Bermuda Stock Exchange (BSX): Electronic Exchange Takes an Island to Leading Status for Global Listings

Launched in 1971 as a purely domestic exchange, the Bermuda Stock Exchange (BSX) is now the world’s pre-eminent fully-electronic offshore securities exchange.

It made steady progress after its launch; by 1993 it had transitioned to an electronic platform and opened to international listings. As of Q2 2020, BSX had over 1000 listed securities, including investment funds, debt- and insurance-related securities, and SMEs.

The BSX’s recent growth is due in large part to its innovative and commercial approach, which includes offering listed issuers speed to market, often in as little as two weeks.

The firm also operates a mezzanine listing facility, which provides development-stage companies with an opportunity to list — and subsequently raise capital — on an internationally recognised exchange at an earlier stage than a traditional IPO.

The majority of issuers are Bermuda-based, but there are others from North America, the UK, Europe and Asia. The BSX has also seen increased interest from global capital markets as an exchange platform for the listing of international debt instruments, especially from Latin and South America.

While the BSX has focused on organic growth and development, it has also pursued its electronic exchange environment and the development of its domestic capital market. This has earned international recognition to ensure appropriate regulation and recognition in support of future development.

The BSX is a full member and sits on the Board of the World Federation of Exchanges. It is an affiliate member of the International Organisation of Securities Commissions, a US Securities and Exchange Commission-designated Offshore Securities Market, and a UK Financial Conduct Authority designated Investment Exchange.

In 2009, the Bermuda Monetary Authority introduced the Special Purpose Insurance (SPI) class which enabled the collateralisation of insurance products — catastrophe bonds and Insurance Linked Securities (ILS). The BSX is the world’s leading ILS exchange: 470 listings with combined nominal value of $38.1bn, or 85 percent of global issuance at the end of Q2 2020.

Recent market volatility has proven ILS to be a non-correlated asset class which continues to grow in scope and geographic diversity. It is increasingly viewed as an attractive investment for institutional investor portfolios. ILS has been deemed a sustainable investment in accordance with the United Nations’ Sustainable Development Goals (SDGs) as it helps private and public organisations to build resistance to natural disasters and climate change.

At year end 2019, Miami International Holdings (MIH), owner and operator of three fully-electronic US securities exchanges, obtained a controlling interest in the Bermuda Stock Exchange. Since its founding in 2012, MIH and its Exchange Group have been generating technological innovation. Electronic exchanges have challenged legacy trading platforms, and this partnership will provide additional support to the evolving global re-insurance risk market through innovative products on a global scale, with a view to the futures market.

A pragmatic commercial approach has created an operational, technical, and regulatory infrastructure focused on clients’ needs. This is the result of a collaborative effort between the island’s private and public sectors. The model ensures jurisdictional policies remain in-line with — or ahead of — market developments. It keeps Bermuda’s regulatory oversight at prudent levels, while maintaining support and appreciation for the entrepreneurial spirit that drives innovation.

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