Q&A with Greg Wojciechowski – President and Chief Executive Officer, Bermuda Stock Exchange…
How would you summarise 2018 from a business growth perspective for BSX?
In general, 2018 was a solid year which saw the Exchange solidify its position as the global stock exchange of choice for the listing of Insurance Linked Securities.
For six years in a row, the BSX has maintained leading market share of the global ILS market. In addition to the number of listed securities growing, we also saw the jurisdiction of domicile of the vehicles expand. For example, ILS deals originating out of Europe and the UK.
New ILS listings totalled 125 securities with a nominal value of USD11.23 billion. At year-end, the total number of ILS securities listed stood at 302 securities with a total nominal value of USD30.92 billion. At year-end, there were a total of 988 listed securities compared to 867 in 2017.
In addition to the number of listed securities growing, we also saw the jurisdiction of domicile of the vehicles expand. For example, ILS deals originating out of Europe and the UK.
International debt listings grew to 201 securities in 2018, up 20 per cent from 167 the previous year with their nominal value growing USD4.6 billion to USD7.0 billion. In respect of international debt, it is clear the market is supportive of listing venue alternatives and the BSX’s value and substance is clearly catching the attention of international debt issuers who have found the BSX to be a commercially compelling alternative to the usual “go to” listing platforms.
Given the BSX is committed to supporting the continued development of Bermuda’s domestic capital market, we continued to enhance our programmes of investor education and awareness to engage more Bermudian investors. Also, as with any fully functioning stock exchange, we provide key market and regulatory support to our domestic issuers undertaking corporate developments and transactions.
What role do exchanges play in their respective jurisdictions and how do they benefit the local economy?
This is a fantastic question and one that is near and dear to all Exchange members of the World Federation of Exchanges (WFE). In fact it is a topic that we regularly discuss in that how exchanges message into their markets so that regulators, politicians and stakeholders understand the value that exchanges have in relation to the “real economy”.
Exchanges help support and encourage the lifeblood of a country’s economy; that is, capital flowing from savers via investments into companies to build or enhance their businesses or products that service the public. This is the engine of growth.
In that regard, the BSX plays an important role in Bermuda’s domestic economy and is always looking at ways to help accelerate its development.
In the national Bermuda Securities Depository (BSD), operated by the BSX, we manage more than 5,000 active accounts with dematerialised stock positions nearing almost USD1 billion. Importantly, the BSX has also supported Bermudian companies in raising over USD1.5 billion. This is a solid metric for a small jurisdiction.
BSX has, over the years, enabled Bermuda to become a centre of excellence for the ILS market. How proud are you of the role it has played, and what further enhancements do you hope to introduce, as President and CEO?
Proud and humbled are the two words that I would use to describe the BSX’s involvement in Bermuda becoming a centre of excellence for the creation, support and listing of global ILS structures.
Bermuda enjoys a unique position in being able to respond quickly to trends in the markets we service. Bermuda’s innovative and entrepreneurial spirit is built on a rock-solid commercial and regulatory infrastructure. These elements provided a bedrock foundation on which our key industry segments could begin, flourish and evolve.
ILS was one of those evolutionary developments. Bermuda was the natural home for the development of ILS given the island’s strength and depth in the global reinsurance industry and expertise in property catastrophe risk. Bermuda is known as the World’s Risk Capital.
ILS provided a very specific opportunity for the BSX as from the outset ILS development was deemed as “Convergence”. From a BSX perspective we saw convergence as two market segments flowing toward and in a mutual direction, those being the insurance/reinsurance and capital markets.
This convergence was an excellent opportunity for the BSX to play a role in supporting these two key and important industries that relied on Bermuda’s rock-solid financial services platform.
In terms of enhancements, Bermuda and more specifically the BSX, will continue to develop its relationship with the global ILS market and provide our core services when needed. Our focus is on helping drive the development of the secondary market in ILS vehicles and the BSX is firmly placed to leverage its operating and regulatory framework in support.
How would you characterise demand for new ILS listings?
We are enthused by developments in the ILS space. The ILS space coupled with ESG investing has a real opportunity to make a global difference to accelerate the world’s insurance protection gap.
From our vantage point, we see the demand for ILS vehicles growing. The capital markets have become very aware of this asset class and are intrigued by ILS securities limited correlation to the performance of the broader capital markets. There is stable demand for the product, thus signalling a challenge for those that originate ILS vehicles.
We are delighted that structures that have been domiciled in other jurisdictions such as Ireland, the Cayman Islands and the UK are joining the critical mass of BSX listed issuers.
Speaking of ESG investing, how does BSX think about this important trend?
As a full member and Board Director of the World Federation of Exchanges, the BSX is committed to the global ESG effort. One of the WFE’s priorities for 2019 is the continued support and expansion of the conversation around ESG-compliant securities and investing.
Bermuda is very active in the ESG space today and our domestically based companies have become more socially responsible. It has been aptly suggested that ILS as an asset class has been recognised as being an ESG compliant investment. Our goal is to ensure that the BSX and Bermuda is in an excellent position to join the global dialogue and support of ESG entities and socially responsible investing.
We will be communicating more about our ESG initiatives in the near future.
