If all goes well, Guyana should have its stock exchange up and running by June with initial trading expected to take place bi-monthly because of an anticipated high level of interest.

The Guyana Association of Securities Companies and Intermediaries (GASCI) established last June, will regulate members of the stock exchange and will be regulated by the Guyana Securities Council (GSC).

GASCI hopes to complete the staff recruitment for its secretariat by the end of this month and to begin training if the necessary staff structure is in place shortly after. It further anticipates that the GSC will grant the necessary approval for its membership rules and have the requisite regulations to accompany the Securities Industries Act (SIA) in place to bring the stock exchange into operation.

Those regulations to be tabled in parliament and necessary for the operationalisation of the stock exchange include orders on the registration of market participants; the conduct of business regulations and accounting and financial statements.

GASCI, whose current board members are Anand Beharry of Secure International Trust Company Limited (acting chairman), Hughley Nelson of GNCB Trust, Chandra Gajraj of Trust Company Guyana Limited and Enid Bissember of Caricom Secretariat, has a "grandfathering" clause as part of its proposed rules to allow those persons/businesses licensed as brokers and dealers under the Financial Institutions Act (FIA) to be grandfathered as members of GASCI.

Those companies which would qualify include Beharry Stockbrokers Limited, GNCB Trust and Trust Company Guyana Limited. Globe Trust and Investment Company would not qualify because of its current status.

Beharry, in a recent interview with Stabroek News, indicated that these companies had not yet been grandfathered but would be, and that they would be given time to regularise themselves in keeping with the rules of GASCI. These rules are still to be approved by the GSC with one outstanding issue still being worked on, namely, mergers and acquisitions.

For other companies wanting to be listed on the exchange, they would have to be approved by the GASCI after conforming to the requirements of the Securities Industries Act.

Beharry says he does not see actual trading taking place before June. He said one issue which had to be dealt with was the dematerialising of shares to allow for fast processing of transactions. He indicated that currently it took between three to five weeks for shares to be transferred from one person to the next. He explained that dematerialising would allow for same day transactions and with the contract note of purchase or sale being proof of ownership. He said whilst the processing took place, GASCI would have a record of ownership to facilitate transactions.

Initially, as well, Beharry sees transactions taking place by open outcry and using the bulletin board. He said shares available for sale would be listed on the bulletin board and an exchange official would handle the board. Brokers would then call out bids and offers and the exchange official would match bids with offers. When there was a match, this was known as a call and a contract would be sealed. The process would continue until all the shares had been traded.

Beharry said trading would be according to time preference and be open to the public.

On the other hand, GASCI has been speaking to businesses on the benefits of the stock exchange and Beharry said that they would be updated on progress on establishing the exchange. A number of public companies in Guyana which are likely to be front runners to trade on the exchange are Banks DIH, National Bank of Industry and Commerce Limited, Guyana Bank for Trade and Industry, Sterling Products and Guyana Stockfeeds Limited.

Beharry noted that the stock exchange was not just a medium to dilute equity but could be a source of cheap capital. He noted many of the Chief Executive Officers were aware of the benefits of a stock exchange and he saw no reason why they would not take advantage of the medium.

He said that problems of interest in the exchange would not arise at the corporate level but rather with the public, as public knowledge on the benefits of such an exchange was minimal. He said that an aggressive public awareness exercise would have to be launched for the stock market to be successful.

The GASCI acting chairman said he anticipated that by the end of this month GSC would approve the rules and regulations necessary for operationalising the stock exchange. Beharry said by this time as well, the staff recruitment would be completed. He said once staff training had been completed, then the operations of the stock exchange would be launched.

GASCI currently operates out of the Private Sector Commission building and its operation for the first few years will be funded by the Department For International Development (DFID) of the UK.

Meanwhile, the GSC, which is chaired by Brian James and has as its members Dr Gobind Ganga, research director of the Central Bank, Dev Rawana, econometrician and lecturer at the University of Guyana and senior counsel Bryn Pollard, is working to have the necessary regulations in place.

James told Stabroek News recently that the regulations would be very tight. He indicated that the project had been set back for a while because the necessary assurances from the government to DFID had not been made to release funding. Funding is now in the process of being released for the first two years of GSC's operation, after which it will be financed by the government.

GSC officials who meet at the Bank of Guyana, are also looking to secure premises specifically for the exchange, and will soon be advertising for a Chief Executive Officer.

The Securities Industries Act was passed in 1998 but actual work on operationalising it only came last year with the formation of GASCI and then GSC six months ago. Technical assistance for the project is being provided by the Adam Smith Institute of the UK.