The Bermuda Stock Exchange (BSX) celebrates 50 years of serving the local and international markets this year. While the future remains challenging due to the ongoing impact of the COVID-19 pandemic, the BSX and Bermuda are embracing new opportunities.
A recent and significant development for the BSX is the integration into Miami International Holdings, Inc.’s (MIH) group of securities exchanges which obtained full ownership in 2020. This partnership will assist MIH in expanding its world-class technology, derivatives trading, and regulatory expertise to address emerging markets, such as digital assets, and provide the BSX with additional support in the evolving global reinsurance risk market and substantial upgrades to the Exchange’s technology infrastructure.
When the COVID-19 pandemic hit a year ago, with the BSX’s exchange platform being fully electronic, and securities held in electronic book entry form, addressing business interruption and resiliency was built into the BSX platform from inception. The BSX continued to function and list new securities, support daily trading, settlement and operation of the securities depository in line with the World Federation of Exchanges’ (WFE) mandate that capital markets are essential in mitigating the effects of economic disruptions such as the pandemic.
The BSX continues to be the world’s leading exchange for the support and listing of Insurance Linked Securities (ILS) with a combined nominal value of US$43.01 billion at the end of 2020, or approximately 94 per cent of the global market. The ILS market continues to evolve and expand and is increasingly being viewed as an Environmental Social and Governance (ESG) investment in accordance with the United Nations’ Sustainable Development Goals due to its role in helping communities, companies, and municipalities create resilience to climate change and recovery if disaster strikes. The BSX is also committed to raising awareness of and producing guidelines for ESG principles on sustainability.
Bermuda’s long-standing reign as the ‘World’s Risk Capital’ was reinforced in 2020 by a new wave of capital entering the market in the wake of several years of low rates and high loss insured events, such as wildfires and hurricanes, and the increasing impacts of climate change. An estimated US$19 billion in new capital was raised by existing and new companies. As industry commentators have observed, capital invested in Bermuda companies shows a flight to quality, experience and expertise in a well-regulated and respected environment underpinned by speed to market and innovation.
Having the appropriate regulatory framework in place is critical to support commercial development. The BSX sought recognition from its regulator, the Bermuda Monetary Authority (BMA), and the WFE. The BSX is a full member of the WFE, and this is the Exchange’s second turn sitting on the board representing the North American region. The BMA is a full member of the International Organisation of Securities Commissioners (IOSCO), and the BSX is an affiliate member. Bermuda is one of three countries that have been deemed equivalent by the European Insurance and Occupational Pensions Authority (EIOPA), the other two being Switzerland and Japan. To meet the level of standard which is applied in the European Union is a significant development and speaks to the regulatory experience at the BMA. Last year, the National Association of Insurance Commissioners in the United States listed Bermuda as a reciprocal jurisdiction.
The BSX is recognised by the US Securities and Exchange Commission as a Designated Offshore Securities Market, Approved Stock Exchange status under Australia's Foreign Investment Fund (FIF) taxation rules; Designated Investment Exchange status by the UK's Financial Services Authority; Recognised Stock Exchange by the UK HM Revenue and Customs; Designated Exchange status under Canada's Income Tax Act; and is a member of America's Central Securities Depository Association. The BSX continues to work vigorously to ensure its continued alignment with global harmonisation of securities settlement standards in line with the Americas’ Central Securities Depository Association (ACSDA) Principles for Financial Market Infrastructure (PFMI) onsite review completed in June 2019.
The BSX is a recognised venue for international debt listings in the western hemisphere and attracts premium international securities to add to an existing client base of blue-chip companies. In 2020, the nominal value of debt listings grew by US$12.76 billion, or 144 per cent to US$21.63 billion in nominal terms, as maturing securities were replaced by larger issuances.
Bermuda’s innovative approach, as seen in the reinsurance industry, is also reflected in the development of regulatory strategies to provide the market with certainty in the digital asset area, as illustrated by the implementation of the Digital Asset Business Act (DABA) and ICO legislation.
In September 2020, the BSX listed one of the world's first exchange-traded funds designed to track digital asset investments; the Hashdex Nasdaq Crypto Index Exchange-traded fund (ETF) is an open-ended investment fund that operates as a traditional ETF and tracks the Nasdaq Crypto Index.
While the world adapts to a ‘new normal’, the BSX will play a critical role in many aspects of the global financial infrastructure and remains one of the world’s pre-eminent offshore securities exchanges, just as Bermuda remains the place where business happens.
To learn more about the BSX visit www.bsx.com.
Gregory A. Wojciechowski
Greg Wojciechowski is President and Chief Executive Officer of the Bermuda Stock Exchange (BSX). He is also, the Chairman of the Financial Intelligence Agency in Bermuda, past-Chairman of ILS Bermuda Ltd. and sits on the Board of Directors of the World Federation of Exchanges (WFE) and the Bermuda Business Development Agency (BDA). Prior to assuming the role of President and CEO in January 2002, Greg Wojciechowski was the Exchange’s Chief Operating Officer. In this capacity, he was responsible for the development of the Exchange’s regulatory and operational infrastructure as well as the day to day running of the Exchange. Prior to joining the Bermuda Stock Exchange in 1993, Mr. Wojciechowski, over a period of several years, held management positions at three large U.S. brokerage firms. During this time his attention was focused on brokerage administration and operations in the global equity and fixed income capital markets. Mr. Wojciechowski was educated in the U.S. and received a Bachelor of Arts degree from the University of North Carolina at Charlotte. He has studied International Business at The University of Copenhagen under Denmark’s International Studies Program and has studied French and International Relations at the Universite D’Aix-Marseille (Institut Pour Etudiants Etrangers) in Aix-en-Provence France. In 1998 Mr. Wojciechowski attended and completed the Young Managers Programme at INSEAD in Fontainebleau, France.