By Stephen Lay

Five years after its launch, the Bahamas International Securities Exchange (BISX) is a work in progress. Still, says Keith Davies, CEO of the Nassau-based exchange, BISX “has made dramatic strides since its May 2000 launch.” He envisions an even greater future.

Today 19 stocks are listed with companies including local financial sector stalwart RBC Finco and the utilities group, Cable Bahamas, offering a slice of ownership to Bahamians. Daily share and dollar volumes are on the uptick. Yet, BISX still lacks a critical mass of listings and investors.

“When we get 50 companies, we’ll be getting there. When we have 100, we’ll be there,” Davies says. Simply put, BISX will need more Bahamian involvement to grow (at this time, foreign participation is not possible). Davies looks forward to the day government bond offerings are listed and traded publicly. Not only would this increase exchange volume, it should lower borrowing costs for the government and increase liquidity. An active stock market would give Bahamians more alternatives for investing their savings and realizing potentially greater returns.

In July 2004, the exchange hit a milestone when Kerzner International (KZL) issued its first Bahamian Depository Receipts (BDRs). These hybrid securities are not actual shares, but rather ownership receipts. They trade like shares and mirror foreign exchange prices. Since being listed, Kerzner BDR prices have appreciated approximately 30 per cent. Some investors who got in on the IPO are holding, while others have sold at a profit. Both are healthy signs.
The next major growth spurt will occur when the market is opened to foreign investors, says Davies. He believes this will come in two phases: relaxation on currency regulations and some cross listing with other Caribbean exchanges.

The Bahamas “has no choice but to move to a more open securities market,” advises Davies.