The Eastern Caribbean Securities Exchange (ECSE) is an electronic securities exchange that operates regional securities markets, in the Eastern Caribbean Currency Union (ECCU) of Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines.   The ECSE is licensed by the Eastern Caribbean Securities Regulatory Commission (ECSRC) under the Securities Act, uniform regional legislation governing securities market activities in the ECCU.  The ECSE facilitates the buying and selling of financial products, including corporate stocks and bonds and government securities. It is the first fully electronic regional securities market in the Western Hemisphere. 

A securities market is like any other market where buyers and sellers meet to exchange goods and services. The buyers (investors) are individuals and institutions who have money (capital) to invest. The sellers are corporations, governments and other investors. The products they sell are securities, including stocks, bonds and other financial products, which are exchanged for money. 

The ECSE provides investors a new way to make money on their investments and participate in the expansion of local enterprises at the same time. It offers an opportunity for investing in and profiting from the growth and development of the economy of the Eastern Caribbean. 

The ECSE provides a primary and a secondary market for trading securities. In primary markets, an issuer – a public company or a government sells its securities for the first time to investors to raise capital to support its operations. The funds generated from this sale of securities go to the issuer. 

In secondary markets, investors buy and sell securities among themselves. The proceeds from this trading activity go to the investors, not to the original issuer.

Enterprises in the ECCU need new sources of capital in order to compete effectively in the growing global marketplace. Capital allows them to buy new equipment, increase productivity and offer better services. The ECSE provides a market for buying and selling a variety of securities. The ECSE gives entrepreneurs a powerful new vehicle for raising capital to support modernisation, expansion, new employment opportunities and economic growth 

Corporate securities (stocks and bonds) as well as government securities (bonds, notes and treasury bills) are among the financial products traded on the ECSE.

Securities are financial products or instruments issued by companies and governments to raise capital. They are generally classified into two main types. Equity (stocks/shares) represents ownership in a company with specific rights, including the ability to share in the profits. Owners of equity may receive periodic income payments from the profits of the company. These are called dividends. The second type of security is a bond, sometimes referred to as a debenture. A bond is a loan that investors make to an issuing company or government. The borrowers (issuers) get the cash they need while the lenders (investors) earn a designated interest on the amount loaned (principal). At some specified point in the future, the issuer must pay back the principal. 

• Stocks give holders part ownership in a company, whereas bonds represent a loan to the company. Shareholders are owners and bondholders are lenders; 
• Shareholders can have a say in the company’s operations. Bondholders cannot; 
• Shareholders can collect dividends based on the company’s profits and the number of shares they own in it. Bondholders collect interest payments on specific dates until the original amount loaned is repaid.

A dividend is a periodic income payment made to shareholders from the profits of a company. Dividends are not fixed or guaranteed.

• Stocks may increase in value. This is known as capital appreciation (gains);
• Owners of stock may receive dividends;
• Owners of stock may contribute to the development of the region’s companies

There is an element of risk in every investment. Although historically stocks have increased in value, there is always the risk that their value may decrease. This depends on the performance of the company, economic conditions, and how investors perceive the company. In general, while stocks may fluctuate in value over time, they tend to perform well relative to other financial products

An investor who buys corporate or government bonds receives interest payments periodically as well as the repayment of the original amount loaned (the principal) at a specified date in the future. Even if the company does poorly, it is still obligated to pay interest to its bondholders. Companies and governments rarely default on bond payments, making this form of investment considerably safer than others.

The interest on a bond is fixed when purchased. Therefore, this investment may not offer the high returns that stocks do. Another risk is that the issuer may run into financial difficulty and be unable to meet its obligations to make interest payments and/or repay the principal to the bondholder. 

Several factors affect the price of securities:

• A company’s operational and financial performance 
• The public’s perception of the company 
• The political and economic environment 
• Supply and demand for the stocks and bond 

Anyone can trade on the ECSE as long as the regulations and guidelines set by the Securities Act are strictly followed. An important objective of this regional capital market is to encourage the active participation of citizens of the ECCU, living at home or abroad. Nevertheless, investors of all nationalities are invited and encouraged to trade on the ECSE. 

