Barbados’ International Securities Market - Open for Business

1. Presented by Marlon E. Yarde Managing Director Barbados’ International Securities Market - Open for Business ACSDA 2016 General Assembly - May 16 - 18, 2016

2. Topics Covered • The International Securities Market (ISM) • What is the ISM? • Why an ISM? • Core products • Our Competitive Advantage • What are the benefits? • The Rules • The ISM, Clearing and Settlement… • General Rules • Participant Requirements • Participant Obligations • Other Considerations • Where We Are Now & What’s Next… • Conclusion

3. What is the ISM? • A market for the listing and trading of securities of issuers who may or may not be incorporated in Barbados that would otherwise be listed and traded on other exchanges around the world. • Examples of other exchanges include the second tier markets of Canada, US and UK. • This is not a new concept e.g. Bermuda, Cayman Islands and Channel Islands (Benchmark Exchanges).

4. Why an ISM? • The missing pillar in Barbados’ international financial centre • Raises the possibility of attracting new types of international business to Barbados • Encourages positive use of the numerous double tax treaties • Enables new types of business to be undertaken (listing sponsors)

5. ISM – Core Products • Equities • Bonds and other fixed interest securities • Mutual funds

6. Our Competitive Advantage: ISM • Our employees are highly trained individuals and we utilize modern technologies to ensure accurate trading, clearing and settlement of all securities; • Large number of Double Tax Agreements (DTAs); • High quality investment laws which are clear, transparent and modern.

7. Our Competitive Advantage: ISM • Tax-efficient vehicles through which investors can conduct international business plus: • no capital gains tax; • exemption from withholding tax on dividends, interest, management fees, royalties or other income paid to nonresidents • exemption from taxes on transfers of securities and assets to nonresidents, and; • freedom from exchange controls.

8. What are the Benefits? • Catalyst for changing dated legislation and removing obstacles to company registration • Creation of new jobs and opportunities with specialized skills • Creates a One Stop Shop for the international business community • Additional tool to the Invest Barbados toolkit for selling the Barbados Brand • Assists in future DTA negotiations and trade agreements • Enhances the current international financial services infrastructure with new and updated legislative framework

9. The ISM Rules The ISM Rules are divided into 6 series: • Series 1000 – Membership Rules • Series 2000 – Trading Rules • Series 3000 – Clearing and Settlement Rules • Series 4000 – Listing Rules • Series 5000 – Continuing Listing Rules • Series 6000 – Listing Sponsor Rules

10. The ISM, Clearing and Settlement… Clearing and Settlement occurs on the ISM either via: • A Clearing Agent or; • An Eligible Participant of the BCSDI. • ISM Trading Participants • Banks regulated by the Central Bank of Barbados (CBB) who act as Clearing Agents for ISM Trading Participants and • Foreign Central Depositories regulated by an overseas regulator but acceptable to the BCSDI

11. The ISM, Clearing and Settlement… General Rules: • ISM trading participants must ensure that all transactions conducted are duly settled on the settlement date (max. T+3 unless otherwise stated) in accordance with the approved settlement procedure. • An approved settlement procedure is determined by the Issuer in conjunction with the Exchange for each security listed and included in the instrument’s prospectus or listing document.

12. The ISM, Clearing and Settlement… General Rules: • Settlement occurring on overseas systems will occur in accordance with the rules and procedures of that settlement system. • Failed settlements executed in accordance with the agreed settlement procedures must be reported to the Exchange within 24 hours of the settlement date.

13. The ISM, Clearing and Settlement… General Rules: • Participants who fail to settle on the due date in accordance with the agreed upon settlement procedure may be declared a defaulter by the Exchange. • If a default occurs, outstanding shares are settled in accordance with the default procedures prescribed by the agreed settlement procedures.

14. The ISM, Clearing and Settlement… Participant Requirements: • Applicants must demonstrate their ability to efficiently communicate with and receive output from the BCSDI’s system. • Applicants must demonstrate their ability to make and receive payments from foreign currency accounts held at the CBB. • Applicants must provide the bank details to which funds due to an ISM participant are to be remitted.

15. The ISM, Clearing and Settlement… Participant Requirements: • Only those ISM Participants and Banks previously approved by the BCSDI may act as Clearing Agents* for other ISM Participants. *Application forms for both new Clearing Agents and existing BCSDI Participants can be obtained upon request from the Depository.

16. The ISM, Clearing and Settlement… Participant Obligations: • Participants must supply the BCSDI with details of any changes made subsequent to their application as soon as practical. • The provision of clearing agent services to new clients must be approved by the Exchange prior to the commencement of these services. • The accuracy and validity of instructions received by the BCSDI from Participants is the sole responsibility of said Participants.

17. The ISM, Clearing and Settlement… Participant Obligations: • Participants must supply the BCSDI with a declaration containing such information with respect to any holding they control within the BCSDI to comply with: • a lawful request of the issuer of a security; • any legislation, regulation or order of a court or administrative or regulatory body.

18. The ISM, Clearing and Settlement… Participant Obligations: • Participants are required to conduct weekly reconciliations of BCSDI account balances against their own records and must advise of any balances which have not been reconciled within one (1) business day of their designated reconciliation date.

19. The ISM, Clearing and Settlement… Other Considerations: • Payment – Net-to-Pay/Net-to-Receive, End of day Payment Statements, etc. • Unwinding – Procedures relating to failure to deliver securities • Suspension and Termination of Participants – reasons for, appeals, etc. • Stock Loans – Stock borrowing and lending. • Pledges • Liability

20. Where We Are Now and What is Next… • Participant Information Packs available for distribution • Promotional materials are being finalized • Internal processes and procedures are being finalized • Road Show/Launch • Local participants – March 15th, 2016 • Canadian market – Ongoing • Specific LATAM markets – Ongoing

21. Conclusion Taking Fresh Guard • Significant strategic developments in the life of the BSE. These initiatives will have significant impact, not only on the continued operational success of the BSE but also on the International Business Financial Services Sector.

22. Contact Information Marlon Yarde – Managing Director marlon.yarde@bse.com.bb Telephone: (246) 436-9871/2 Fax: (246) 429-8942 Website: www.bse.com.bb

23. Questions…