The Bermuda Stock Exchange: Strong, Stable and Thriving

By Greg Wojciechowski, CEO of the Bermuda Stock Exchange (19/09/2017)

Established in 1971, the Bermuda Stock Exchange (BSX) has a history of over 45 years of operating the national stock exchange of Bermuda. Following the modernization of its regulatory and operational infrastructure in 1993, the BSX has emerged as a leading niche focussed exchange supporting the listing and trading of a variety of capital market instruments. The Exchange specializes in the listing of funds, equities, hedge funds, debt issues, derivative warrants and Insurance Linked Securities (ILSs). Considered as one of the world's risk capitals, Bermuda is the third largest reinsurance market, behind only London and New York.

The Exchange provides a regulated market in which buyers and sellers of listed securities can transact business using world-class electronic trading, clearing and settlement technology. The platform, based on a central limit order book model, is fully automated and allows for the trading of both equity and fixed income securities in a modern and secure environment. Trading and settlement happens daily and is supported by a network of regulated professional intermediaries.

The Exchange has experienced significant growth over recent years. Over 800 securities are listed, of which over 300 are offshore funds and over 200 are ILSs.  Speaking on ILSs, the firm's president and CEO Greg Wojciechowski explains that, "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."

BSX's 2017 to Rival Excellent 2016

Debt listing activity is another asset class the BSX is focusing its attention on. This sector showed impressive growth, almost doubling, from 65 listings in 2015 to 128 last year. Listing activity across almost every sector was strong in 2016.There were also 29 new collective investment vehicles, 19 new derivatives, two international equities and 74 fixed income securities listed, along with 11 subsequent issues undertaken by existing issuers, including those of Keytech and Butterfield Bank.

De-listings in 2016 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 RB/BSX index closed 2016 at 1,923.79, up 47.52 per cent from 2015.

Trading volume was up 31.75 per cent year-on-year with a total of 8.22m shares traded. Correspondingly share value ended the year at US$48.6mn, compared to US$22.9mn in 2015, constituting a 112.23 per cent increase.

The BSX ended 2016 with a total market capitalisation of US$343.8bn, up a notable 41.24 percent from the previous year. Listing buoyancy is set to continue for 2017. In 2016 the Exchange had marked a record number of ILS listings, with the number growing from 151 in 2015 to 175 by the end of last year. As of 30 June 2017, there are 218 listings, a second equal increase of 16 per cent, taking the overall value of securities from US$21.2bn at year's end to US$24.5bn half way through 2017.

The record 218 ILS listings on the BSX include catastrophe bonds, private catastrophe bonds or cat bond lites, other private ILS, collateralised reinsurance sidecars and two listed reinsurance-linked investment funds.

 “The rapid pace of catastrophe bond issuance and use of ILS capacity in 2017 has helped to stimulate further interest in the BSX as a home for listed insurance securities. BSX ILS listings are tracking the market issuance momentum so far this year, which we are delighted about and grateful to the market for,” reports Wojciechowski.

Debt listing activity is maintaining similar momentum. The number of listings presently stands at 161, up 33 from last year. “The BSX is focusing attention on the international debt listing space and the market is responding as our numbers show.  There is clearly a desire in the market to have an alternative to the usual debt listing venues and BSX is providing that alternative.  We are also focusing our attention on different geographic regions that would benefit from having a regulated market listing platform closer to their regions, markets and time zones.”

What Sets the BSX Apart?

One of the main aspects that sets the Exchange apart is its many years of experience in providing a modern, regulated, internationally recognised stock exchange platform to both domestic and international clients. “The BSX was at the forefront in creating the exchange structure that can be seen in some smaller exchanges,” says Wojciechowski, adding, “I believe that our clients would say that the 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."

The BSX was in fact one of the first stock exchanges in the world to introduce a set of specific listing regulations designed exclusively for insurance securitization. Correspondingly, in 2009 the Bermuda Monetary Authority (BMA) issued revised regulations to streamline the process of setting up an ILS vehicle in Bermuda.

Staying a step ahead of the curve and remaining innovative has helped spur the Exchange’s most recent successes. For instance, the BSX is able to offer listed issuers speed to market, with many listings taking as little as two weeks to complete. An example of the BSX’s pioneering approach is its Mezzanine Listing facility, which provides development stage companies with a unique opportunity to list, and subsequently raise capital on an internationally recognized exchange at a much earlier stage than a traditional IPO.

Hard work and dedicated teams also play a central role in keeping the BSX’s operations streamlined. "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 pieces collectively contribute to the health and development of Bermuda's economy," explains Wojciechowski. “The dedication of the BSX team, its level of professionalism and understanding of our business were resoundingly punctuated in 2016 when the BSX was appointed to the Board of Directors of the World Federation of Exchanges," he concludes.