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Greg Wojciechowski - President & CEO Neville Caines – BSX Operations Manager Bermuda Stock Exchange X Asamblea General ACSDA ACSDA 10 th General Assembly.

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Presentation on theme: "Greg Wojciechowski - President & CEO Neville Caines – BSX Operations Manager Bermuda Stock Exchange X Asamblea General ACSDA ACSDA 10 th General Assembly."— Presentation transcript:

1 Greg Wojciechowski - President & CEO Neville Caines – BSX Operations Manager Bermuda Stock Exchange X Asamblea General ACSDA ACSDA 10 th General Assembly Introduction to the BSX &BSD

2 Bermuda Shorts » Only 1 1/2 hours from NY » 7 hours to LGW » 2 ½ hours to Miami

3 Bermuda Snapshot » Bermuda is a British Overseas Dependent Territory; » Stable democratically elected and fiscally responsible government; » Bermudas law is based on English Common Law with final court of appeal being the UKs Privy Council; » Bermuda maintains very high credit rating with global rating agencies one of the lowest of government indebtedness among rated sovereigns; » GDP Per Capita is forecast to be nearly $90,000 in 2008.

4 Bermuda Business Snapshot » More than 50% of Fortune 500 companies are registered and do business in Bermuda » Bermuda is the leader in Captive Insurance Market » Bermuda is one of the largest Property catastrophe reinsurance markets with over 1400 companies domiciled » Leading global fund administration centres with 70 licensed administrators » Vibrant Trust and Private Banking sectors

5 BSX Snapshot » BSX founded in 1971 » Over 550 listings » 16 Trading Members and Listing Sponsors » Daily trading » Rolling T + 3 Settlement » Market Cap over $ 350 Billion

6 The BSXs Mission » To develop an efficient, electronic domestic market » To develop the listing of Investment Funds and other International Securities » To build the infrastructure to make Bermuda the worlds first truly offshore, international capital market

7 Sound Legal Framework » Bermuda Stock Exchange Private Act , 1996, 1997, 2002 » Financial Institution under Schedule 3 of BMA Act 1969 » Power to Make Regulations - subject to prior consent of BMA

8 International Recognitions » Full Member of World Federation of Exchanges » DOSM status from US-SEC » Registered Organisation - LSE » Designated Investment Exchange - UK Financial Services Authority » Approved Stock Exchange – Australian tax authorities » Recognised Investment Exchange – The BMA » Affiliate Member – IOSCO » Recognised Stock Exchange – UKs HM Revenue & Customs

9 Over 550 BSX Listings

10 Trading & Settlement » Fully electronic BEST - Trading System, CLOB based BEST - Trading System, CLOB based BSD - Fully integrated settlement and Depository system BSD - Fully integrated settlement and Depository system

11 BSD The BSX Clearing, Settlement and Depository Service Bermuda Securities Depository Neville Caines

12 The BSD Advantage BEST Trading BSD

13 What is BSD? » » BSD is a wholly owned subsidiary of the BSX » » This company was implemented and operates a fully electronic clearing, settlement and depository service to be known as the Bermuda Securities Depository (BSD) » » The service was introduced during the first half of 2001 » » It operates basically the same way as other central depositories although it was adapted to the Bermuda environment.

14 Situation with BSD » To enter stock into the BSD, investors will lodge certificates (unless book form) through the use of transfer forms, to transfer legal ownership to BSD nominee » Settlement of BEST trades will then take place by book entry transfer within the depository system » Investors may withdraw certificates if they wish but this will be discouraged

15 BSD Clearing Settlement Depository Brokers, custodians/institutions and foreign depositories may be members Overview BEST Best trades are passed automatically to BSD through the gateway. Stock is deducted from the sellers account and added to the buyers account by book entry transfer. Payments are netted at participant level and net amounts are paid to/received from BSD. Stock is held in dematerialised form at account within member – details are provided to the registrar. BSD checks trades for validity, e.g. valid account and sufficient stock and funds.

16 Summary of Benefits » The implementation of the Bermuda Central Depository (BSD) provides brokers and custodians in Bermuda with: a book entry transfer settlement system which avoids the need for the movement of paper to settle a trade a book entry transfer settlement system which avoids the need for the movement of paper to settle a trade a central guarantee that once a trade has been accepted then stock and money will pass a central guarantee that once a trade has been accepted then stock and money will pass no bad delivery of stock because all stock is validated for good delivery before acceptance no bad delivery of stock because all stock is validated for good delivery before acceptance registration on settlement due date so faster turnround of stock registration on settlement due date so faster turnround of stock a system that is volume insensitive – enabling significant volume increases without extra manual processing a system that is volume insensitive – enabling significant volume increases without extra manual processing a platform for future growth and expansion. a platform for future growth and expansion.

17 BSD MembersTradingClearingSettlementDepositoryBrokersYesYesYesYes CustodiansNoYesYesYes InstitutionsNoYesYes Own accounts Foreign Depositories NoYesYes Omnibus Account Brokers, Custodians, Institutions and Foreign Depositories may become participants. They have access to facilities as follows:-

18 Cash Movement » A payment statement is produced by the BSD for each participant on T, showing net funds to pay or receive on T+3 » On T+3 net funds are settled between participants and BSD Brokers who are net payers instruct a transfer of funds to BSD Brokers who are net payers instruct a transfer of funds to BSD BSD acts as a Central Guarantor for the settlement of all trades BSD acts as a Central Guarantor for the settlement of all trades Settlement Cap Guarantees in place for all Brokerages Settlement Cap Guarantees in place for all Brokerages

19 Clearing Check Settlement Cap + bank guarantee + cash + sales - purchases BEST sold order 20 shares acct. U A Buy order 20 shares Acct. Z C Owned Available ABC U 50 V 10 W 25 X 50 Y 10 Z Check and Update inventory OK? Trade executes Update inventory BSD provides guarantee that all trades will settle

20 Interface with Users » Brokers and Issuers (and/or a third party registrar) can interface with BSD through: our secure website our secure website receipt of information by ; receipt of information by ; receipt of printed reports receipt of printed reports » Frequency of output dependent on Issuers connection or pre- agreed conditions

21 System Access Trader BEST Settlement Staff Same Log In BSD Different Log In Access Levels Secure Website

22 Closing Summary » Stock: BSD checks that stock is available for settlement (in a specified BSD account) and freeze the stock in the account BSD checks that stock is available for settlement (in a specified BSD account) and freeze the stock in the account » Funds BSD checks that funds are available for settlement through the use of a settlement cap BSD checks that funds are available for settlement through the use of a settlement cap Clearing members are required to support their net trading balance (settlement cap) by providing a bank guarantee or cash Clearing members are required to support their net trading balance (settlement cap) by providing a bank guarantee or cash Bermuda banks or foreign banks with good credit rating may provide the guarantee Bermuda banks or foreign banks with good credit rating may provide the guarantee Catastrophe insurance against bank default Catastrophe insurance against bank default BSD offers a central guarantee, but will not be at risk as


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