BSX: WFE Report ‘Validates Our Commitment’

August 10, 2017

Building on the launch of their ‘Own Your Share of Bermuda’ Investor Education programme earlier this year, the Bermuda Stock Exchange [BSX] noted the report from the World Federation of Exchange’s [WFE], saying it “clearly validates our renewed commitment to Investor Education.”

It comes by way of a report issued by the WFE this month. Entitled ‘Enhancing retail participation in emerging markets’, the research looks at how exchanges can enhance retail investor participation in emerging markets, noting a number of contributing factors.

Commenting on the report, BSX President and CEO Greg Wojciechowski noted, “This newly released research by the WFE clearly validates our renewed commitment to Investor Education through our ‘Own Your Share of Bermuda’ initiative and strongly supports our contention that retail investors play an important and integral part in the legitimacy and perceived relevance of Bermuda’s stock market.”

The report reviews existing academic literature on the subject and analyses data from 14 emerging market exchanges to assess what levers impact levels of retail trading. It looks at a variety of factors such as transaction costs, tax rates and financial literacy programmes and how these factors affect the breadth [number of individuals investing] and depth [level of trading activity in number of trade and value traded] of the retail investor pool. The report also contains several case study interviews that support and expand the results of the statistical analyses.

Mr. Wojciechowski went on to explain, “Among the findings, the report indicates a positive relationship between financial literacy programmes, such as investor education programmes, and both breadth and depth of trading; further supporting the premise that financial literacy is important for improving not just levels of retail activity but also the quality of activity. The report also notes that the existence of brokers who are willing and able to effectively service retail investors and contribute to broader literacy objectives is, in the report’s words, critical.”

“As key as the findings themselves, is the fact that they come from an unsolicited, undeniably credible third-party source”, said Mr. Wojciechowski. “The fact that the research clearly corroborates what we have been saying through our initiative over the last six-moths is very encouraging.

“For instance, the report conclusion noted that from a social perspective having individuals directly invested in the stock market may contribute to a greater democratisation of finance, and that well-functioning exchanges contribute positively to broader economic growth and development. It goes on to say that an exchange should not be viewed as something remote from ordinary citizens but rather as contributing positively to an individual’s ability to realise their aspirations.

“By enabling broad-based wealth creation through financial inclusion, the exchange achieves a potentially higher degree of public legitimacy. These are points we raise regularly in the local community and we are heartened by the fact that they are resonating globally.”

In addition to looking at the impact of investor education programmes such as the ‘Own Your Share of Bermuda’ campaign, the report looked at a number of efforts used to enhance levels of retail investor participation including, increasing awareness and outreach, changing the cost structures to reduce the cost of participation, enhancing the availability of information about the market and the companies listed on the market and the introduction of new products such as Exchange Traded Funds [ETFs].

Responding to these points Mr. Wojciechowski noted “The BSX remains committed to Bermuda’s retail investor base and will continue to push for improvements both internally and externally to drive greater market participation. For our part we will continue to press forward with our investor education initiative, while simultaneously increasing awareness through community outreach.

“This will include participation in the International Organization of Securities Commissions’ [IOSCO] inaugural World Investor Week, October 2nd to 8th. The BSX also remains committed to providing investors with timely, accurate company data through Bloomberg, Bermuda’s daily paper and our website

Additionally, we will continue to work with the local brokerage community, government and other financial institutions to look for potential cost savings and the development of new products and services aimed at attracting retail investors.”

The complete WFE report can be found on the BSX home page:

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