The regulator: Wentworth Graham tells why the JSE created his new post

Published: Monday April 5, 2008

Wentworth Graham is very clear about his role as the island's first ever chief regulatory officer (CRO) at the Jamaica Stock Exchange (JSE). "At this point in time, it is necessary to separate the activities that relate to profitability and regulation in an effort to eliminate any perception of conflict of interest in JSE operations," he said.

The JSE's decision to become a for-profit entity, he explained, resulted from easier movement of capital, the evaporation of physical trading floors with substitutes of electronic trading platforms and the mandate to create new product offerings to clients.

"So the CRO post was created to fulfil the responsibilities that come with the Regulatory and Market Oversight Division (RMOD)," said Graham, who regards his post as service-driven with a mandate to provide enhanced oversight to the 43 companies listed on the JSE, all stockbrokers and investors in the market.

Although the local capital market has not been rocked by scandals at the level of North American listed companies such as Enron and Worldcom - which wiped out shareholder value - Jamaica has embarked on the global trend for greater market regulation. Coupled with the JSE's move towards becoming a for-profit entity, the job of the CRO allows the JSE to have two distinct functions - commercial operations headed by JSE general manager Marlene Street-Forrest and the regulatory unit headed by Graham.

Graham reports to a Regulatory and Oversight Committee, chaired by Hilary Phillips, QC, one of Jamaica's legal luminaries. Other distinguished committee members are Livingstone Morrison, Diane Black and Garth Kiddoe.

"Investors should feel comfortable with the team running the Regulatory and Oversight Committee because they are knowledgeable and people of integrity," said Graham. "Additionally, in the department, we have extremely bright people. From the administrative assistant right up."

Jamaica currently has two other regulatory agencies - the Financial Services Commission (FSC), which regulates non-deposit-taking financial institutions, including insurance companies; and the Bank of Jamaica (BOJ), which regulates deposit-taking financial institutions.

With those structures already in place, one could ask whether Jamaica, with only 43 listed firms, needs another regulator.

"Research shows that investors see more value in a market that provides adequate stringencies than one that is perceived to be unbridled," said Graham. "What is more fundamental is whether regulation is translating into cheaper cost of capital. The simple answer in the context of the JSE is yes."

In fact, Graham noted that in regard to regulation, Jamaica is actually moving towards First-World standards. "On the regulatory side, I'll say that we are probably ahead of some of our regional counterparts and comparable to some of our global counterparts," he argued. "For instance, we have regulations on business continuity, audit committees and an option for audited submissions within 60 days, which exist on the global frontiers, but are absent elsewhere. These rules came into being over the last two years, hence, evidence of dynamism of our market."

Prior to taking up this new post as CRO, Graham was the JSE's assistant general manager and has served the exchange in various posts over the last 10 years.

"My interest in the Exchange started before being employed to the company, so on one level, it could be seen as the preservation of a long last association," he said. "As a member of the team, I've always been fascinated with the opportunity to effect change and harness the skills and qualities of the team to fulfil the company's objectives."

His benchmark, he said, are the New York Stock Exchange (NYSE) Regulations. "I've read a lot on NYSE Regulations, which is the regulatory arm of the New York Stock Exchange, and I believe the model is ideal for Jamaica," he said.

Addressing recent developments surrounding alternative investment schemes, Graham said that there has not been a contagion from the crisis facing the alternatives over to the listed firms. "One should recognise that the Exchange has proper oversight, and therefore listed companies must disclose information to make owners and the investing public know what's happening to the companies," he said. "There are no smoke screens in the activities of listed companies. As such, innocent and hardworking people will not be left with empty bags and inadequate information."

On a personal level, Graham is very active in volunteer work. "I love volunteerism," he said. "I'm a fund-raising organiser for the Blood Bank; president of my community association; and a parent representative at my daughter's school."

His biggest influences, he said, are his family, specifically his mother, brothers, sister and wife. He also draws support from close friends. "Then there are non-family members, who I found at Mona School of Business," he said.


Source:
Dennise Willliams
The Jamaice Observer
http://www.jamaicaobserver.com/magazines/Business/html/20080504T000000-0500_135246_OBS_THE_REGULATOR_.asp
williamsd@jamaicaobserver.com