By NEIL HARTNELL
Tribune Business Editor
The Bahamas International Securities Exchange (BISX) has paused its ambitions to launch a digital securities trading platform as it bids to catch-up with the sector’s fast-paced evolution.
Keith Davies, BISX’s chief executive, yesterday told Tribune Business that the exchange had been forced back to the drawing board as the plans it unveiled in May 2019 were no longer best-suited to meet the market’s needs and ongoing development.
Acknowledging that BISX has “no choice” but to develop a digital arm otherwise it will “get lefty behind”, he added that the exchange was “doing our homework” on developing the right facility and attracting “new partners” to assist with the venture.
“This digital asset market has changed. The market has evolved in a number of ways, some market driven and some people driven,” Mr Davies said, referring to COVID-19 and its economic impact with his latter reference.
“There’s been a lot of changes in that area. We’re looking at how we can evolve and take advantage of them in that environment. The work is ongoing. We’re looking at new avenues and new partner to help drive this.
“Right now we know digital assets is the future. It really will revolutionise the way in which the market interacts with investors. That is an evolving area and ongoing process for us.”
When asked by this newspaper if BISX was pausing or delaying its digital securities market ambitions, Mr Davies replied: “We have to until we get to a point of not necessarily critical mass, but what we conceived of a year or two ago is no longer the case.
“From a resources perspective and operational perspective, we have to look at it. It’s about doing the work necessary to deliver a product that meets the needs of the market, the stakeholders in the market and ultimately the investors in the market.”
BISX launched its digital securities exchange proposal with much fanfare in May 2019, with Mr Davies pledging at the time that the move would put the exchange - 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 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 at the time 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 would 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.
That timeframe is almost up, and Mr Davies yesterday declined to commit to a new deadline for when BISX will complete its latest round of market research as he acknowledged it will “become critical as time moves on” for the exchange to establish itself in the digital space.
“This is the future,” he told Tribune Business, “and as markets around the world are moving we have no choice but to move in that direction otherwise we will get left behind. We definitely want to make sure we understand what’s required, understand what needs to be done, and apply the lessons as best as possible to our advantage.
“What we try to do is be proactive. Right now we are doing our homework and a lot of investigation. When we find the right ingredients to deliver on that product we will take that step.”
Mr Davies, in announcing BISX’s digital securities exchange in 2019, said it would largely steer clear of initial coin offerings (ICOs) and Bitcoin-type cryptocurrencies, given previous 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 added that 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.”