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Barbados is always seeking ways to improve itself and to diversify an already advanced financial and professional services market. Nothing underlines that constant quest for betterment and progress more than the recently created International Securities Market (ISM).
Formally launched in March 2015, the ISM will operate separately from the island’s national bourse, the Barbados Stock Exchange (BSE), adhering to its own rules of trading, membership, clearing and settlement. Its members will include local securities houses, foreign multinational banks, global business entities and international securities dealers. And issuers will not have to be incorporated in Barbados to be listed on the new exchange.
The key to the ISM lies in its name. Over time, the aim is to transform it into an international securities hub, a single marketplace offering international corporates and institutions the chance to list and trade securities in a jurisdiction firmly embedded in the global financial system, and which adheres to international financial rules.
Marlon Yarde, managing director of the BSE, expects the new bourse to grow rapidly, with 700 stocks and bonds expected to be listed on the ISM over the next few years. A strong focus will be on attracting long-term US dollar bonds, open- and closed-ended investment funds, and secondary equity listings by corporates with strong links to Barbados, or with existing primary listings in such countries as the US, the UK and Canada.
Attractive
Regulators have worked hard to make the rules of listing attractive to investors. In addition to the island’s longstanding benefits – an excellent communications network, a geographically diversified tax-treaty network, and investment laws that are modern, clear and transparent, the bourse offers substantial cost savings. Fees for listing on the ISM are typically 30% to 50% lower than on the big exchanges of Europe and North America, providing affordable access to public markets for smaller firms unable to sustain a public listing on other exchanges.
“It will be particularly attractive to companies which value a combination of lower listing fees and Barbados’ robust and pragmatic regulations,” says the BSE’s Yarde. He tips North American and European investors to be early adopters of the ISM, after which it will be “well received by international businesses globally”.
The next stage is to sell the new bourse to the world. Yarde has already visited Jamaica, Argentina and Canada to promote the benefits of the ISM. In June 2016, he visited Toronto, where he met prospective Canadian market participants and attended a conference hosted by Invest Barbados. “We are particularly keen on establishing a relationship with the Canadian market,” he says. “Barbados and Canada have enjoyed a mutually beneficial relationship for over a century.”
Barbados is leaving nothing to chance when it comes to the ISM. The concept was dreamed up in the aftermath of the global financial crisis. Its architects have spent years honing its focus and identity, with the ultimate ambition being to integrate Barbados more tightly with the global capital markets industry.
And the more securities and instruments that list on the ISM in the years to come, the greater the benefit to every domestic industry, from tourism to professional business services. Sir Trevor Carmichael, chairman of Bridgetown-based law firm Chancery Chambers, notes that the new bourse is being “marketed globally as another plank to the international business offerings of the jurisdiction”.
And what of the Barbados Stock Exchange itself? Carmichael notes that since being demutualized, it has become “more vibrant and flexible”. The market now hosts 24 listed securities, four of which are cross-listed entities. In the first quarter of 2016, 92 bond trades were conducted on the BSE, comprising 20 government debentures and 11 government treasury notes, with a total face value of $38.7million.