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Bermuda Stock Exchange

Bermuda Stock Exchange. X Asamblea General ACSDA ACSDA 10 th General Assembly Introduction to the BSX &BSD. Greg Wojciechowski - President & CEO Neville Caines – BSX Operations Manager. Bermuda Shorts. Only 1 1/2 hours from NY 7 hours to LGW 2 ½ hours to Miami. Bermuda Snapshot.

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Bermuda Stock Exchange

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  1. Bermuda Stock Exchange X Asamblea General ACSDA ACSDA 10th General Assembly Introduction to the BSX &BSD Greg Wojciechowski - President & CEO Neville Caines – BSX Operations Manager

  2. Bermuda Shorts • Only 11/2 hours from NY • 7 hours to LGW • 2 ½ hours to Miami

  3. Bermuda Snapshot • Bermuda is a British Overseas Dependent Territory; • Stable democratically elected and fiscally responsible government; • Bermuda’s law is based on English Common Law with final court of appeal being the UK’s Privy Council; • Bermuda maintains very high credit rating with global rating agencies one of the lowest of government indebtedness among rated sovereigns; • GDP Per Capita is forecast to be nearly $90,000 in 2008.

  4. Bermuda Business Snapshot • More than 50% of Fortune 500 companies are registered and do business in Bermuda • Bermuda is the leader in Captive Insurance Market • Bermuda is one of the largest Property catastrophe reinsurance markets with over 1400 companies domiciled • Leading global fund administration centres with 70 licensed administrators • Vibrant Trust and Private Banking sectors

  5. BSX Snapshot • BSX founded in 1971 • Over 550 listings • 16 Trading Members and Listing Sponsors • Daily trading • Rolling T + 3 Settlement • Market Cap over $ 350 Billion

  6. TheBSX’sMission • To develop an efficient , electronic domestic market • To develop the listing of Investment Funds and other International Securities • To build the infrastructure to make Bermuda the world’s first truly offshore, international capital market

  7. Sound Legal Framework • Bermuda Stock Exchange Private Act - 1992, 1996, 1997, 2002 • Financial Institution under Schedule 3 of BMA Act 1969 • Power to Make Regulations - subject to prior consent of BMA

  8. International Recognitions • Full Member of World Federation of Exchanges • “DOSM” status from US-SEC • “Registered Organisation” - LSE • Designated Investment Exchange - UK Financial Services Authority • Approved Stock Exchange – Australian tax authorities • Recognised Investment Exchange – The BMA • Affiliate Member – IOSCO • Recognised Stock Exchange – UK’s HM Revenue & Customs

  9. Over 550 BSX Listings

  10. Trading & Settlement • Fully electronic • BEST - Trading System, CLOB based • BSD - Fully integrated settlement and Depository system

  11. BSD Bermuda Securities Depository The BSX Clearing, Settlement and Depository Service Neville Caines www.bsx.com

  12. BEST Trading BSD The BSD Advantage

  13. What is BSD? • BSD is a wholly owned subsidiary of the BSX • This company was implemented and operates a fully electronic clearing, settlement and depository service to be known as the Bermuda Securities Depository (BSD) • The service was introduced during the first half of 2001 • It operates basically the same way as other central depositories although it was adapted to the Bermuda environment.

  14. Situation with BSD • To enter stock into the BSD, investors will lodge certificates (unless book form) through the use of transfer forms, to transfer legal ownership to BSD nominee • Settlement of BEST trades will then take place by book entry transfer within the depository system • Investors may withdraw certificates if they wish but this will be discouraged

  15. Stock is deducted from the seller’s account and added to the buyer’s account by book entry transfer. Payments are netted at participant level and net amounts are paid to/received from BSD. BSD checks trades for validity, e.g. valid account and sufficient stock and funds. Best trades are passed automatically to BSD through the gateway. Brokers, custodians/institutions and foreign depositories may be members BEST Stock is held in dematerialised form at account within member – details are provided to the registrar. BSD Clearing Settlement Depository Overview

  16. Summary of Benefits • The implementation of the Bermuda Central Depository (BSD) provides brokers and custodians in Bermuda with: • a book entry transfer settlement system which avoids the need for the movement of paper to settle a trade • a central guarantee that once a trade has been accepted then stock and money will pass • no bad delivery of stock because all stock is validated for good delivery before acceptance • registration on settlement due date so faster turnround of stock • a system that is volume insensitive – enabling significant volume increases without extra manual processing • a platform for future growth and expansion.

  17. BSD Members Brokers, Custodians, Institutions and Foreign Depositories may become participants. They have access to facilities as follows:-

  18. Cash Movement • A payment statement is produced by the BSD for each participant on T, showing net funds to pay or receive on T+3 • On T+3 net funds are settled between participants and BSD • Brokers who are net payers instruct a transfer of funds to BSD • BSD acts as a Central Guarantor for the settlement of all trades • Settlement Cap Guarantees in place for all Brokerages

  19. 25 V 10 X 50 W 25 50 U 50 10 Y 10 50 25 10 45 Z 25 10 25 30 10 25 50 50 10 25 Check and Update inventory 30 10 C B A C A BEST OK? Trade executes Owned Available sold order 20 shares acct. U Buy order 20 shares Acct. Z Update inventory Clearing Check Settlement Cap + bank guarantee + cash + sales - purchases BSD provides guarantee that all trades will settle

  20. Interface with Users • Brokers and Issuers (and/or a third party registrar) can interface with BSD through: • our secure website • receipt of information by e-mail; • receipt of printed reports • Frequency of output dependent on Issuers connection or pre-agreed conditions

  21. Trader Different Log In Same Log In Access Levels BEST BSD Settlement Staff System Access Secure Website

  22. Closing Summary BSD offers a central guarantee, but will not be at risk as • Stock: • BSD checks that stock is available for settlement (in a specified BSD account) and freeze the stock in the account • Funds • BSD checks that funds are available for settlement through the use of a settlement cap • Clearing members are required to support their net trading balance (settlement cap) by providing a bank guarantee or cash • Bermuda banks or foreign banks with good credit rating may provide the guarantee • Catastrophe insurance against bank default

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