Angus Young, Chief Executive Officer of NCB Capital Markets
New international regulations are expected to force smaller brokerage companies in Jamaica and across the Caribbean to merge or consolidate, while larger firms grow even bigger.
That warning has come from Angus Young, Chief Executive Officer of NCB Capital Markets.
Speaking at the Jamaica Stock Exchange's 21st Regional Investments and Capital Markets Conference last week, Mr. Young said new regulatory standards, including Basel III, will require brokerage houses to hold more cash and other high-quality assets such as treasury bills and blue-chip stocks.
He explained that this is to ensure firms can withstand unforeseen financial shocks, rather than using those funds primarily for lending and investment.
Mr. Young noted that meeting these standards will be especially challenging for smaller brokerage houses, raising questions about their long-term viability.
He also pointed to the implementation of the "twin peaks" regulatory model, under which the Bank of Jamaica will assume responsibility for ensuring financial institutions remain financially sound, while the Financial Services Commission will oversee market conduct and consumer protection.
Mr. Young added that building the required internal talent, establishing more sophisticated risk-management teams, and maintaining more scientifically structured balance sheets will further drive up operating expenses — costs that many smaller broker-dealers may be unable to absorb.
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