Firms licensed to act as securities market intermediaries, referred to as and broker dealers, and are member of the ECSE, handle the purchase and sale of securities for investors on the ECSE. If you would like to invest, you should contact a local broker dealer for information about listed companies. Names and addresses of licensed broker dealers can be found here.

An intermediary is a firm licensed under the Securities Act as a broker dealer or a limited service broker to trade securities on behalf of investors.  The ECSE-member intermediaries, currently all broker dealers, are located in territories throughout the ECCU.

Limited service brokers are authorised to handle all functions necessary for securities trading, including: 

• funds collection 
• securities ownership verification 
• order placement 
• settlement for securities transaction 

They facilitate transactions for the investor but are not allowed to give advice or hold money on behalf of the investor, except for settling transactions.  Limited service brokers charge fees for their services. 

In addition to the services provided by limited service brokers, broker/dealers offer other financial services to investors and issuers for a fee. These services include: 

• study market fluctuations 
• conduct trading services 
• evaluate new products 
• provide investment advice 
• help companies go public 
• keep records of clients’ holdings 
• assist issuers determine the best 
• set up and maintain accounts method/time to issue securities for client 

An investor must provide the intermediary “good funds” to place an order to buy securities on the ECSE. “Good funds” can take the form of cash, cheque, credit or debit card. Once the intermediary has verified that funds are available to cover the transaction, the purchase can be made. The intermediary then handles all the details of the transaction.

Information is available from: 

• The ECSE 
• ECSE-member Intermediaries 
• Trade information bulletins 
• Local and regional media 
• The ECSE’s web site – ecseonline.com 

An issuer wanting to list on the ECSE must disclose information detailing its management structure, ownership structure, financial health, and short and long-term objectives. Disclosure of these facts informs potential investors about the risks and benefits of an investment. In order to remain listed on the ECSE and sell new issues, a company must publish quarterly financial reports, annual audited financial statements and provide timely information on major activities. For more details about listing and reporting requirements, please contact the ECSE, an ECSE-member intermediary or explore the ECSE’s web site – ecseonline.com. 

Factors important in analysing a company include the performance of the company, its business history, financial status, management structure, its plans and projections and, if offering new shares, how it plans to use the proceeds of the offering.  All of this information is provided in the company’s annual report or quarterly and audited annual financial statement, and, in the case of new offering, the prospectus.  These documents can be accessed from the company, ECSE-member intermediaries or on the ECSE’s website – ecseonline.com. 

A significant amount of pride and prestige is associated with being eligible to list on the ECSE. Companies must qualify by meeting certain key criteria including sufficient capital and an appropriate level and quality of financial reporting and general governance standards. Listing on the Exchange also provides a fair market value for the companies’ shares.

When any of the following conditions exist: 

• it is making a profit 
• it needs to raise capital to finance future growth 
• it has a reputation for being a sound and well managed organisation with good potential for making additional profits 
• it has a well thought-out and clearly articulated plan for the future 
• it has developed a good strategy for coming to the market 
• it is considering going public 
• it is a public company 

A company must first determine if it meets the criteria for listing. To do this, it should seek professional advice from a broker – dealer firm or from the ECSE

The ECSE creates new opportunities for companies to raise capital by issuing their securities on the regional electronic market to be freely accessible the regional investing public. Companies from one island can now sell securities to investors from all the islands, and to investors anywhere in the world. 

The ECSE provides the primary market platform for the issuance of Government securities on the Regional Government Securities Market (RGSM). Governments from one island can now sell securities to investors from all the islands, and to investors anywhere in the world

The ECSE trading day, during which time brokers place orders to buy or sell securities for investors, runs from 9:00 AM to 2:00 PM daily.  During the day orders are matched on a continuous basis. Any sell and buy orders that are not traded are carried over to the next business day, unless specified as “day orders”. “Day orders” not traded on a given day are removed from the system.