There are clearly some major weaknesses at the Jamaica Stock Exchange but no one wants to fix it, not its executive management or any of the board of directors.
Those close to the JSE may feel that there are persons with a vendetta for them but nothing could be further than the truth. The problem is that in many cases, situations that make no sense are brought to their attention and no one does anything about it. Take the matter of the daily stock market report. It has been brought to the attention of the JSE that the report is erroneous as it does not summate the volume and value properly. For example, the volume associated with the main market includes the preference shares. However, those shares don’t form a part of the index and therefore should not be reported as such. Also, the market volume does not include Proven Investments shares even as it is reported on the daily report.
The information below is an extract of stock exchange report taken from Tuesday’s trading:
“Market volume amounted to 3,444,116 units valued at over $18,332,628. Jamaica Money Market Brokers Limited 8.75% was the volume leader with 2,827,574 units (51.74%) followed by LIME with 1,850,500 units (33.86%) and Jamaica Broilers Ltd. with 435,184 units (7.96%).”
As reported, the volume of Cable & Wireless and JMMB preference shares adds to nearly 4.7 million shares yet the report says 3.4 million traded. What sort of nonsense is this? How can the stock exchange publish such erroneous information and no one does anything about it? In fact, there was trading in 6.27 million shares on Tuesday not 3.44 million.
Then there continues to be the matter of Cable & Wireless Jamaica that did not change its name, but changed its brand name to Lime. The Stock Exchange lists the ordinary shares as Lime and the preference shares as Cable & Wireless. However, there is no limited liability company with the name Lime, so why the JSE continues this practise is beyond good reasoning. Worse yet, is to have one listing as Lime and two as Cable & Wireless in the preference segment gives the wrong impression that these are two separate companies.
The JSE hardly made money in 2014, yet it pushed First Caribbean International Bank off the Exchange. This action happened shortly after the JSE went public at an elevated price, which would suggest that they would want to retain as much income as possible, but no, they delisted the bank, thus cutting its income and depriving some local investors the ready access to trade in those shares locally.
Another matter that the JSE needs to deal with is the 15 percent rule, which was instituted in the 1990s when it was thought that the rule would prevent wild swings in prices. The rule may be useful when prices are in triple digits, but when a stocks sells for less than $20, it makes little sense. Barbados has a similar rule, but they suspend trading in the stock for 15 minutes to allow information to go out to investors and then re-open trading. The rule that states that a stock cannot move by more than 15 percent in a day is far too restrictive and prevents liquidity in the stock until the price gets equilibrium. Jamaica must move to the more enlightened Barbados regulation in this regard.
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If we’re talking about the JSE, lets also talk about settlement, why are we still at T+3 in settling a trade? T would be perfect but even T+1 would be amazing. And brokerage fees are ridiculously high in Jamaica they charge a percent of each trasaction as the commission, most trades on the JSE are small, but the commissions and fees are so high as a precent of the transation it takes considerable time / appreciation to turn any profit on a trade. I contacted a broker I use to place my trades about this and they told me to focus on the dividend I get and that its just standard practice to charge commisions that way, what kind of nonsense is that! There is potential in the JSE but it’s being hampered by the “island mentality” We dont seem to like innovation and change very much in Jamaica.