Saturday, April 19, 2008

Locals may soon invest in Microsoft, Google

Local investors are expected to get the chance to buy and sell shares of foreign publicly listed companies through depositary receipts by mid-June or July.

Trinidad and Tobago Securities and Exchange Commission chairman Osborne Nurse said yesterday he will take the necessary draft legislation to make depositary receipts a reality to Finance Minister Karen Nunez-Tesheira and Cabinet next week.

The draft could become law by the end of May, after which the first sponsored receipts could be issued for Royal Bank of Canada shares-which are traded in the United States-after the US$2.2 billion deal for the takeover of RBTT by RBC is finalised.

A depositary receipt is a type of negotiable financial security that is traded on a local stock exchange but represents a security that is issued by a foreign publicly listed company.

During a workshop on the topic at the Courtyard by Marriott hotel at Invaders Bay, Port of Spain, yesterday, the SEC showed a slide presentation which suggested that local investors might have the opportunity to buy and sell stocks through depositary receipts in foreign companies like BP, IBM, Google and Microsoft.

This will depend on if an issuer (like a brokerage house) can provide the depositary receipts for investors to buy into.

It provides a chance for investors who don't have access to trade online or can't afford to buy a share in a company like Google-which trades at hundreds of US dollars per share-to buy a fraction of a stock unit in these companies in TT dollars.

Nurse described the depositary receipt concept as the "'next best thing since sliced bread" for local investors and added that the time was right for the introduction of this activity.

He said depositary receipts would provide an "excellent incentive" for people to indirectly own foreign stock and would also be an avenue to soak up excess liquidity in the financial system as well as provide an injection into the local stock market.

If people, especially RBTT shareholders who will split about $8 billion in cash when the RBC deal is completed, invest in depositary receipts, it could take some of the money out of the system and also reduce inflation, other SEC analysts said during the workshop.

Curtis Rampersad
Saturday, April 19th 2008
Trinidad & Tobago Express Newspapers

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