Key figures in the Bahamas and the wider Caribbean financial services sector met this week to brainstorm ideas for the growth of the Bahamian and Caribbean economies, and to discuss issues which directly impact financial services in the region. The meeting was a first time initiative coordinated by the Bahamas International Stock Exchange (BISX), whose executives appeared distinctly cool to the idea of becoming part of a Caribbean stock exchange.
Present at the conference were all of the exchanges in the countries involved in the Inter-American Development Bank-sponsored project on Harmonisation of Capital Markets in the Caribbean, namely Barbados, the Dominican Republic, Jamaica and Trinidad and Tobago. However, the spotlight fell squarely on Barbados. T Baswell Donaldson, chairman of the Securities Commission of the Bahamas, commented: 'With the rapid shrinking of our global economy, it is only fitting that the countries of the Caribbean explore ways of cooperating with each other.'
The one day meeting was essentially an opportunity for an exchange of information on the development of securities markets regionally and within the Bahamas, with regional and local experts speaking on topics that directly impact financial services, capital markets and e-commerce. The Caribbean nations have seen little intra-Caribbean cross border business, as each have their own individual exchanges, with different business ownership, operational and regulatory models. There are also legal constraints such as foreign exchange control, underdeveloped privisation programmes, expensive lower quality telecommunications and the illiquidity of the markets.
According to financial experts, the key goals of any
exchange include lowering the cost of capital and
providing a choice for capital raising; mobilising
domestic savings into new productive sectors of the
economy, and becoming an engine for economic growth.
Chairman of BISX Ian Fair told this week's conference
that in the Bahamas, at least, it was very early to
consider how the country has fared in comparison with
these objectives. BISX claims that its mandate is
to create a state-of-the-art securities exchange for
the delivery of innovative and efficient financial
services, but the exchange is barely one year old
and has a track record of only five months of live
business, trading having only commenced in May 2000.
According to Mr Fair, a major objective of BISX is to make capital markets accessible to all Bahamians, but in order to achieve this goal, a series of major challenges need to be overcome. He said: 'In order for BISX to achieve its mission statement to become a provider for innovative financial services, a range of legal and structural reforms will be needed domestically and internationally.'
The Caribbean nations have long been pondering whether to link up in a wider Caribbean stock exchange but financial executives like Mr Fair feel that this would also be problematic and present too many technological and legal hurdles. Mr Donaldson of the Bahamas' Securities Commission told the conference that the Bahamas would have to change its exchange control laws and manage a transition from "paper trading", where stockholders use share certificates to show ownership, to an electronic system that would make regional trade more efficient. He added: 'We also have to feel comfortable that the countries we're dealing with have sufficient foreign exchange to do the settlements at the time the settlements have to take place.' Mr Donaldson estimates that it could be as much as 10 years before Caribbean countries form a regional exhange.
Larry Gibson of Colina Financial Services in Nassau spoke for many Bahamians when he said that he does not see joining a regional exchange as a viable option for BISX. He said: 'There is neither the commitment nor the will (for a regional exchange). I think the Bahamas' participation is going to be more theoretical and less real.'
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