Today, the BSX is the world's largest offshore, fully electronic securities market offering a full range of listing and trading opportunities for international and domestic issuers of equity, debt, depository receipts, insurance securitization and derivative warrants.
The Bermuda Stock Exchange's significant growth over the last several years is due in large part to the company's innovative and flexible approach. In addition to taking a leading role in what has become a world trend towards profitability and demutalisation, the Exchange has sought to create unique products and services for its niche offshore market.
A case in point is the Exchange's "Mezzanine Market" , a unique pre-IPO market listing for start-up, high growth potential companies.
Unlike AIM in the UK or the European Neur Market, the BSX Mezzanine Market offers development stage companies the opportunity to list on a recognized international stock exchange without having to commit to a full IPO.
This is due in large part to the fact that the BSX restricts Mezzanine Market investment to 'Qualified Investors'. This means that access is limited to intuitional and or sophisticated investors only in this way, the BSX can rely more on full disclosure than prescriptive regulations for investor protection purposes.
In addition to the Mezzanine Market the BSX supports an active domestic market that trades daily, Monday through Friday and a robust after-hours crossing market for large institutional block trades. It is one of the world's leading listing facilities for offshore funds and alternative investment vehicles and supports niche markets for specialized insurance and debt products.
Trading on the BSX is executed through the Exchange's customized trading system, BEST (Bermuda Electronic Securities Trading), a fully automated system based on a central limit order book which allows Trading Members to trade both equity and fixed income securities on an equal, real-time 'first come, first served' basis. Once executed, trade information is disseminated electronically to key financial information providers Bloomberg and Reuters for worldwide distribution. Thus creating a transparent, liquid and global market for Bermuda.
At the close of 2001 the BSX introduced the final phase of its electronic build out with the introduction of the ' Bermuda Securities Depository' (BSD), Bermuda's national securities depository.
The move is a natural progression for the Exchange, which, as a full member of the World Federation of Exchanges, is committed to meeting and exceeding international securities market standards. Since the late 1980s the introduction of a central securities depository and shorter settlement cycles have been universally acknowledged as the best way to reduce risk and make securities markets more efficient.
Another contributing factor to the Exchange's success is the BSX's 'light but effective' regulatory environment which makes it conducive to new and innovative product listings, especially 'institutional only' securities. The BSX is bound neither by European Union Listings Directive, nor United States Securities Exchange Commission (SEC) regulations.
However, as a full member of the World Federation of Exchanges (formally the FIBV) the BSX has been acknowledged by its peers to meet the highest regulatory and operational standards. Similarly the US Securities Exchange Commission recognises the BSX as a 'Designated Offshore Securities Exchange' (DOSM) and the UK Financial Services Authority (FSA) recognises the BSX as a 'Designated Investment Exchange' (DIE).
While all these initiatives, products and recognitions go a long way to explaining the Exchange's steady growth, they do not tell the whole story. Location, a world-class reputation and the flexibility to move rapidly with the times have also contributed significantly to the Exchange's success to date.
Bermuda has earned a reputation as a world-class centre of commerce, featuring a business-friendly environment, a stable and growing economy, and an unmatched collection of talent and intellectual capital in key sectors, including insurance, financial services, and, more recently, electronic commerce.
Bermuda's regulatory and legal systems (British Common Law) have evolved "over the years", not only facilitating business, but also allowing it to flourish. The island offers international companies a sophisticated high-tech infrastructure and is rich in intellectual capital.
The Bermuda Government works closely with Bermuda's international business community to develop laws & regulations that enhance the business environment in Bermuda. Similarly, Bermuda's telecommunications infrastructure and high technology backbone provide maximum bandwidth, with full redundancy, to the island, enabling Bermuda to accommodate rapidly growing global electronic commerce and communication services.
Bermuda is a truly offshore financial center, with a sterling reputation. Located just seven hundred miles off the US eastern seaboard and less than seven hours by air from London the Island is both geographically and legislatively independent and neutral, making it an ideal hub for international finance.
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