Prospects good for securities bourse in NMI

Given the dominance of United States-based banking laws here, prospects are bright for the development of a finance-based activity in the Northern Marianas as efforts are being intensified to alleviate CNMI’s dependence on the highly-volatile tourism and garment industries.

Being a U.S. jurisdiction which is only at least three hours plane ride away from the heavily populated Asia makes the establishment of a securities exchange bourse in the Northern Marianas feasible, commerce officials said.

CNMI’s financial services industry is presently concentrated in banking, the Commonwealth being a home to 10 banks; eight of which are in operation with physical facilities and locations while two were licensed and are operating through their resident agents.

According to a government report, potentials are bright in stimulating the economy by allowing dollar trades of securities to be conducted in a US-regulated market during Asian daylight hours.

Aside from the advantages it will have in terms of diversifying the local economy, developing a securities exchange market would give the CNMI the capability to position itself as a financial center in the region.

Finance managers have noted the sector-based multiplier effect that may be potentially available once a securities bourse is established in the Northern Marianas, including the creation and administration of mutual funds specializing in Asian investments.

While a securities exchange activity can be lucrative, establishing such an industry may also prove to be difficult and costly, thus, the need for financial and expertise support from available means are inevitably needed.

The stability of the U.S. dollar and the volatility of major currencies in neighboring Asian countries also make it auspicious for the CNMI to create dollar-denominated trusts that cater to Asian investors.

The potentials of this activity are strengthened by the security of the financial system and the stability of the American political system, according to the report.

These factors make financial assets attractive to wealthy Asian investors because of the sharp reduction in perceived risks.

Government economists said there are strong indications that the CNMI could become a financial center in the Pacific Region, as potentials for the financial market becomes brighter.

Predictions are rife that the Northern Marianas could see increased activities in mutual fund brokerage and in the stock market due to the presence of U.S.-based financial institutions in the islands which may spur the sector’s expansion .

CNMI bankers are confident that there are hard lessons to be learned from the two-year-old Asian currency crisis, which should clear the road for the Commonwealth’s economic recovery.