By Neil Hartnell
Tribune Business Editor
The Bahamas International Securities Exchange’s (BISX) goal of becoming a “world class” digital trading player has received a major boost after it secured a partner to launch a new exchange.
Keith Davies, BISX’s chief executive, confirmed to Tribune Business that it had signed an agreement with a “major FinTech (financial technology) company”, which he declined to name for legal reasons, to provide the expertise and trading platform for its proposed digital securities exchange.
While the launch date depends on obtaining final regulatory approval from the Securities Commission, Mr Davies said the new digital exchange will place BISX - and The Bahamas - “squarely on the map as a significant player” in a sector many observers see as playing a key role in the future of financial services and the global capital markets.
He added that the Bahamian exchange was aiming “at the top”, and “shooting for the stars”, in its ongoing efforts to establish itself as a leader in this area, pledging that BISX “intends to innovate” and introduce “unique features” with its digital securities exchange.
Declining to identify these products and services on the basis that they had yet to be approved by the Securities Commission, Mr Davies said the proposed new exchange will be separate from BISX’s existing trading platform but still “wholly-owned” by the exchange and with its own licence.
He added that its creation would “ultimately” create new jobs and income streams for BISX, with efforts to develop the digital securities exchange lasting “the better part of two years” before it secured its partner.
“My mantra has been to take small, positive incremental steps,” Mr Davies told Tribune Business of BISX’s two-decade evolution. “Eventually we take a leap, and this is one area where we’ve taken a partial leap forward with respect to our development.
“We’ve been planning to take this positive step for a while, and we’ve done it. It’s significant in the sense that it signals our intent to venture into this area with innovation and develop it for the company and the country.”
Mr Davies said BISX had selected its digital securities exchange partner based on their “experience, experience, experience”, and described the FInTech operator as having “vast expertise on the securities side of things, trading and asset management”.
He added that the partner entity will “provide the platform” for the proposed digital securities exchange, which BISX has already tested and used, and plans to operate from The Bahamas and bring its knowledge and technology to these shores. “We’re going to marry their expertise in this space and build on what exists,” Mr Davies said.
“We will build upon it with additional features that will suit our needs that speak to persons on the sidelines. We’re going to be bringing people back, and introducing innovative features and trading options that people are looking for coming into this space. We’re excited to do something that is only being talked about now.”
Mr Davies reiterated BISX’s digital securities exchange will largely steer clear of initial coin offerings (ICOs) and Bitcoin-type cryptocurrencies, given current global volatility in this area, and instead focus on the listing and trading of so-called “tokenised securities”.
These digitised/electronic instruments effectively replicate ordinary shares issued by blue chip companies such as Amazon and Microsoft, with holders enjoying the same voting and other rights. The price of tokenised securities adjusts in exactly the same way as stocks listed on a traditional exchange, but with the share register now maintained by blockchain technology.
Mr Davies said these technological advances had created what he termed “decentralised securities platforms”, where trading could take place in real time. He added that information such as jurisdiction, disclosures, pricing and other communications could be programmed into tokenised securities, enabling the global capital markets to take “a quantum leap” forward.
The BISX chief conceded it was difficult to currently quantify the digital securities exchange’s earnings potential, but added: “The potential for digital assets, their expansion and usage is phenomenal. The way the technology works, you can access the world all at once.
“When you start thinking on that scale you’re talking of a tremendous impact when we’re able to deliver the platform proposed and the unique features we intend to bring to this space. There are some unique features and technology advances in the blockchain space that we want to capitalise on.”
Mr Davies said “one of the hallmarks” of BISX’s digital assets exchange venture is that it will be fully supervised and regulated by the Securities Commission. He added that such an environment prevented him from going into details on the exchange’s plans until they were approved by the Bahamian capital markets regulator, as it would want to know how both issuers and investors will be protected.
“We want to take the time to do it right,” the BISX chief executive told Tribune Business, “and we believe the time and effort taken to get it right to this point demonstrates the care we’ve taken to deliver what we consider will be world class.
“I think what this will do is place us squarely on the map as a significant player in this space when we bring it to bear. That is our intent and our drive. Hopefully, this will put as at the top.
“We want to shoot for the stars, man on the moon. We’re not going backwards into this space; we’re going in face forward, diving in and establishing ourselves as a credible player in this space.”
Mr Davies said the proposed digital securities exchange was just one element of BISX’s efforts to grow the Bahamian capital markets, adding: “We’re doing a heck of a lot; listing mutual funds at an accelerated pace, are heavily engaged in the government debt listing and trading initiative, and taking on another major project with respect to blockchain and digital asset trading.
“We have a full programme, but people should feel good that the national stock exchange is exerting itself for the benefit of its people and country.”