Bermuda and Channel Islands exchanges latest to explore linking up

London and Frankfurt are doing it. So are the Hong Kong and Shenzhen stock exchanges – their link-up is due to go live next week. The Dubai Financial Market and the Abu Dhabi Securities Exchange talked about it a few years ago, but decided that a serious relationship wasn’t really for them.

Now, it seems, the Bermuda Stock Exchange and the Channel Islands Securities Exchange could be the next to tie the knot, at least if a just-signed memorandum of understanding is anything to go by.

And in stock market terms at least, it has the makings of a good match.  What’s more, they have lots in common: both are stock exchanges located on islands that are either a British overseas territory (Bermuda) or British crown dependency (Guernsey), that also both happen to be known for their financial services industries.

The Channel Islands Securities Exchange, or CISE, is best known to stock market denizens for listing investment vehicles, including open- and closed-ended fund structures, as well as international debt securities. The BSX, meanwhile, provides what it calls “a fully electronic stock exchange platform to Bermuda’s domestic capital market”, and is known as well for supporting the global reinsurance and capital markets through the listing of a variety of investment vehicles, such as fund structures and insurance linked securities.

Greg Wojciechowski, the president and chief executive of the Bermuda exchange, noted the growing trend around the world for stock markets to join forces in situations in which there could be commercial and regulatory synergies to be realised.

“Larger exchanges have taken similar action,” he said in a statement, accompanying the announcement of the signing of the MoU, “[as they seek] to create synergies through closer cooperation or even formal collaboration, such as is the case with the London Stock Exchange and Deutsche Bourse at the moment.”

The CISE/BSX MoU, he added, “illustrates that smaller, niche focussed exchanges are being entrepreneurial and forward thinking in relation to their strategic development.

“I believe that closer cooperation between BSX and the CISE offers significant potential benefits to both exchanges, our clients, investors and the domestic economies which we serve.”

CISE chief executive Fiona Le Poidevin, pictured, said BSX was “an ideal partner” for the Guernsey exchange, for such reasons as the fact that the two entities “differ in geographical location and market strengths, so there is plenty of scope to leverage these complementary offerings in order for each exchange to diversify its product range, and broaden its international appeal”.

(Le Poidevin and other CISE officials stress that although their securities exchange is technically located on Guernsey, it is technically a pan-Channel Islands facility, and maintains an office as well on Jersey, also a major financial services jurisdiction, 25 miles to the southeast.)

Under their new MoU, the CISE and BSX plan to work together to seek out areas in which they can work together for mutual benefit, “across both the commercial and regulatory aspects” of their businesses, according to the statement.

Examples of areas and ways in which they said they expect to do this include the cross-fertilisation of regulatory best practice, information exchange in relation to market developments, potential resource sharing, and joint promotional activities.

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