What new initiatives is BISX currently involved in?

DAVIES: BISX is engaged in a number of new initiatives. The first is trying to develop a new market for companies that are seeking to raise less than $1m of capital. We call this a Small Alternative Market (SAM). We see a huge gap in the market. There are larger companies that have entered the market successfully, but in our country we haven’t really developed that small business market niche yet. We are focusing on developing that for small businesses. In terms of developing our product, we are trying to create a commercial paper market as well. We are working on short-term fund raising for businesses that are operating and mature, but may need to visit the bank, or have a line of credit. With this facility, they will be able to access the capital markets. We are going to establish a facility allowing them to utilize the processes within the Exchange to issue those securities, to place them on the Exchange, and have them tradable as well.

How many companies are currently listed on the BISX? Where do you see future listings coming from?

DAVIES: We currently have 20 companies listed on the BISX. They are mainly Bahamian domiciled companies. There is one company that is listed on the NASDAQ for which we have created a product called the Bahamian Dollar Receipt (BDR), which allows those securities that are in US dollars to be traded in Bahamian dollars. Am I satisfied with the scope of the number of companies? I am never satisfied. Satisfaction breeds complacency, and that is something that is not a part of my culture or nature. I am realistic that this particular number is indicative of the size of our market. What we need to do is figure out how to attract the international listings, and the cross listings, even into the region. We want to go into North America and Latin America, but we also want to go into the southern end of the Caribbean and work with our sister exchanges there. We see avenues for cross listings there as well. We are looking for alternative listings. One of the things we have been able to do over the last two years is expand the Registry and Transfer Agency business with our newly developed Bahamian Central Securities Depository, which I am currently the president of as well. It is gaining its footing, and it is going to be internationally recognized.

What are you doing to increase the number of listings on the BISX?

DAVIES: One of the things I tell people is that our country is only 40 years old. The BISX has only been around for the last 13 years. There is a two-step process that has to take place to increase the number of listings. The first is education. There needs to be a desire to list. There needs to be an understanding of what listing does for individuals and for companies. We are engaged in that campaign. We have been successful over the past number of years. Every single public company that has come to the market is now listed on the exchange. Over time, we expect there will be a desire and a need for us. By extension, we have institutional investors making the claim that, unless you are listed on the exchange, we are not going to invest in you. There is a natural progression and an organic growth for companies who want to be located on the exchange, where they receive a number of benefits.

What are your feelings on dual listings? How do you feel about major companies wanting to be listed in New York or London, rather than the BISX?

DAVIES: The one thing that we have to realize is that our market is small. We are not going to compete with New York, London, and Canada. We provide alternative means of fund raising opportunities. We have a very large financial services sector here in the Bahamas that is offshore. You can raise money in the United States, the United Kingdom, or Canada, but you now have an alternative means to raise money in the Bahamas. We are recognized as a designated offshore securities market by the United States Securities and Exchange Commission (US SEC). We are also recognized as a securities exchange by the HM Revenue & Customs (HMRC) in the United Kingdom. There are many benefits to being listed here in the Bahamas, such as utilizing our facilities to raise money through us.

How do tight exchange controls impact companies and investors here?

DAVIES: The Bahamas is basically two tiers. You have the Bahamian Dollar, and you have everything else. It is a very unique situation. Exchange controls are being relaxed through the exchange. As companies list with the BISX, and trading commences through the BISX, exchange controls are relaxed to allow those two different markets to integrate and interact. The Central Bank of the Bahamas has a policy calling for the liberalization of exchange controls where they are utilizing the exchange. If you are listed in another jurisdiction and you list with the BISX, the cross trading aspects are allowed through the facilities of the exchange. It is an added advantage being on the BISX, versus just existing on the open market here.

How can volume and liquidity on the BISX be increased?

DAVIES: In terms of volume and liquidity, and how it translates to the Bahamas, the volumes are low because our population size is small. We have about 300,000 people. Half of those individuals are under the age of 45. There are many under the age of 18. Some of these people do not have money to invest. This number begins to whittle down. We have to educate the investor. This is a big issue. We engage in something called saving and investing education programs. We speak to the schools. The generation that exists now has never had an exchange. For the coming generation, BISX is all they know. Saving and investing is an important issue. Instead of putting money into a bank, or under the mattress, you can put it in a company that is listed on the exchange. This is a progression. We are only 13 years old, so we have a long way to go. We are going to be increasing that. The other aspect is that Bahamians are the only ones investing in the market for the most part. With exchange control liberalization, you are going to increase the pool of eligible investors that will begin to transact on our exchange. Over time you will begin to see investors from abroad begin to access our market more readily. There is great demand and great interest, but the ability is not there yet. We are going to create that through the exchange to allow that population to grow. What you will begin to see is a depth in liquidity, and an expansion of transactions.

What is being done to increase awareness about the BISX among international investors? What role do you see the BISX playing in global financial markets?

DAVIES: I think the issue is how do we attract, and how do we interact with those international markets. BISX, as an institution, has begun a campaign to secure a series of international recognitions, whether it be with the International Organization of Securities Commissions (IOSCO), with the United States Securities & Exchange Commission (US SEC), or the United Kingdom regulatory authorities. We are also looking into Latin America and the Middle East. This recognition is going to show that people are happy with your regulatory framework, and your operations. Their reviews are quite extensive. That is the first step in proving to individuals that our market is viable, our market is safe, and our market is secure. The second step focuses on what these organizations will do with us. We are providing alternative means of fundraising. We want to be the hub between the Middle East and the United States, the United States and Latin America, and back and forth. We also want to be the route to Europe as well. We have always been a service related entity. Our exchange can be a service related exchange, to benefit investors through and into those jurisdictions in a safe and secure way, as we have provided for the last 25-40 years.