Regulatory Changes to Retail Repos

In compliance with regulatory changes, all securities dealers are required to restructure the management of Retail Repos. The reform will also require action on the part of new and existing clients investing in Retail Repos.

What You Need to Know

With the introduction of The Securities (Retail Repurchase Agreement) Regulations, 2014 and the Government’s National Reform Strategy, assets which are currently used to secure Retail Repurchase Agreements (Repos) will be held in “trust” by the Jamaica Central Securities Depository (JCSD) Trustee Services Limited as of August 17, 2015. At present they are held in the custody of securities dealers, such as JN Fund Managers Limited (JNFM).

In compliance with these regulatory changes, all securities dealers are required to restructure the management of Retail Repos. The reform will also require action on the part of new and existing clients investing in Retail Repos.

For ease of reference, we have provided a listing of Frequently Asked Questions regarding the new mandate. Please contact your JNFM Financial Advisor for further information.

Why will the new structure be introduced?

The Financial Services Commission (FSC), which regulates and supervises the securities industry, advises that the change is primarily intended for the additional protection of Retail Repo clients. It is designed to reduce the potential risk of loss to persons who invest in Retail Repos, should a disruption occur in the securities industry or in the operations of an individual securities dealer.

As such, the assets (securities) will be held in the custody of an independent trustee, the Jamaica Central Securities Depository(JCSD) Trustee Services Limited. With the introduction of the new framework, should a disruption occur, the trustee will liquidate the securities and settle the obligations of investors using the proceeds of the liquidation.

What are the important dates associated with the new mandate?

  • The transition of investors with Retail Repos to the new structure will begin by June 30, 2015.
  • The Jamaica Central Securities Depository (JCSD) Trustee Services Limited will hold the assets in “trust” as of August 17, 2015.
  • All securities dealers must be compliant by August 31, 2015.

Which of my investments with JNFM will be impacted?

  • JNFM Wealth Accumulator
  • JNFM Tax-free Plan

How will the new Regulations affect JNFM clients who have Retail Repos?

JNFM clients with Retail Repos will be affected mainly by the following:

  • Minimum Transaction Size: New and existing clients who invest in Retail Repos will need a minimum of JMD$1M or USD$10,000 to do so.

Here is the Schedule:

table

 

  • Tax Payer Registration Number: All clients who reside in Jamaica must have a Taxpayer RegistrationNumber (TRN) should they wish to continue their Retail Repo Agreement. It is a requirement of each client to provide JNFM with a unique identifier for their file. If you do not own a TRN, please contact the Tax Administration Jamaica (TAJ) or visit their website at www.jamaicataxgov.jm for information on how to secure your TRN. Consistent with the directives of the Financial Services Commission, JNFM (and other securities dealers), will be unable to maintain Repurchase Repos on behalf of clients for whom a TRN is not on the company’s records.
  • SSN, TIN, NIN and Other Nationalities: All clients who reside outside of Jamaica are required to provide a unique identifier issued by their Country or State should they wish to continue their Retail Repo Agreement. Residents of the United States of America are required to provide their Social Security Number (SSN) or a Taxpayer Identification Number (TIN). Residents of Canada and the United Kingdom are required to provide their National Insurance Number (NIN) and clients of all other nationalities should provide a unique identifier issued by their Country or State. It is a requirement ofeach client to provide JNFM with a unique identifier for their file. Consistent with the directives of the Financial Services Commission, JNFM (and other securities dealers), will be unable to maintain Repurchase Repos on behalf of clients for whom a unique identifier is not on the company’s records.
  • JCSD Account Number: Each client or set of clients, with funds invested in Retail Repos will be given a unique JCSD account number which will enable the transactions to be monitored independently through the JCSD online portal. This number will be created and maintained in addition to the client’s existing JNFM retail repo number.
  • Master Retail Repurchase Agreement: In keeping with the new mandate, and to remain compliant with the Securities (Retail Repurchase Agreement) Regulations, 2014, JNFM has revised its Master Retail Repurchase Agreement (MRRA). The MRRA outlines the terms and conditions of the Retail Repo contract. Under the new regulations, all clients, new and existing, are required to accept the revised MRRA and JNFM’s updated Client Account Form (CIF).

Under the new mandate, in what types of securities will my money be invested?

Your money will continue to be invested in securities outlined in the FSC’s regulations.

Your JNFM Financial Advisor continues to be available to address any questions or concerns you may have regarding the management of your Retail Repo Agreement.

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