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The Eastern Caribbean Home Mortgage Bank
Eastern Caribbean Securities Market
The Regional Government Securities Market UPDATED 11 April 2013
The Eastern Caribbean Enterprise Fund
The Eastern Caribbean Unit Trust
The Eastern Caribbean Institute Of Banking And
RGSM in Detail
The Eastern Caribbean States of Anguilla, Antigua and Barbuda,
Dominica, Grenada, Montserrat, St Kitts-Nevis, St Lucia, and
St Vincent and the Grenadines constitute a monetary union,
termed the Eastern Caribbean Currency Union (ECCU). These
eight countries share a common central bank and a common currency.
The genesis of the capital market development programme in
the currency union can be traced back to the early 1990’s,
when the Monetary Council of the Eastern Caribbean Central
Bank (ECCB) mandated the Bank to proceed with the activation
of Article 4(3) of the Agreement, which states that one of
the purposes of the Bank is “to promote credit
and exchange conditions and a sound financial structure conducive
to the balanced growth and development of the economies of
the territories of the participating Governments”.
This was interpreted to mean, in practical terms, the development
of money and capital markets. Accordingly, the latter part
of the 1990’s heralded the onset of a new era of financial
sector development in the region.
Despite the existence of a currency union with a common currency
and a common central bank, as well as the rudimentary issuance
of shares by public firms and T-bills and bonds by ECCB Member
Governments, the financial system was fragmented, with eight
separate markets. This, along with a high degree of fractionalisation
in these markets, was identified as a constraint to the development
of the region.
The financial sector, comprising financial systems, markets
and institutions, is an important element in economic development.
The financial sector mobilises savings and allocates credit
across space and time. It provides not only payment services,
but also more importantly products that enable firms and households
to cope with economic uncertainties by hedging, pooling, sharing
and pricing risks. An efficient financial sector reduces the
costs and risks of producing and trading goods and services,
and thus makes an important contribution to raising standards
of living, which has an indirect impact on economic development.
Money and capital markets form a significant part of the
financial sector; their underdevelopment limits risk–pooling
and risk sharing opportunities for households and firms. Within
the ECCB region the underdevelopment of money and capital
markets has made the economies more vulnerable to financial
In an effort to address this, the ECCB has sought to develop
and integrate the ECCU money and capital markets into a single
financial space. The Bank began by the creation of both markets
and institutions to achieve this goal. A special unit was
established to carry out this mandate, which after a number
of changes has now become the Financial and Enterprise Development
Arising out of a series of consultative meetings, held through
the Currency Union, the ECCB identified five initiatives to
be established at the regional level.
(a) The Eastern Caribbean Home Mortgage Bank (ECHMB);
(b) The Eastern Caribbean Securities Market (ECSM);
(c) The Regional Government Securities Market (RGSM);
(d) The Eastern Caribbean Unit Trust (ECUT); and
(e) The Eastern Caribbean Enterprise Fund (ECEF).
THE EASTERN CARIBBEAN HOME MORTGAGE
The Eastern Caribbean Home Mortgage Bank was established
by the Eastern Caribbean Home Mortgage Agreement Act 1994,
assented to on 27 May, 1994 by the governments of Anguilla,
Antigua and Barbuda, Commonwealth of Dominica, Grenada, Montserrat,
St Christopher and Nevis, Saint Lucia and St Vincent and the
Grenadines. The Bank was established with the primary objective
of promoting the development of the secondary mortgage market
within the eight participating countries of the Organisation
of Eastern Caribbean States (OECS).
For more information visit www.echmb.com.
EASTERN CARIBBEAN SECURITIES MARKET
In October 2001, the ECSM was launched with the opening
of the Eastern Caribbean Securities Exchange Ltd (ECSE) and
its affiliated institutions along with the requisite laws
and legal framework.
The ECSE is designed to provide an alternative mechanism
for public institutions to raise capital within the regional
financial system. It allows for the transfer of private sector
savings to productive investments. This will essentially increase
productive activity in the real sector, facilitate private
sector development and create avenues for increased employment.
