Bermuda’s BSX ensures essential financial services amid global pandemic

How did the Bermuda Stock Exchange rise to the challenge of the global pandemic? What challenges did the BSX encounter and how did you overcome them? 

As an important stakeholder in the Bermuda economy and member of the WFE, the Bermuda Stock Exchange (BSX) took quick and decisive action once the Covid-19 Pandemic arrived in Bermuda. In March we announced the BSX would remain open for business and continue to provide services to our local and global customers in the capital markets. 

The BSX was deemed an “essential service” and so we continued our operations as normal, albeit with initial access to the BSX office limited to core personnel. The BSX team implemented our Business Continuity Plan which involved a variety of precautionary measures to ensure operational resilience as well as the wellbeing of our staff. Our team was able to quickly pivot to working remotely and, as we are a fully electronic exchange, switching to the new normal was relatively seamless. We continue to serve our markets and clients without interruption.

Where is the BSX now with respect to reopening? 

Bermuda is open for business. While the situation remains fluid, we do not anticipate disruption to normal operations and functions which remain critically important. The BSX has robust technology infrastructure in place and we are guided by the WFE mandate that financial markets remain open, accessible and able to perform their role by providing investors with liquidity, facilitating price discovery and allowing for risk transfer solutions. We remain committed to maintaining a solid and dependable market platform for our local and global customers through the global pandemic which looks set to continue into 2021.

• As the island is essentially Covid-19-free, with the occasional case arriving from overseas and strict quarantine requirements, the Bermuda Government reopened its borders August 1, which will enable remote workers or “digital nomads” to live and work on the island under a One Year Residential Certification programme.

What opportunities are you seeing as a result of the global pandemic?

• Bermuda has a history of capitalising on market shifts and this crisis will likely be no different. The island is uniquely positioned with a reputation for being an incubator and facilitator of risk transfer solutions as a result of opportunities that arise out of catastrophic events. Our long-established framework, intellectual capital and track record will enable us to be a natural home for the coming transformation where greater efficiency is enabled through technology, analytics and capital working together.

The BSX will also benefit from the new partnership with Miami International Holdings, Inc. (MIH), the parent holding company of the MIAX Exchange Group which acquired a majority ownership of the BSX in late 2019.

As MIH looks to establish its international presence and address emerging markets such as digital assets, we find that the Bermuda Government’s commitment to FinTech regulation with legislation such as the Digital Asset Business Act 2018, coupled with Bermuda’s established international business market, make the BSX and the country of Bermuda as a whole, very attractive. The alignment with MIH better positions us to compete and serve customers across a broad range of asset classes by uniting our brands, expertise and infrastructure.

What is the BSX’s vision for rebuilding the world?

• Since the inception of the BSX in 1971, we have fostered growth within Bermuda’s domestic capital market, and insurance/reinsurance market, and now we turn our sights to FinTech, automation, digitisation and emerging insurance technologies.
• Our contribution is strengthened by our ability to provide additional support to the evolving global insurance landscape through potential initiatives such as supporting exchange traded risk.

Bermuda’s history is built on a proven track record of innovation and collaboration between business, government and regulators that has enabled us to drive risk innovation and establish a reputation for expertise in various alternative risk transfer solutions that are accepted across the globe.

We are actively engaging in discussion with market participants that will continue to enhance and broaden the development of risk transfer products, InsurTech, FinTech and innovative insurance-linked solutions which will we believe will advance the sustainable finance agenda globally.

How do we need to think about exchanges and regulated markets in future?

Markets around the world recognise their responsibility not only to issuers and market participants, but to the economies they serve and society at large. We believe that with coordinated action, information-sharing, vigilance, along with a fundamental focus on market integrity and investor protection, we will be able to come through the current crisis and adapt to and thrive in changing market conditions.

It is also important for exchanges to adapt to a rapidly evolving digital world. One of the drivers for MIH acquiring a majority shareholding in the BSX was to leverage the progressive commercial and regulatory approach Bermuda has adopted in respect of digital assets and crypto currency business. The MIAX and BSX teams are working closely creating a digital asset business platform. These include the listing of digital asset/crypto related products such as a cryptocurrency index tracking funds and the creation of a regulated trading platform for digital asset-related instruments.

We also see environmental, social and governance (ESG) considerations becoming an important driver for corporations and investors around the world. As investors look to grow their holdings in asset classes linked to socially responsible investments, this creates an increased pool of investors in Insurance Linked Securities which are helping to narrow the insurance protection gap and expand the sustainable agenda for important global threats like climate change, pandemics and social development. The BSX remains committed to the continued support of the global (re)insurance industry through exchange traded risk and other innovative solutions through our robust regulated trading platform.