BISX recently published a "State of The BISX Market" Op-Ed in the local press, the article is presented in its entirety below. This Op-Ed is a part of the Exchange's goal of providing more financial literature to the Bahamian capital markets.
State of the BISX Market
History – including snapshot of the Market at inception
The Bahamas International Securities Exchange (BISX) was established as a private, for-profit company in September 1999 and is the only Securities Exchange in The Bahamas. BISX was founded with the goal of bringing transparency, price discovery and market efficiency to the Bahamian capital markets. With this goal in mind, BISX began formal listing and trading of securities on May 12, 2000 with 9 domestic companies having listed their ordinary shares on the Exchange resulting in a market capitalization of approximately $820 million.
BISX began operations with 2 Broker-Dealers Members offering the listing and trading of ordinary shares only, as the Exchange at that time was exclusively focused on the domestic market. Since that time, the Exchange has experienced growth and development in both the products and services that it offers, and also in the markets that it offers services to. This article will highlight some of those developments and provide a snapshot of the state of the BISX Market today.
Developments since 2000
Mutual Funds
BISX began offering mutual funds on April 10, 2001, this development was based on requests from local Members to have their mutual funds listed on a separate facility from the trading facility used by ordinary shares. Since that time, a new market developed as international service providers have discovered that the Mutual Fund Facility is a way for them to offer a new value added service to their clients. Growth in the number of international funds seeking listing has now outstripped that of domestic mutual funds and at Dec 31, 2014 there were 32 funds listed on BISX with approximately $2.2 billion in Assets Under Management.
Central Bank Exchange Control Liberalization Programme
The Central Bank of The Bahamas in June 2007 initiated their Exchange Control Liberalization Programme (the “Programme”) one of the aims of the Programme was to encourage BISX Members to create investment vehicles that would allow their clients to access international markets without paying the investment premium that had previously been charged to investors to access international capital markets. The investment vehicles created to access the Programme are required to be listed on the Exchange. Since inception, 14 investment vehicles, all exclusively mutual funds, have been listed that are a direct result of the Programme. These new securities have allowed Bahamian investors to access previously unavailable asset classes such as emerging markets, energy and alternative investments.
Listing of secondary issues
BISX Members and Issuers have always seen the need to issue other types of securities besides ordinary shares, to assist with company fund-raisings. Preference Shares and Debt Instruments have been a part of the capital raising initiatives of these companies for many years, however during the last decade, the desire to list these securities was heard repeatedly by the Exchange. In 2008, the FOCOL Class B Preference Shares became the first secondary issue to be listed on the Exchange. Since then, the number of Secondary issues has grown to 11 preference shares and 4 bonds. These securities have become a key component of the BISX Market due to their ability to be swiftly bought and sold in large volumes.
International Recognitions and The Bahamian Financial Services Industry
BISX was never created to exist in isolation, but was instead established to create an avenue for Bahamian Financial Services Providers to offer value added services to their clients. One way that BISX is able to help these organizations offer better services to their clients is through the international recognitions that the Exchange secures. In 2003, BISX became an Affiliate Member of The International Organization of Securities Commissions (IOSCO). In May 2010, BISX became a “recognized stock exchange” by Her Majesty’s Revenue and Customs (United Kingdom), and in October 2011, BISX became a “Designated Offshore Securities Market (DOSM)” by the United States Securities and Exchange Commission. BISX is currently in discussions with several exchanges regarding Memorandums of Understanding that are intended to lead to closer international working relationships.
The expectation is that all of these initiatives will allow the Bahamian Financial Services Industry to develop new ways to service the needs of their diverse clients. The goal is that these initiatives will allow these services providers to capture new clients and target new markets.
Government Listing and Benefits
The Government of The Bahamas in their latest bond offering, indicated their intention to list these securities on the Exchange. BISX considers this a positive development in the life of The Bahamian Capital Markets as investors will be able to benefit from trading their securities on a centralized marketplace where all buyers and sellers meet. Additionally, the trading fees charged by the Exchange (5 basis points of the value of the trade, which works out to $0.50 on a $1000 trade), are intentionally low to ensure that they are easily afforded by investors (BISX Brokers will also charge their own trading fee commissions).
Investor Education
BISX speaks to a number of high schools within The Bahamas each year as part of the Exchange’s commitment to educating the next generation of savers and investors, including for the first time this year, speaking to a family island school that was visiting a BISX Broker-Dealer Member. Officials from the Exchange also lecture at the College of The Bahamas and speak at other colleges and at initiatives organized on behalf of the Chartered Financial Analyst Society of The Bahamas as a part of the Exchange’s investor education initiative.
Conclusion
Today BISX has 5 Broker-Dealers that trade in ordinary shares, preference shares and bonds, which collectively at December, 2014 had a value of $3.653 Billion. The process of creating a new stock exchange is not easy, and the journey for BISX from an idea to a functioning entity is no exception. However, in the approximately 15 years from the time that the Exchange began operations to present, the Bahamian Capital Markets has experienced significant growth and development. BISX plans to continue investing its time, energy and resources in the next generation of investors as this will no doubt pay significant beneficial dividends for the next 15 years of the Exchange’s existence.
BISX will continue to publish regular articles in the daily newspapers speaking to the Exchange, its operations and addressing the comments, questions and concerns of the investing public. Please look out for our upcoming article: The Process of Going Public and Listing on BISX