About the BSX and the Domestic Issuers Index
About the BSX and the Domestic Issuers Index - The LOM Blue Book
About the BSX
Established in 1971, the Bermuda Stock Exchange (BSX) is the world’s first and largest fully electronic offshore securities market. Trading on the BSX is executed through the Exchange’s customized trading system, BEST (Bermuda Electronic Securities Trading), a completely automated system based on a central limit order book which allows exchange members to trade securities on an equal “first come, first served" basis. Once executed, trade information is disseminated electronically to key financial information providers (such as Bloomberg and Reuters), thus creating a transparent, liquid, and global market. Timely clearing and settlement is facilitated through BEST’s tight integration with its electronic clearing, settlement, and depository system, the Bermuda Securities Depository (BSD).
The BSX domestic market trades daily, Monday to Friday, from 9:00am to 3:30pm Atlantic Standard Time. International Markets on the BSX remain open until 6:30pm AST, allowing for extended trading hours to those exchange members residing outside of North America.
About the Domestic Issuers Index
Since 1971 the BSX, in association with The Royal Gazette, has published a daily market cap-weighted index entitled “The Royal Gazette/BSX Composite Index”. This index is currently comprised of sixteen of Bermuda’s largest “domestic” companies – those corporations who serve predominantly the local markets and who desire the benefits intrinsic to being a “publicly-listed” company (for example: corporate transparency, media coverage, and efficient access to capital.) The BSX further separates the domestic issuers into two distinct classes. “Main board” companies must have a minimum market capitalization of $10 million and are required to make financial releases twice per annum – a six-month financial report in addition to fiscal year-end annual reports. “Small capitalization issuers”, on the other hand, must have a market capitalization above $500,000 but not more than $10 million, with similar reporting requirements.
Historical Performance of the Index
Given the remarkable developments in Bermuda’s economy over the past twelve years, the RG/BSX Domestic Issuers Index has shown substantial growth. The BSX reports the following statistics from its modernization in 1995 up until the end of 2006:
- RG/BSX Composite Index growth of 343% (from 1,098 points to 4,860 points)
- Market Capitalization growth of 362% (from $585 million to $2.7 billion)
- Total value-traded growth of 236% (from $26.5 million to $89 million)
- Traded share volume growth of 56% (from 2.5 million shares to 3.9 million shares)
The BSX notes that these numbers, save the Composite Index growth, exclude the Bank of Bermuda, which was acquired in 2004 by The HSBC Group.
The annualized return numbers for the Domestic Issuers Index over these past twelve years compare quite favourably with other international benchmarks:
- BSX Domestic Issuers Index: 19.81%
- S&P 500 Index: 11.08%
- MSCI World Index (ex-USA): 7.41%
The BSX notes that the above figures are gross returns, exclusive of transaction costs and assume that dividends are reinvested. Further, the S&P 500 and MSCI Index returns do not take into account the negative impact of income tax on dividends that a Bermuda-based investor would normally have to bear (whereas no withholding or income taxes are payable by Bermudians on domestic dividends.)