Currently five corporate securities are listed on the ECSE
with a total market capitalisation of $322m as at 15 August
2003. After less than two years in existence, the ECSE has
recorded in excess of $6.0m in trading activities in relation
to corporate securities. Market activity is expected to become
more buoyant as additional companies are listed over the next
For more information on the ECSE visit http://www.ecseonline.com top ^
THE REGIONAL GOVERNMENT SECURITIES
The Regional Governments Securities Market (RGSM)
is a regional market for the trading of debt instruments of
the member states of the ECCU which comprise Anguilla, Antigua
and Barbuda, Dominica, Grenada, Montserrat, St Kitts and Nevis,
Saint Lucia, and St Vincent and the Grenadines. The market
was established in November 2002 and operates on a fully electronic
platform. The instruments on the RGSM take the form of Treasury-bills,
notes and bonds and have varying maturities. These securities
are backed by the full faith of the governments of the issuing
member states... more
THE EASTERN CARIBBEAN ENTERPRISE
The Eastern Caribbean Enterprise Fund (ECEF) was incorporated in St Kitts and Nevis on 11 October 2009. The Eastern Caribbean Central Bank (ECCB) has undertaken the establishment of the ECEF as a part of its commitment to foster the development of the private sector and money and capital markets in the Eastern Caribbean Currency Union (ECCU)...More
THE EASTERN CARIBBEAN UNIT TRUST
The ECUT will function as an investment company that
pools shareholders' financial resources and invests them in
a diversified portfolio of securities. By pooling investors'
resources the ECUT will be able to ensure a broader spread
of investments across a wider range of Money and Capital Market
instruments. This Trust would be able to invest these funds
in sound, stable and reliable securities in the ECCU.
THE EASTERN CARIBBEAN INSTITUTE
OF BANKING AND FINANCIAL SERVICES
The Eastern Caribbean Institute of Banking and Financial
Services (ECIB), an affiliated institution, was established
by the ECCB with the support of the commercial banking community,
in an effort to strengthen the human capital of the financial
sector. The Institute provides professional development courses
for staff of institutions across the financial services sector,
and assists its members to develop and implement best practices
to enhance their ability to compete in the changing global
environment. It is envisaged that over time the ECIB will
assist with training the professionals operating in the capital
The Bank is also promoting the establishment of a regional
institute of accountants to pursue the adherence to high uniform
accounting standards across the currency union.
For more information visit www.ecib.org.
In the Mid 1980s, the ECCB established an interbank
market, in an effort to assist the commercial banks to manage
their liquidity, and to facilitate the lending and borrowing
of available reserve balances between commercial banks, in
a timely and cost effective manner. The ECCB performed the
role of broker and guaranteed the funds; interest rates were
In October 2001, the ECCB introduced changes to the arrangements
governing the Interbank Market. Under the new arrangement,
a Bulletin Board Service, facilitated by the Central Bank,
replaces the ECCB’s brokerage service. This service
can be used by the commercial banks on a daily basis to advertise
funds available for lending and to source funds for borrowing.
Commercial banks negotiate on a bilateral basis for the use
of excess funds in the banking system and set the terms and
conditions of each loan without the intervention of the ECCB.
In the conduct of Interbank transactions, commercial banks
can either enter into informal unsecured agreements, or can
choose to enter into secured arrangements, whether by offering
collateral or by repurchase agreements.
The changes to the Interbank Market arrangements are expected
to result in market determination of the fund rates and contribute
to the removal of the rigidity of interest rates in the Currency
Union. This is in keeping with efforts by the Central Bank
to develop and deepen the money and capital markets of the
Collaboratively these institutions are expected to
strengthen the ECCU's financial system, as the sub-region
moves closer towards a single financial space. The ECCB’s
focus is to simultaneously integrate markets across national
borders while further developing these markets internationally.