The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

BISX can be the vehicle for Bahamians to repatriate”the millions and billions” they have stashed abroad, with its chief executive urging “a change in dialogue” over exchange controls.

Keith Davies told Tribune Business that the Bahamas International Securities Exchange (BISX) could facilitate the gradual, responsible easing of exchange controls via “unique linkages” with other global stock exchanges.

Looking to a future in which BISX permits “the free movement of securities” between the Bahamas and other markets, he said the current exchange control regime was too often perceived as a “barrier to entry” by businesses and investors alike.

Mr Davies said this perception needed to be altered, and any actual ‘barriers’ minimised so they did not become an obstacle to the private sector and free movement of capital.

“I would love to see us trading internationally, linked to some exchanges in the region,” he told Tribune Business of his future vision for BISX.

“I would love to see us collaborate internationally with a couple of exchanges, one in North America and one in Europe, creating a unique linkage that allows the free movement of securities through those exchanges.

“Once we create that road and map that’s compliant with exchange controls, we would love to see it where we continue the relaxation of exchange controls through exchanges that allow that trading to take place.”

Such a development, if it occurs, would broaden and deepen the Bahamian capital markets by allowing overseas investors to access them. It would also enable Bahamians to more easily exploit international investments.

BISX has long targeted such a role for itself, with the exchange also potentially a key factor in the controlled easing of the Bahamas’ exchange control regime.

Mr Davies earlier told the Rotary Club of south-east Nassau that BISX has already been positioning itself for this, having obtained international recognitions from the Securities & Exchange Commission (SEC) in the US and Her Majesty’s Revenue and Customs (HMRC).

He said these were achieved despite BISX not possessing a decades-long track record, and having to do all the work itself.

“We did it all in-house,” Mr Davies added, suggesting that the process typically took two-three years and cost some stock exchanges millions of dollars.

“What’s that going to do for us? As we go into the future, it puts the ‘international’ in BISX and will pay dividends as we enter into relationships with other exchanges,” the BISX chief executive said.

Mr Davies added that BISX has scheduled a conference call with its Jamaica Stock Exchange (JSE) counterpart this week, in a bid to explore how the two can work together to “grow each other’s market”.

Speaking with Tribune Business, Mr Davies conceded that his vision for BISX will take time to realise.

Although he had earlier suggested exchange controls should be “non-existent”, the BISX chief executive acknowledged they served a purpose given this nation’s economic structure and US currency peg.

“I believe exchange controls hold some value,” Mr Davies said. “It’s a necessity that they were put in place.

“I understand the merits and why they are in place, but we also need to take into consideration good business sense and the structure of the economy.”

He suggested that exchange control “barriers to entry” be minimised, so that investors and businesses were not deterred by cost and time factors when transacting international business.

“It should be minimised to the point where people do not leave money abroad, and they bring it back home to the Bahamas,” Mr Davies told Tribune Business.

“There should be no barriers to entry. Allow it to travel. If we allow that money to be transferred easily without barriers, the business community would be willing to transact, bring those millions and billions back home, and allow them to be profitably used throughout the Bahamas.”

“Where other people see problems, I see opportunity,” Mr Davies continued on exchange control. “Change the dialogue, change the perception. Make it work for you.

“People see it as a barrier to doing business. Perception is a terrible thing sometimes. If people see it as a barrier, they will not use it in a way that benefits others. Give options. Let business work.”

Mr Davies said BISX would “take small, positive, incremental steps to achieve” a vision that he acknowledged will not happen overnight.

He compared it to the “10-year plan” that had brought BISX to its current position, likening the exchange’s history to a kick returner who covered a total 200 yards in taking the ball the length of the football field.

“It’s not a straight line,” Mr Davies said. “It was a zig zag, curvy line to get to this positive stage. We had to move back and forth, left and right.”

He added that BISX has grown from an $820 million market capitalisation, and nine listed companies, when it launched trading in May 2000, to its current $3.826 billion market cap.

The exchange now boasts 20 listed companies; 13 preference share issues worth $327 million; 16 corporate bonds and government securities worth $508 million; and 14 mutual funds.

BISX also has five broker/dealer members, compared to the two when live trading began, and seven sponsor members.

The Government, too, is seeking to further liberalise the Bahamian exchange control regime. Michael Halkitis, minister of state for finance, told Tribune Business recently that the Central Bank is poised to announce further amendments imminently.