Bermuda Stock Exchange – anchoring the world’s risk capital

By Greg Wojciechowski, President and CEO, Bermuda Stock Exchange (29/08/2017)

Established in 1971, the Bermuda Stock Exchange (BSX) has become the world’s leading, fully electronic, offshore securities market. Bermuda, already an established global financial centre and the third largest reinsurance market in the world, is now considered the world’s risk capital with its well-respected and regulated financial services platform.

The BSX specialises in listing and trading capital market instruments such as equities, debt issues, funds, hedge funds, derivative warrants and insurance linked securities (ILS). There are over 750 securities listed on the BSX, of which over 300 are offshore funds and 175 are ILS. Bermuda has emerged as a centre of excellence for the creation, support and listing of ILS structures.

The BSX is a critical component of Bermuda’s domestic capital market. The Exchange provides a regulated market in which buyers and sellers of listed stock can conduct business using world-class electronic trading, clearing and settlement technology. Trading and settlement occurs daily and is supported by a network of regulated professional financial intermediaries.

What sets the Exchange apart from its competitors is its longevity in providing a modern, electronic, internationally recognised stock exchange platform to our domestic market as well as our international clients. The BSX was at the forefront in creating the exchange structure that can be seen in some smaller exchanges.

Other key features include the sophistication of Bermuda’s commercial platform and Bermuda’s unique geographic location, nestled nicely between two of the largest and deepest capital market and insurance industries in the world.

While its primary responsibility lies with firmly supporting Bermuda’s domestic capital markets and investors, the BSX’s entrepreneurial spirit has let it to evolve as a niche market focussing on specialised areas.

One area in which the BSX has excelled and carved a firm niche is the support of the ILS space. The BSX is now the global exchange leader in supporting the listing of vehicles in this very exciting and developing asset class. In fact, the BSX has played a key role in Bermuda becoming known as a centre of excellence for the creation, support and listing of ILS vehicles.

The firm’s client base comprises domestic and international corporations and investors. We offer them a solid, modern and regulated stock exchange platform that adds value with our well-known brand and reputation. BSX takes a commercially sensible approach when dealing with new business while never forgetting its critical regulatory responsibilities to ensure that the market platform maintains international best practice standards.

Commercially and organisationally, 2016 was a very positive year for the BSX, with some very significant milestones achieved. We are particularly proud of the BSX’s appointment to the Board of Directors of the World Federation of Exchanges, the global association of exchanges and clearinghouses.

We saw positive listing activity across most sectors in 2016, including international equities, debt, collective investment vehicles and ILS. International debt listing activity was particularly strong growing by over 100 per cent from 55 to 116. As at 31 December 2016, the total number of listed securities stood at 753.

In 2016 the BSX recorded a record number of ILS listings – 61 in total, with a capitalisation value of US$6.157 billion, including several new variable rate note programmes and 19 new notes under established programmes. In total the number of ILS listed vehicles grew from 151 to 175 (a 16 percent increase), while the overall value of the securities grew from US$19.21 billion to US$21.22 billion (a 10 per cent increase).

There were also 29 new collective investment vehicles, 2 international equities, 19 new derivatives and 74 fixed income securities listed along with 11 subsequent issues undertaken by existing listed issuers, including those of Butterfield Bank and Keytech. 

De-listings included several ILS vehicles, international debt structures and Butterfield Bank’s 8 per cent preferred share class, all of which matured as part of the normal course of business. 

The RG/BSX Index closed the year at 1,923.79 up 47.52 per cent over 2015.

Trading volume was up 31.75 per cent year on year with a total of 8.2 million shares traded. Correspondingly share value ended the year at US$48.6 million, as compared with US$22.9 million in 2015, representing a 112.23 per cent increase.

The BSD, the domestic Central Counter Party (CCP) and Central Securities Depository (CSD), continued to ensure orderly settlement of trades and processing of all domestic corporate actions. At years’ end the BSD held 58 per cent of all domestic listed securities in custody, up from 40 per cent over last year. The BSX ended the year with a total market capitalisation of US$343.8 billion, US$2.5 billion of which represented the domestic market, up a notable 41.24 per cent over the previous year.

The accomplishments of the BSX to date, particularly the 2016 results, are directly attributable to the hard work of a dedicated team of world class stock exchange professionals that manage and operate the Exchange on a daily basis. The BSX team clearly understands the importance of a modern and solid domestic capital market, how the BSX platform is central to this and how all the pieces collectively contribute to the health and development of Bermuda’s economy.

Bermuda and the BSX are well positioned for an excellent 2017. As the Exchange has emerged as a solid niche exchange market platform, we will seek to add value and create new opportunities where we can. One very logical area will be to ride the acceleration of the convergence of the insurance and capital markets industries by creating an exchange focussed on insurance products.

Whatever 2017 has in store, the BSX, given its longevity in the business, deep pool of stock exchange experience, its unique and critical geographic location, the sophistication of the jurisdiction in which it operates and its well know platform, is well prepared to address and take advantage of any new opportunity that comes it way.