MUTUAL FUND ASSOCIATION OF TRINIDAD AND TOBAGO
"STRENGTHENING THE ENVIRONMENT FOR INVESTOR CONFIDENCE"

Protecting the Integrity of the Securities Market 

Trinidad and Tobago Securities and Exchange Commission 

A key responsibility of the Trinidad and Tobago Securities and Exchange Commission (TTSEC), under the Securities Act Chapter 83:02 (SA), is to protect the integrity of the securities market against any abuses arising from market manipulating practices, insider trading, conflicts of interest and other unfair and improper practices. This is accomplished through a variety of ways, with one of the most important being through the registration of market participants.

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Offerings of Cryptocurrencies: 

Some considerations for the securities sector 

Further to the issuance of the first cryptocurrency1 (‘Bitcoin’) in 2009, the number of cryptocurrencies in existence has grown to 6,500 cryptocurrencies as at September 16, 20212. 

Amidst the rise in the growth of cryptocurrencies, there is still much debate among regulatory bodies and governments as to the classification and formulation of appropriate frameworks to govern not only the existence of cryptocurrencies, but that of the Exchanges/Networks on which they are traded.

These debates are complicated by the fact that cryptocurrencies combine the properties of electronic payment systems, currencies, commodities3 and/or securities. A commodity here refers to a basic good used in commerce that is interchangeable with other goods of the same type. When they are traded on an exchange, commodities must also meet specified minimum standards.4 Further, the transnational and virtual nature of transacting in cryptocurrencies create opportunities for regulatory arbitrage and limit law enforcement actions where coordinated policy decisions have not been made.  

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Indicators of a Viable Investment Opportunity 

In this fourth instalment in our five-part series on competent investment management, members of the investing public are reminded that the Trinidad and Tobago Securities and Exchange Commission (TTSEC) does not provide specific investment advice to the public. This week’s article will look at the indicators of a viable investment opportunity, in compliance with our obligations under Section 6(g) of the Securities Act, Chapter 83:02, pertaining to investor education, but will not seek to offer advice to the public on what products in which to invest. It will provide suggestions on parameters to look for that point to a viable investment and is intended to promote better discussions with investment advisers.  

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Importance of Diversification

Competent investment management is critical to achieving returns and helping investors meet their financial goals. Over the next five weeks, the Trinidad and Tobago Securities and Exchange Commission (TTSEC) will be providing information on the topics of portfolio diversification, financial statements, the investment process, indicators of a viable investment opportunity and the impact of interest rates on investments. This week’s article discusses two very important aspects of investment management, which include Diversification and Asset Allocation. 

Diversification 

 

Both individual and institutional investors may hold a diversified portfolio of investments rather than a portfolio concentrated in just a few types of investments. A key reason for this diversification is the desire to manage risk, which is consistent with the saying, “Don’t put all your eggs in one basket.” Diversification is one of the most important principles of investing. When securities with different characteristics are combined in a portfolio, the overall level of risk is typically reduced. Adding more unrelated securities to a portfolio will reduce risk through diversification. 

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Impact of Changes in Interest Rates on Investment   

When we hear the term, ‘interest rate’, we immediately think of the annual amount charged on our loans and credit cards. Interest rate is not only the cost of borrowing but it also refers to the amount earned on savings and investments. In this final article in our five-part series on competent investment management, we look at the impact of fluctuations in interest rates on the value of investments. Before so doing, however, its is important to understand the role of the Central Bank of Trinidad and Tobago (“the Central Bank”) and its monetary policy in influencing domestic interest rates.

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