Keith Davies, Chief Executive Officer of the Bahamas International Securities Exchange (BISX), reports that the exchange is looking to strengthen transparency and corporate governance throughout the Bahamian market. Specifically, there are plans to amend BISX rules to include stronger requirements with regard to disclosure, corporate governance, mergers and acquisitions, and the protection of shareholder rights.
Speaking to members of the CFA Society of the Bahamas recently, the CEO also spoke to plans for the creation of a centralised, electronic news bureau for the purpose of releasing – to the market – news impacting listed companies. Complementing this will be an electronic filing platform allowing listed companies to file information on material events.
Announced recently were plans to create incubator listing facilities for both domestic and international companies. Mr. Davies reports that the exchange has received credible interest in both platforms from companies who do not want to be included among its primary listings. Discussions are ongoing, to ensure compliance with the Securities Industry Act.
On the matter of trading government debt securities, the BISX CEO reports collaboration with the Central Bank of the Bahamas to electronically duplicate the system of paper issues. The creation of an electronic platform for listing and trading debt instruments issued by the Government and other public sector agencies would lead to a greater efficiency in the debt markets. It is anticipated that the advent of secondary trading in government debt will attract Bahamas-based financial institutions to become BISX members; consequently, the exchange is in the process of developing rules and guidelines for this new type of BISX member.
**Deepening Capital Markets**
Earlier this year, the Central Bank of the Bahamas announced certain measures to relax capital account restrictions – with the specific objectives of providing enhanced opportunities for residents to participate in and finance investments overseas – and at the same time addressed several issues relating to the deepening of domestic capital markets. Within prescribed limits and arrangements, resident investors may invest in any company listed on a recognised stock exchange, by way of a representative Bahamian Dollar denominated securities listed on BISX – e.g. Bahamian Depository Receipts (BDRs). BDRs essentially are instruments that allow Bahamians to buy in Bahamian dollars stocks traded on overseas exchanges.
Also announced at that time were provisions, within prescribed limits, for equities of Bahamian companies listed on BISX to be cross listed on principal CARICOM exchanges. Additionally, foreign companies listed on principal CARICOM exchanges may list issued and outstanding equity securities on BISX. The Central Bank and BISX are in discussions concerning the necessary operational mechanisms and policies to govern cross listing and trading, a process that it expects to complete within the year.
Mr. Davies feels that the Exchange Control arrangements which now allow broker dealers to invest up to $25 million per annum in structuring unsponsored BDR issues is likely to have the greatest impact on the Bahamian capital markets. Effectively, this allows BISX members to exercise a fair amount of creativity in structuring BDR issues.
The new Exchange Control measures also allow for designated resident entities to invest in private and public sector securities; in this regard they are permitted to invest in equities of companies listed on BISX up to a limit of 10% of the issue/offering per investing entity. Investments in other private sector and public sector securities do not attract limits.
Currently, there are 20 listed issuers on BISX with capitalization in excess of $2.6 billion. BISX has approved three broker-dealer Members to trade listed securities: First Bahamas Capital, Fidelity Capital Markets and SG Hambros Bank & Trust (Bahamas) Limited. These entities actively facilitate trading of the domestic equities listed on BISX. KPMG joins First Capital and Fidelity as Sponsor Members that facilitate the listing of Mutual Funds. BISX maintains that an ongoing objective is to create a balance between regulation and the needs of the market and investors.