What is the Regional Government Securities
What are government securities?
What is the ECCB's role in the regional
government securities market?
What is an intermediary?
How are government securities sold?
How can I get information on upcoming issues?
How can I buy government securities?
What is the minimum purchase amount for
Why should I consider purchasing government
How is ownership recorded?
Can I sell my securities before maturity?
Can I use my securities as collateral?
What happens when my security matures?
How do I receive interest and principal?
What type of information should I as a
potential investor consider?
What are the costs to the investor when
purchasing a security?
How do the various issues fit with my investment
Who will regulate Governments participation
in the RGSM?
How can I get more information about the
the Regional Government Securities Market?
The eight ECCB member countries (Anguilla, Antigua
and Barbuda, Dominica, Grenada, Montserrat, Saint Lucia,
St Vincent and the Grenadines and St Kitts and Nevis)
have established a regional market for Government Securities,
with the assistance of the Eastern Caribbean Central
The regional market allows all member governments to
issue their securities throughout the member countries
and beyond, allowing residents and non-residents to
buy and sell the securities of their choice. This initiative
will enhance the investment options available to investors
by enabling investment opportunities beyond the domestic/home
market, incorporating the regional market as well.
Government securities are financial instruments including
treasury bills, notes and bonds that are issued
by a sovereign and sold to the public. Backed by the
full faith and credit of the issuing Government, these
instruments are usually considered safe investments.
Treasury Bills are short-term instruments
issued with a term of one year or less. They are sold
at a discount from face value (par) and do not pay interest
before maturity. The difference between the purchase
price of the bill and the amount that is paid at maturity
(par), or when the bill is sold prior to maturity, is
the interest earned on the bill.
Treasury Notes and Bonds bear a stated
interest rate, and the owner receives periodic, typically
semi-annual income. Treasury notes have a term of more
than one year but less than ten. Treasury bonds are
long-term instruments issued with a term of more than
the ECCB's role in the regional government securities
The Eastern Caribbean Central Bank acts
as Fiscal Agent to Governments. In this role, the ECCB
assists the Governments by facilitating the operations
of the RGSM, serving as secretariat to the RDCC and
providing advice to the Governments.
An intermediary is a person
or organisation, which provides services related to
financial securities to investors such as a broker,
dealer or custodian. These services include facilitating
trading on behalf of investors and providing investment
advice. Intermediaries dealing in securities must be
licensed by the Eastern Caribbean Securities Regulatory
government securities sold?
When a government
brings a new issue of securities (treasury bills, notes
and bonds) to the market for the first time it does
so through the primary market. Government securities
issued on the regional market are sold via the Eastern
Caribbean Securities Exchange (ECSE) Ltd.
Treasury Bills are sold on the regional
market through a single price auction where the yield/price
of the security is determined by competitive bidding
by investors. Each investor must submit a bid specifying
a yield or price for a specified quantity of securities.
Those bids that fall within the range accepted by the
auction will be awarded the security. Each successful
investor pays the same price (or receives the same yield)
for their securities. The risk associated with competitive
bidding is that an investor might bid a yield that is
too high and not obtain the quantity requested.
Treasury Notes and Bonds may be sold
on the regional market through an auction (as explained
above) or on a fixed-price subscription basis where
the price is determined by the government before issuing
the securities and the investor submits an application
for only an amount. Bonds and notes may be sold at par
(face value), discount or at premium, that is, a price
above the face value. Member Governments usually sell
their bonds at par value.
I get information on upcoming issues?
with information on securities to be issued on the regional
market are provided to the market at least a week before
the auction. These announcements provide the details
on upcoming issues which include: type of instrument,
Government of issue, issue date, auction or subscription
date, maturity date and deadline date, time for receiving
applications, names and addresses of licensed intermediaries
participating in the government securities market.
Announcements are also provided in local newspapers,
member governments' gazettes, ECCB and ECSE web sites.
In addition, a week before the auction date, the government
issuing the securities provides a press release with
details on the specific issue. This announcement serves
to reconfirm details provided to the market.
I buy government securities?
to purchase government securities issued on the regional
market may do so by using the services of a broker/dealer
that is licensed by the Securities Regulatory Commission
and is a member of the ECSE. The names of intermediaries
dealing in the government securities will be provided
in announcements to the market. Intermediaries will
submit applications for securities on behalf of their
customers to the ECSE where the securities are sold.
