Tiny BSX A Big Player At Global Forum
With the 51st annual general meeting of the World Federation of Stock Exchanges taking place in South Africa this month, Bermuda’s tiny bourse risked being overshadowed by such global trading powerhouses as New York, London and Hong Kong.
But Bermuda Stock Exchange [BSX] CEO Greg Wojciechowski has fought above his weight at the forum, interviewed at length on South Africa’s financial channel Summit TV about how bourses have had to quickly adapt to new and constantly changing conditions in the wake of the global economic crisis.
Mr. Wojciechowski said stock exchanges must routinely monitor business environments which have been in states of constant flux since the world-wide recession began in 2008.
“Regulatory change and trading mechanisms are forcing us to look at how we can continue to offer the services that we have in the past because exchanges are absolutely essential to the wellbeing of an economy,” he said.
The tightening grip of the economic crisis meant tremendous political pressure was brought to bear to close down the cash markets according to Mr. Wojciechowski.
“At that point the heads of the exchanges were adamant that our mechanisms were working properly –- at that point we were one of the only mechanisms providing liquidity to the global marketplace.”
Mr. Wojciechowski said that the stock exchanges were very aware of their social obligations to ensure there was always a framework, and to mitigate systemic risk.
“We are always balancing the cost of continuing to provide the structures for new competition and price discovery, with regulatory oversight — we are all having to take a hard look at how we do things.”
Fragmentation of the markets one hand was being accompanied by consolidation on the other side new entrants overshadowed by huge mergers like the German and New York Stock Exchanges.
“These appear to be competing forces –- but the one is the pre-cursor to the other. We have new competitors coming into the market –- which is fine as that’s a competitive source –- but they don’t have the same levels of overhead required to operate traditional exchange mechanisms that are pretty substantial.”
Mr. Wojciechowski said that systems need to be in place to ensure order flow is handled correctly, and that price discovery happens in an open and transparent fashion with quick trading and fast settlement post the trades.
Consolidation was as a result of exchanges having to rationalise their business models and seek amalgamations for a number of reasons — that might include economies of scale or diversification — but that a lot of things were happening in this space.
Although it was one of the smaller exchanges present among the 52 bourses present in South Africa, the BSX had applied capital market mechanisms in the small island country of just 65,000 people.
The BSX developed for the same reasons as anywhere, to offer investors protection and information about companies with access open trading platforms.
“We’ve just we turned 40 and in terms of size we have about 800 issuers. Our speciality is in re-insurance and specialty insurance products where we are seeing a lot of interest in insurance-linked securities.”
Mr. Wojciechowski said he was very proud of Bermuda’s “little exchange”.
He said that hosting leaders of the world’s exchanges would be good for South Africa, because it would focus the attention of the capital markets on South Africa and that would be fantastic for the country.
Mr. Wojciechowski said that the markets were important to raise capital for entrepreneurs, but that the mandate of the regulators and exchanges was to protect investors with appropriate regulations.
“To ensure things don’t happen we have to strike a balance where we meet the needs of the market and protect our economies — but make sure we are not stifling innovation and growth.”
