Has BSX Outgrown Small Firms?

by Amanda Banks, Tax-News.com, London

23 June 2006

Masters Limited, one of the first local companies to list on the Bermuda Stock Exchange (BSX), has announced its intention to delist from the exchange, citing costly fees and burdensome regulatory requirements as the key reasons.

The BSX announced on Tuesday that Masters (MSTR BH) had given notice to the Exchange that it wished to voluntarily withdraw from listing. The decision stemmed from the company's annual general meeting, held on June 14, when shareholders voted in favour of the motion to withdraw from listing on the BSX.

President and CEO of Masters, Susan Wilson, was quoted by the Bermudian daily news service, the Royal Gazette, as stating that the decision to delist has come about because the BSX has become a "very large, company orientated" exchange.

She added that "the burden for us to remain on the exchange is just too great given our very limited administrative resources."

"The BSX started out as a formalisation of trading of local shares with basically only local people doing it. Then all of sudden we had this BSX with all these fancy rules and requirements and whopping big fees and everything," Ms Wilson observed, according to the Gazette.

The BSX has put in place an ambitious strategy of transforming itself from a small and relatively unknown offshore exchange into an internationally recognised institution capable of attracting listings from international entities. However, in order to do this the BSX has had to put in place more stringent investor protection regulations to gain recognition from onshore regulators such as the UK's Financial Services Authority, which granted the BSX Designated Investment Exchange status in 2005. The bourse also has Designated Offshore Securities Exchange status from the United States Securities and Exchange Commission.

Masters is the third local company to announce plans to delist from the BSX in the past year, according to the report.

However, Ms Wilson went on to stress that she is not opposed to the BSX's new direction, but stated that the company has been "outgrown" by the exchange.

There are currently well over 400 listings on the BSX, but only 23 of these are from domestic issuers. At the end of 2005, total market capitalisation, excluding fund listings, stood at over $300 billion, of which approximately $2 billion represented the domestic market.

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