By NEIL HARTNELL
Tribune Business Editor
The Bahamas International Securities Exchange (BISX) is “very close” to having the $3bn-plus government debt market listed and traded on its platform, its chief executive has confirmed.
Keith Davies, pictured, speaking after the Central Bank took another step towards achieving this objective by becoming BISX’s seventh broker/dealer member, told Tribune Business that the initiative would improve transparency in the secondary market for Bahamas Registered Stock (BRS) and enable participants to make “more informed” investment decisions.
“This is all part of the process,” he explained of the Central Bank’s broker/dealer status, which will enable it to intervene and trade in the market if it sees the need. “We are moving swiftly towards the goal as stated by the Ministry of Finance and Central Bank.
“Things are moving along, the process is taking shape and we are ever more closer to having government securities listed and traded on the exchange. Definitely we are moving in the right direction.”
Government debt securities form the largest component of the Bahamian capital markets in terms of both value and number of issues. Both indicators have increased significantly since 2000 as a result of the multi-million, nine-figure annual deficits racked up by successive administrations, and the need to finance them with debt issues.
As a result, the collective value of the securities set to be listed on BISX is likely to at least be in the $3bn to $4bn range, even though shorter-term Treasury Bills are not included. The listing and trading of government securities on the exchange had been exactly what BISX had hoped for when it launched in 2000, amid expectations that this would give it an immediate market that was both broad and deep.
This never happened and, with BISX having ramped up its costs and structure in anticipation, led directly to the Government-led “bail out” - through the Central Bank - some three to four years later that was essential to rescuing the exchange and ensuring its survival.
With BISX seemingly having put that troubled past behind it, Mr Davies said the latest initiative would enable the exchange to “do what it intended” from inception with a market that “has lacked the transparency a listing on the exchange will garner”.
He added: “People will have more information about which securities are available, and be able to make informed investment decisions. It’s the largest market, and being the largest market we want to give it avenues and means for people to participate in it.
“The Ministry of Finance has stated that they want to provide a home for government securities on the exchange.... My view is we’re right there, and if it takes a little more time to get it right we’ve been waiting 20 years, so a few more weeks and months will not hurt us. Let’s get it right. We’ve very close to the time now.”