues for business in the equities market for publicly traded companies.

“We communicated with many of our 200,000 members and they’ve have been asking for more investment opportunities, rather than just the regular credit union services. The investment subsidiary has been doing wealth management for 11 years and the members felt that they were missing out on opportunities such as IPOs and buying equities,” Linton said.

Prior to last week, FHC’s trading of stocks had to be settled through other brokerage houses for a fee, but now it is in a position to earn income from the execution of transactions on behalf of others.

“Previously, FHC Investments was very much dependent on local interest income and the yield from foreign currency investments. We want to diversify income streams and strengthen our investment arm against the vagaries of the market and the volatility that we sometimes experience,” said Linton.

She adds that she is looking at a two- to three-year horizon for FHC Investments to stabilise income flows and make a greater contribution to the credit union’s consolidated income.

Amid preparation for the new line of business, Linton said FHC executed a series of changes, including development of a business continuity policy, beefed up IT infrastructure, overhauling the human resources department, upgrading the marketing department, and training for staff to operate in the expanded environment.

“We got the provisional approval in July 2020 and we set about upgrading all the policies. We spent a number of months doing all the work and ticking all the boxes in preparation,” she said.

FHC Investments, which operates from Dominica Drive in New Kingston, had a little over $5 billion in assets under management as at December 2021, up from $4.7 billion the year before, Mullings said. Her staff also grew from 10 to 15.

Parent company FHC Credit Union holds about $16 billion in assets.

JSE BROKERS/MEMBER DEALERS:

Barita Investments Limited

CUMAX Wealth Management Limited

First Heritage Co-operative Credit Union Investments

GK Capital Management Limited

Ideal Securities Broker Limited

JMMB Securities Limited

JN Fund Managers Limited

M/VL Stockbrokers Limited

Mayberry Investments Limited

NCB Capital Markets Limited

Proven Wealth Limited

Sagicor Investments Jamaica Limited

Scotia Investments Jamaica Limited

Stocks and Securities Limited (SSL)

Victoria Mutual Wealth Management Limited

neville.graham@gleanerjm.com