Opened in 1971, the BSX operates a sophisticated, fully electronic market. The market is regulated by the Bermuda Monetary Authority (BMA), which was commended recently by Michael Foot in his ‘Final Report of the Independent Review of British Offshore Financial Centres’.
Since inception, being at the forefront of international standards of regulation and transparency has been a number one priority for the BSX, however, as a reflection of the way Bermuda’s international economy is run, it has achieved this in a commercially sensible way and has also remained cost competitive with other offshore stock exchanges.
In recognition of this fact, the BSX is a full member of the World Federation of Exchanges, is a “Recognised Stock Exchange” of the UK’s HM Revenue & Customs, is considered a “Designated Offshore Securities Exchange” by the US Securities and Exchange Commission and is recognised as a ‘Designated Investment Exchange’ by the UK’s Financial Services Authority. What really makes the BSX stand out from its peers is its operational reliability, its unique economy and geographical location.
Economy, geography, regulation and intellectual capital
With its geographical position in between North America and Europe, Bermuda has become a trusted commercial gateway to some of the most sophisticated capital markets in the world.
Particularly renowned for its insurance industry, Bermuda is now home to nearly 1,400 insurance companies with total assets of $442bn and gross premiums of $142bn, making it the third largest insurance market in the world.
Bermuda presently provides approximately 40 percent of US and EU broker placed catastrophe covers and is now the most important offshore supplier of insurance, reinsurance, and payer of property and casualty losses to the US.
Stable economic growth and high per capita incomes, combined with easy access to global markets has proved a catalyst for attracting not just business, but intellectual capital to the island. World-class service providers including law firms, insurance managers and accounting firms ensure top of the line service for anyone looking to list their company, fund or other securities on the BSX.
High quality companies and diverse securities
In conjunction with the Business Bermuda and the BMA, the BSX developed ‘Launch ‘n’ List’ to address frustration among practitioners about the length of time they experienced when creating, domiciling and listing a structure. The procedure will reduce and eliminate duplicate effort, which in turn reduces the time it takes to list and get a product to market.
In October 2009 the Insurance Amendment Act 2008 became effective, which provides specific risk based regulations for the establishment of special-purpose insurers (SPIs) as a new class of insurer within Bermuda’s insurance class system. This recognises and facilitates the structure of insurance linked securities (ILS), such as catastrophe bonds (cat bonds).
Being at the heart of one of the largest insurance markets in world, the BSX is the ideal listing environment for these insurance-linked securities and has already successfully listed eleven cat bonds with a combined value of over $900m. The most recent being Lodestone Re. Furthermore, the BSX’s regulatory approach has been embraced by the global fund industry, especially hedge funds, with investment funds making up half of all BSX listed entities.
The BSX also has a Mezzanine Market, specifically designed for growing high-tech and development stage companies. While it gives these companies the opportunity to list on an internationally recognised stock exchange earlier than they might in another jurisdiction, it is restricted, for investor protection purposes, to only ‘qualified investors’. Subject to this restriction, a company listing on the BSX Mezzanine Market does not have to have any minimum track record, market capitalisation, free float or profitability in order to qualify.
Technology and operations
Once executed, trade information is disseminated electronically to key financial information providers Bloomberg and Reuters for worldwide distribution, creating a transparent, liquid and global market for Bermuda. The BSX is also home to the Bermuda Securities Depository (BSD), which is Bermuda’s national securities depository. It is linked electronically to the BEST (Bermuda Electronic Securities Trading) trading system and through these integrated platforms an environment of seamless trading, clearing and settlement has been created for BSX listed securities.