Country moves one step closer to electronic trading of Government bonds

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The Hon. K. Peter Turnquest, Deputy Prime Minister and Minister of Finance, accompanied by executives of the Central Bank of the Bahamas and BISX, commemorating the listing of Bahamas Government Registered Stock on BISX. Pictured from left: Derek Rolle, Deputy Governor of the Central Bank; Keith Davies, BISX Chief Executive Officer; K. Peter Turnquest, Deputy Prime Minister and Minister of Finance; Andrew Strachan, BISX Chairman.

The Ministry of Finance is pleased to announce that Bahamas Government Registered Stocks (BGRS) have been approved for listing on the Bahamas International Securities Exchange (BISX or the Exchange). This major step forward paves the way for Bahamians to be able to buy and sell Government bonds on the local securities exchange, and track the value of their investments using the online marketplace.

“We are getting ready to list over 200 government bonds, which (at the time of Press) represents the entire portfolio of outstanding securities going back to 1999. This will stimulate the entire Bahamian capital market, improve our financial market infrastructure, and increase accessibility to Government-backed investments for all Bahamians,” said K. Peter Turnquest, Deputy Prime Minister and Minister of Finance.
“This is another area where the Government is making good on its promise to modernize and keep pace with the digital transformation happening globally, and introduce more efficiency to the Government’s borrowing. Centralized market trading of Government bonds is an important component for the growth of the entire Bahamian capital market. It’s been a longtime in the making and I am proud that this Government’s leadership hashelped to finally bring this project
to fruition,” said Minister Turnquest.

The transfer of the secondary market to the Exchange-is a major objective of the Financial Markets Modernization Project, a collaborative effort between the Ministry of Finance, the Central Bank of The Bahamas and BISX. The project seeks to create a centralized marketplace for all Bahamians dollar securities.Several changes are being implemented, including the creation of the centralized marketplace for all Bahamas Government debt dollar securities.

The project’s phases include: 1) Listing BGRS on BISX, 2) Launching a Bahamas Government Registered Stock Depository (BGSD), which will facilitate competitive bidding and other industry-specific market improvements; 3) Transition to a paperless registry, which involves the introduction of digital certificates for Government bonds; and, 4) Electronic trading. “With this modernization of the country’s financial market infrastructure, Bahamians will now have easy access to investment information and market activity on all Government bonds, and there will be transparency around the pricing of Government securities. Lastly, Bahamians will be able to see and have an opportunity to trade outstanding securities on an open market,” said
Minister Turnquest.

10 Things You Need to Know About the Financial Markets Modernization Project

  • From August 2019, Government bonds will be listed on BISX: outstanding securities and all future issuances of government bonds.
  • It is anticipated that in November 2019, trading of Government bonds (i.e., buying and selling) will beginon The Bahamas International Securities Exchange (BISX).
  • The daily value of individual investment holdings will be determined by market factors, such as demand and supply, and will be displayed publically on the Exchange. This means the price can move up or down.
  • The initial prices will be set using the Central Bank’s existing pricing structure as currently available on the Central Bank’s website. These prices will apply until trading begins.
  • Government bonds will no longer be fixed at par (which is the equivalent of the initial purchase price). They will be set by the market.
  • Once Exchange trading begins, investors who have plans to sell their securities before maturity will be subject to the current market price and any associated fees.
  • Exchange trading will have no impact on the maturing value of a security (for investments that are held to maturity).
  • Regardless of the market value, interest and principal payments will not change from the terms set out in the respective Initial Public Offerings for all investors.
  • Investors participating in new issuances of Government securities in excess of $100,000 will need to utilize a broker to purchase these securities. Those investors with existing holdings that were purchased through the Central Bank can continue to sell those
    holdings directly through the Central Bank or through a broker.
  • Investors with existing holdings or new issuances $100,000 and below have the option of buying and selling those holdings directly through the Central Bank or through a broker.

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