Understanding the Central Depository

What is the Trinidad and Tobago Central Depository (TTCD)?
How does the TTCD Keep My Shares Safe?
How does the TTCD Help with Trading on the Stock Market?
What do you mean by Settlement Cycle?
What are the benefits of the TTCD?
Is there a cost to using the TTCD?

1. What is the Trinidad and Tobago Central Depository (TTCD)?

The TTCD is a company established by the Trinidad and Tobago Stock Exchange Limited to enable investors buying and selling securities on the Exchange to settle such transactions through a computerized book entry system.

A computerized book entry system is an accounting system which aids the change of ownership of securities electronically between buyers and sellers without the need for the exchange of the physical share certificates.

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2. How does the TTCD Keep My Shares Safe?

The TTCD is there for the benefit and protection of stock market investors. Many times there are instances where share certificates may be misplaced or lost or certificates may be invalid or fraudulent. When there is increased activity on the stock market the risk of these occurrences also increases.

The TTCD allows you, through your stockbroker (WISE) to deposit your securities at the TTCD for safe keeping. To facilitate trading, these securities will be registered in the name of the TTCD and held in vaults at the Central Bank.

You will receive a monthly statement from your stockbroker as well as a separate monthly statement from the TTCD which will reflect your securities’ holdings at the TTCD.

You will therefore be in a position to reconcile your securities’ holdings on the statement from your stockbrokers with that shown on the statement from the TTCD.

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3. How does the TTCD Help with Trading on the Stock Market?

When your stockbroker sells shares on the Exchange on your behalf the TTCD will record the sale of the shares. This is done by reducing the number of shares held in your name (seller) and simultaneously increasing the balance of shares purchased in the buyer’s name.

Because this is now a computerized system matching buyers and sellers the settlement cycle for share transactions on the Exchange will be reduced.

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4. What do you mean by Settlement Cycle?

When shares are brought or sold on the floor of the Exchange you will have a certain number of days after the trade date (T) to deliver and pay for the securities sold and purchased. This is referred to as the settlement cycle.

In the past the settlement cycle was T+10 days. Currently the settlement cycle is T+5 days. This means that you have five working days after the date on which your shares were bought or sold to settle (either you pay or receive an amount). Since the trading week starts on a Tuesday every settlement period will straddle a weekend so you will in effect have 7 days to settle.

The TTCD has stated an intention to further reduce this settlement cycle from T+5 to T+3 days in keeping with international standards.

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5. What are the benefits of the TTCD?

Efficiency Gains

The use of the automated book entry system for the transfer of ownership of securities eliminates manual errors and simultaneously increases the speed of processing the transfer of ownership securities.
Safe Keeping of Securities

Securities certificates kept at home or elsewhere are always in danger of being defaced, misplaced, lost or destroyed by fire.

Should you experience this misfortune you would have to obtain a duplicate certificate from the Company’s registrar or transfer agent and this takes time. All securities which are deposited at the TTCD are kept for safe keeping in the vault of the Central Bank.
Convenience in the Trading of Securities

If you wish to sell shares which are already deposited with the TTCD, there will be no need for you to physically deliver certificates for sale to your broker. You will simply give your broker your order and other pertinent information as requested by your broker.

On the Settlement Day you will simply collect your funds – it’s that simple.
Attraction of Foreign Investment

As the Stock Exchange moves closer to international standards foreign investors are more likely to be open to participation in our market. This may also add to the depth and liquidity of the market.

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6. Is there a cost to using the TTCD?

The TTCD is located at:

1st Floor, #1 Ajax Street,
Wrightson Road,
Port of Spain

The above is based primarily upon publicly available information provided by the TTCD.

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