Investors should submit their applications for securities
before the deadline specified in the announcements for
the specific issue.
the minimum purchase amount for government securities?
The minimum investment on the RGSM is $EC5,000.
I consider purchasing government securities?
securities usually provide a good savings option as
they are generally risk free and provide a higher return
than that which can be received from a regular savings
account. Interest rates on treasury bills and bonds
issued in the region generally exceed 3.00%, as compared
to the rates on a three month fixed deposit offered
by commercial banks, which may be lower. In addition,
Government bonds are generally ideal for savings as
they provide long term savings options. Whether you
are saving for a new home, your children’s education
or retirement, government bonds can help you reach your
Investors will receive a
confirmation notice indicating the success of their
application for securities. This notice indicates the
amount of securities allotted to the investor and the
market yield/price for those securities. Securities
are issued to investors in a dematerialised form, which
simply means that ownership of the securities is recorded
and maintained electronically by the Eastern Caribbean
Securities Registry (ECSR). Investors do not receive
printed certificates as previously done, however they
receive regular statements of their holdings at the
Dematerialisation of securities offers several advantages
over printed certificates such as facilitating trading
of securities and elimination of risks associated with
theft, loss or destruction of physical certificates.
Can I sell
my securities before maturity?
Yes. The Eastern
Caribbean Securities Exchange (ECSE) Ltd provides investors
with the opportunity to sell and buy securities (government
securities, shares and other financial instruments)
on the secondary market. As on the primary market, investors
will need to place their orders to sell or buy securities
through a licensed intermediary.
Can I use
my securities as collateral?
Yes. You may pledge
your government securities as collateral for financial
obligations such as loans. Pledging of securities are
done at the Eastern Caribbean Securities Registry (ECSR)
where the ownership of the securities are held and recorded.
happens when my security matures?
On maturity date,
each investor will be paid an amount equal to the face
value (principal and interest) in respect of their holdings
of the specific security.
Treasury bills are sold at a discount
and are redeemed at face value at maturity, your return
is the difference between the purchase price and the
face value, assuming you hold the bill until maturity.
Notes and Bonds may be sold at discount
or at premium. As with Treasury Bills, when the security
is sold at a discount, the purchaser pays less than
the face value. Holders of notes and bonds receive periodic
interest payments (coupons) usually on a semi-annual
basis. The annual return on notes and bonds is equal
to the face value of the securities times the coupon
do I receive interest and principal?
When submitting applications for an issue of securities,
investors must provide the intermediaries acting on
their behalf. With bank details such as the name and
address of bank, bank account number for which they
want their principal and interest payments deposited.
(editor's note: provide also for payment by cheque
type of information should I as a potential investor
In bringing an issue of securities to the market, the
Government is required to disclose certain information
to the market. This information provides prospective
investors with insight into the fiscal performance of
the government and the economic performance of the country,
which enables them to make an informed investment decision.
An investor's assessment of a government should include
an examination of the country's level of outstanding
debt in particular, outstanding debt to GDP and debt
interest payments to current Government revenue. Such
ratios and data provide some indication of the country's
ability to meet current and future debt as well as interest
What are the costs to the investor when purchasing a
If the bid is successful the investor must pay the
principal cost of the bond or discounted cost of T-Bill,
plus the commission to the broker. The commission charged
will vary by broker, as each broker calculates the commission
according to their requirement. Please seek advice from
one of the licensed brokers to determine the commission
charge. If the bid is not successful then there are
no fees incurred by the potential investor.
How do the various issues fit with my investment strategy?
The variety of issues (i.e. 91 day T-bills, 1-year,
5-year, and 10-year bonds) allows the investor to satisfy
short, medium, and long-term investment objectives.
An investor may look to the RGSM if seeking an investment
vehicle to help with the purchase of a home or automobile
in the near future, or tuition for the children when
they go to school, or to supplement a retirement plan.
Who will regulate Governments participation in the RGSM?
Regulation of the activities of the issuers (Governments)
is the responsibility of the Regional Debt Coordinating
Committee (RDCC) which comprises the Financial Secretaries/Directors
in the Ministries of Finance of each member country.
The Governor of the ECCB, or his designate, is an ex-officio
member of this Committee.
How can I get more information about the market?
An investor may obtain additional information about
the Regional Government Securities Market through the
Fiscal Agent (ECCB), Treasury Department of the respective
government, the intermediaries established in the market
as well as Eastern Caribbean Securities Exchange website,