BISX On Verge Of Collapse, Urges Government To Fulfil Pledge

by Carla Johnson, Investors Offshore.com

01 November 2001

Reports from The Bahamas say that the Bahamas International Securities Exchange (BISX) is struggling to keep its head above water and could collapse if the government does not keep to its pledge to channel its business through the exchange.

According to The Bahamas Journal, the exchange's shareholders agreed, during BISX's recent annual general meeting to raise around $2 million to help spur on the fledgling exchange and called upon the government to invest another $2 million to create an environment in which the exchange can thrive. So far the exchange has been funded privately with no help from the government.

'From the moment that government urged the financial services industry to create a stock exchange,' explained BISX chairman, Ian Fair, 'it was always with the understanding that government would use the exchange for privatization of national corporations, would invest institutional funds such as pension funds and National Insurance and would take advantage of the profile and transparency of the market to sell, trade and settle government securities.'

'But government has not conducted one single transaction through BISX,' he stressed, 'and has been slow to create what could be a more conducive environment in which a market could flourish. This must change...Just as there is no serious financial services jurisdiction that does not have a stock exchange, there is no stock exchange anywhere that does not have government participation.'

Mr Fair added that the maintenance of the stock exchange was critical 'to the preservation of the financial services industry and the development of the national economy.'

Shareholders also urged the government to push ahead with the relaxation of exchange controls that is desperately needed to stimulate international investment in the Bahamian economy. 'Just as a body cannot operate without a heart, a jet without fuel, a computer without power, a financial services jurisdiction or an economy in which there is any democratisation of capital cannot operate without a stock exchange. A viable stock exchange is the catalyst for national economic growth and is at the heart of any financial industry,' implored Mr Fair.

The Bahamas Journal noted that earlier in October, BISX Chief Legal and Compliance Officer Keith Davies raised the suggestion that National Insurance Board funds could be utilised to develop the capital market. 'We do not propose that institution simply dump their money into the capital markets to support the fragile market; instead we believe that institutions should take a long term view on stock and capital markets,' said Mr Davies who added that it was possible for private pension funds to invest a sum of $500 million at least in the exchange.

BISX officials have now got their thinking caps on and intend to re-examine its operations and continue to urge the goverment to take a larger interest in the exchange. 'Let us find answers, not excuses. Let us not recant, but re-connect. Let us not recede, but proceed. Let us not regret, but re-commit, re-direct and revitalize the Bahamas International Securities Exchange. We have no choice. The only other path from our crossroads is extinction. We must choose survival,' declared Mr Fair.

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