Barita partnership opens US equities market to clients
Published:Wednesday | November 10, 2010 | 12:00 AM
Barita Investments Limited has forged an agreement with international equity trading firm Stock USA, a move which the company said will now provide its local clients with an American equity trading platform while affording the company an opportunity to further diversify its product offerings.
The agreement according to Ian McNaughton, general manager of Barita Investments, was signed in mid-October with access to trading on all the major American exchanges, such as the New York Stock Exchange and the NASDAQ.
"We initiated the arrangement, a referral facility whereby we would refer to Stock USA competent and confident clients who are able to handle their own trading, or whereby Barita Investments would form the conduit through which other less competent customers could trade in the US equities market," said McNaughton.
"It will pretty much provide another facility for clients. We have clients who do want to participate in the US equities market and with the situation now as it exists within the repo market. It's an opportunity to provide clients with good returns."
Trading stocks
But the offering of trading stocks in the United States market will not be open to everyone, just high net worth clients.
"The facility is in place now but we have not yet started canvassing clients," said McNaughton.
"But we don't expect the market to be a broad-based one; it will be a selected one, particularly for high net worth clients, so we will be very careful in how we market and promote it," he told Wednesday Business.
While McNaughton declined to disclose the full terms of the arrangement, he said that Barita would earn a commission for clients referred to Stock USA.
The new business according to him will add at least one per cent to the company's revenue stream, which last year amounted to approximately J$434 million in net operating revenue, of which fees and commission income amounted to 12 per cent or J$54 million.
Net revenue in the nine-month period ending June 2010 is down from J$344 million to J$275 million, but fees and commissions are up from J$33 million to J$40 million.
Barita Investments, the 33-year old company, which recently listed on the Jamaica Stock Exchange has an asset base of J$11.6 billion.
Just five months ago, the company announced at its annual general meeting plans to bring new product offerings to the market, including a new foreign currency-denominated unit trust product and individual retirement account.
Those are still to be signed off on by regulator, the Financial Services Commission (FSC).
For trading done through Barita on the Stock USA platform, the Jamaican company will charge a fee similar to what is now done for clients trading on the local stock market.
Stock USA is a New York-based corporation founded in 1999, which provides brokerage services for sophisticated clients.
It utilises a combination of advanced technology to execute trade in equities, options and futures transactions on multiple exchanges, including NASDAQ, NYSE ARCA, NSX, CBSX, BATS, and NFA.
Barita will launch the service later this month.
"Market conditions at this time in the local market is not as vibrant as it ought to be. With the US or international market it fluctuates — there are opportunities there but it is not for the faint-hearted," said McNaughton.
"Experienced equity investors can make good returns, because it fluctuates very widely, so the risk and return are alive and well for people capable enough to handle it," he said.