• ‘Serious interest’ but guarding against ‘let down’
• And ‘a lot of irons in fire’ in domestic markets
• ‘Promising signs’ of new debt, equity listings
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Bahamas International Securities Exchange’s (BISX) chief executive says he is keen to avoid any “let down” with three separate groups “expressing significant interest” in partnering with it to develop a digital assets arm.
Keith Davies, the exchange’s chief executive, told Tribune Business that even though it is “fielding serious interest” he wants to ensure “expectations are managed” such that BISX and the wider capital markets are not harmed - and escape any reputational fall-out - if an agreement does not materialise.
Declining to identify the parties involved, or give details on their plans, he indicated much work remains to be done before any partnership or digital assets-based market is formalised. However, he told this newspaper that BISX remains alive to “all potential opportunities” to expand the Bahamian capital markets, plus the products and services it offers, and digital assets remain in its focus despite FTX’s implosion and the much-publicised ‘crypto winter’.
“The one thing you can rest assured on is that we look at all potential opportunities,” Mr Davies said. “It would not be responsible of us if we did not do that, but we will go through the proper process to evaluate it and determine if it is something that, as an organisation, we wish to pursue.”
Confirming that digital assets remain one such expansion possibility, he added: “When we were looking at it initially or early, it was all the rage and BISX was literally being bombarded by proposals from persons all over the world. I’m not exaggerating this.
“Then the market changed and the crypto environment changed, and there was a downturn. Even though we were not in the crypto space, that kind of dampened the digital assets conversation. But the digital assets arena is still very much alive, and I can tell you we are fielding serious interest from potential partners in developing the exchange in a digital asset manner and other non-traditional avenues.”
Asked how serious these “partners” are, and how far their plans and discussions with BISX have progressed, Mr Davies replied: “Everyone who comes to us expresses that they are extremely serious. There is a due diligence process we go through. We have an internal framework that we follow for the engagement of potential partners, and also the approval of their plans.
“We are at various stages with these individuals. I know there are three entities that have expressed significant interest in what they would wish to work with us on, and we’ll see where that goes.” The BISX chief was anxious to manage the expectations of investors and other market participants by indicating that any agreement or partnership remains some ways off.
“Just to put this in perspective, we have these approaches from time and again,” he told Tribune Business. “It’s not uncommon that we go through this process with these entities. I want to manage expectations. It goes through a process, and is not done until it is done. We will see where it goes; don’t over-anticipate and set unrealistic expectations because then there is a let down.
“We are going through a very methodical process that is very transparent at the end of the day. Once we reach that point, we intend to let persons know who, what, when, where and why.” That would include BISX’s primary regulator, the Securities Commission of The Bahamas, which has to approve any digital assets partnership or venture involving the exchange.
Mr Davies, meanwhile, pointed out that digital assets do not mean crypto currency. “Digital securities are the future of securities in the world,” he explained. “People need to understand that this is not crypto currency. Digitisation of securities really essentially means we have elements of blockchain, but it’s literally having a programmable security where things are built into that security.
“That allows its trading, that allows its ownership, that allows its accessibility or not to be controlled. When you place certain securities in that environment, you can do more. Your costs go down and more people have access. This is a natural evolution of the securities market. Stock exchanges around the world and regulators around the world are preparing for this, talking about this.
“It behooves us to be part of this as time goes on, as we prepare and continue to prepare ourselves even more. One of the things we are doing is having persons in-house that continue to gain expertise. We are gathering expertise and knowledge to be able to deliver on that promise of an innovative stock exchange.”
Mr Davies told Tribune Business that BISX had received promising indications that there are “a lot of irons in the fire” in the domestic Bahamian capital markets when it comes to potential new debt and equity capital raises and listings. “There are some debt instruments that we expect will be there, and go through, preference share and debt instruments, from private companies to be listed on the exchange,” he disclosed.
“We have gotten reports from industry players that there are a lot of irons in the fire and we expect to be beneficiaries of that work. We’ve received some positive indications of equity listings as well, but this is all contingent on the market. The signs are promising, I will say that, and I’m encouraged by what I’m seeing in the marketplace.”
The BISX chief executive added that the exchange has also received promising signals from the investment fund industry on more mutual fund listings once it fully shrugs off COVID era uncertainty and puts monies “back to work”.
He added: “The message that is coming back to us is we’re beginning to come back. We’re looking at structures and expect to be approaching you in the future. All we can do is wait and be prepared for when they move.”