The Tribune

By NEIL HARTNELL

Tribune Business Editor

THE Bahamas International Securities Exchange (BISX) is becoming the "recognised independent standard" for valuing securities in this nation, its chief executive dismissing concerns that prices for stocks and other instruments were being distorted by one-off trades.

Speaking in the wake of Colina Holdings (Bahamas') $30 million preference share listing, the seventh such secondary listing by a publicly traded company, Keith Davies said BISX was the "natural home" for company issuers and investors seeking the true market value of their securities.

"There's a consolidation of the market on to the exchange, because it's become the standard location for the proper valuation of issued securities," Mr Davies told Tribune Business.

Explaining that only securities issued by publicly traded, not private, companies were eligible to be listed on BISX, Mr Davies said secondary listings involved instruments - typically the likes of preference shares and bonds - issued by listed entities via a private placement.

These placements targeted specific investor groups, such as institutions and high net worth individuals, as opposed to the general public, but Mr Davies said that once issued the securities were tradable commodities.

Listing them on BISX, he added, enabled these securities to be traded in a formalised, rules-based setting and created a market that allowed investors to determine their true worth/valuation.

"Like everything, you don't have a market unless it's placed on the exchange," Mr Davies told Tribune Business, "so for investors seeking to trade or hypothecate them for value, they would need to have an independent, third-party location to engage in that transaction.

"It's the way this market has developed, and individual investors are seeking a location for that third party independent standard. We're providing a natural home. We're a fully functional, independent, operational market.

"I am happy, pleased and satisfied that we are doing what we are supposed to do, which is why we continue to grow the interest from companies that have already done business with us. We expect that to continue. It's a logical progression, and something we strive to do."

Mr Davies said FOCOL Holdings' Class B Preference Shares, one of BISX's secondary listings, had been among the most actively traded securities on the exchange, showing the value of the secondary market.

He dismissed, though, the long-held concerns of some listed companies and investors that share prices in the Bahamas were distorted by a combination of one-off trades and an overhang of sellers. The latter were mainly retail investors, eager to exit for cash, and not basing their decisions on rational logic or the company's fundamentals.

"When you come on to the market, you have to live with the way the market moves and grows," Mr Davies told Tribune Business. "I've got 12 years of data that tells me you have one-off trades that decrease share values substantially, but you also have one-off trades that increase values substantially.

"Over time, those trades have little to no impact on the valuation of a company, because they're lost in the volume of trades. The market is doing exactly what it's supposed to do, despite the fact it's a small market.

"Markets function in this way all over the world, despite their size. As long as they have the correct rule base and mechanics, they [stocks] will find their level. I have 12 years of data to back that up. The market doesn't lie at the end of the day."

On the Colina Holdings (Bahamas) secondary listing, Mr Davies said the life and health insurer had been one of the longest serving, and largest, issuers on BISX.

A secondary listing was "something they've been seeking to do and looked at before; that independent, third party valuation factor".