Driving development towards immediate recovery

Driving development towards immediate recovery

Greg Wojciechowski, President & CEO, Bermuda Stock Exchange, declares that ‘Bermuda is the biggest small place to visit’


How optimistic are you about the speed of Bermuda’s economic recovery after this global pandemic? How central will the role of the BSX be for its revival? 

Bermuda was incredibly quick and measured in reacting to the pandemic. It was a collaborative approach between the government and the community and people adhered to lockdown, public notifications and guidance. The commercial cadence was impacted, because many worked from home. At the BSX, as an essential service of the country, our office remained open, but with a skeletal staff. As a fully electronic market, all of our trading members and institutions that required access to our platforms for trading, clearing, and settlement services could do so remotely. Other than the inconvenience of not physically being in the office together as a team, and how that impacts collaboration and team spirit, we did not miss a beat from a commercial perspective. In fact, the areas of business which we focused our attention on were very strong throughout the period and we ended last year with record numbers of securities listed as well as some really exciting developments.

Stock Exchanges play a key role in domestic capital market support which contributes to healthy markets at home and internationally. In Bermuda, the BSX is a very important part of the country’s financial services infrastructure. The BSX operates the regulated market platform for the trading and settlement of domestic company stocks. Important disclosure requirements ensure information flows to the market so that investors are aware of and able to assess the financial well-being of the companies in which they invest. The BSX provides capital market support to over 1,130 listed securities, a mix of local and international securities spanning many different asset classes.

In respect of the role of the BSX in Bermuda’s post pandemic recovery, the BSX will continue to support our key asset classes and will, as we always have done, actively provide support to existing or new industries that operate or will operate in the country by providing an internationally recognized stock exchange platform for their capital formation and listing needs. Areas of our focus will be the insurance linked security (ILS) asset class, trading of insurance risk, building momentum in the listing of international debt securities and working alongside stakeholders as Bermuda seeks to deploy a regulated and well-respected commercial platform for digital asset securities.

Bermuda is not immune to what is going on in the rest of the world. Our economy is driven primarily by international business and tourism and, of course, we were affected by the pandemic the same way other tourism-centric jurisdictions were. Thankfully, our international business community continued to contribute significantly to the economy and we weathered the storm well. As a smaller country, organizing the testing and vaccinations is easier than in a larger country. The government of Bermuda has been extremely efficient, not only in its guidance in containing and mitigating the spread of the virus but also in setting up efficient testing mechanisms and centers and, now, vaccinations. This efficiency has and will continue to have a positive impact on the community in respect of curtailing the virus.

From an economic development perspective, we have a program where we have invited ‘digital nomads’ that want to live and work in a lovely, beautiful location very close to the United States and global gateways.

One of the things we pride ourselves on is the reinsurance industry which provides the world a safe harbor in adverse circumstances, predominantly natural catastrophe. Bermuda’s position as the ‘World’s Risk Capital’ was reinforced in 2020 by a new wave of capital entering the market which augers well for our post-pandemic recovery. An estimated USD 19 billion in new capital was raised by existing and new companies which reflects a flight to quality, experience and expertise in a well-regulated and respected environment underpinned by speed to market and innovation.


From becoming the risk capital of the world Bermuda is now also known as the Silicon Valley of the Atlantic. Can you tell us about this journey, the vision behind it, and how a strong and attractive stock exchange has paved the road for a vibrant ecosystem?

We are closely and comfortably nestled between two of the deepest capital markets in the world and two of the biggest reinsurance markets in the world. Being practical and innovative is in our DNA from a community perspective, a survival perspective, and certainly a commercial perspective. Bermuda has done very well over the years identifying niche markets, becoming experts and providing thought leadership and knowledge so that our commercial platform provides the support and innovative energy for our niche industries to develop. Apart from being the world’s risk capital, Bermuda has been the face of international hospitality, and even more so international business for decades. Bermuda has been a leader in the Insurance industry for 70 years, providing services to international consumers of specialty insurance and reinsurance.

Our financial services platform has developed in line with international standards. Our prudent and created for purpose regulatory framework and oversight protects while encouraging the development of the businesses that we operate. In Bermuda, there is a sense of pride in the balance that our regulatory framework has struck. Our regulatory approach has been deemed to be in line with international standards as is evidenced by the recognition we have received from our peers internationally. The BSX is a full member of the World Federation (WFE) of Stock Exchanges and I sit on the board, representing BSX and as a representative exchange for the North American region. Our regulator, the Bermuda Monetary Authority recognizes the BSX as an approved exchange. The US SEC, the UK FCA and UK Revenue and Customs all deem the BSX as a recognized stock exchange as do the Irish tax authorities, the Canadian Ministry of Finance, and the Australian tax authority. The Bermuda Monetary Authority (BMA) is a full member of the International Organization of Securities Commissioners (IOSCO) and the BSX is an affiliate member of IOSCO. Bermuda is one of only three countries globally that has achieved Solvency II equivalence in accordance with the European Insurance and Occupational Pensions Authority and is recognized by the National Association of Insurance Commissioners (NAIC) in the U.S. These notable recognitions are thanks to the depth of commercial experience and human capital within Bermuda’s main industries both underpinned by a fit for purpose regulatory regime administered by the BMA. These designations underscore Bermuda’s reputation and the comfort the market and international regulators have in respect of Bermuda’s products and services and the level of regulation and oversight of both. The combination of innovative spirit, niche areas of expertise, as well as the country’s recognized and well-respected regulatory environment creates a solid commercial platform and ecosystem for innovation and business to thrive.

Bermuda is the global leader in insurance linked securities (ILS), which is a capital funding mechanism for risk transfer. This is a highly specialized asset class which resulted from shifts in the way capital formation occurred in the reinsurance market. Given Bermuda’s unique geographic position, its many years of experience in the specialty insurance sector, the mind and management that developed here over the years, underpinned by a reputable regulatory body and deep experience in the service providers supporting the industry. When working together these elements created a ‘Silicon Valley effect’. These factors established the foundation for this existing asset class to evolve and flourish in Bermuda. The last component to solidify Bermuda’s place in the ILS industry was the number of dedicated investors located on island and actively participating in the asset class.


In just one year alone, the number of insurance linked securities (ILS) listed on the Bermuda stock exchange has increased by 63 percent. Is that a result of what you are describing?

The BSX is one piece of an important Bermuda mosaic that has effectively come together to create a platform that has emerged as a center of excellence for the creation, support and listing of global ILS vehicles. From our experience, the ILS market continues to develop and Bermuda features heavily in supporting the global development of the asset class. Due to Bermuda’s prominence in the specialty reinsurance industry, we are seeing robust activity in companies seeking to establish operations or corporate vehicles here during the pandemic and many of the vehicles ultimately seek the listing services of the BSX. Despite the systemic pressures across the broader capital markets early on in the pandemic, the ILS asset class performed well in respect of risk continuing to be transferred via ILS structures and investors continuing to allocate to ILS securities. The market and investors are very comfortable with Bermuda and the BSX, and as a result choose us to support their business. As it pertains to the BSX, we have been able to create critical mass in this asset class and look forward enthusiastically to leverage this momentum and experience to grow the business in other asset classes that use our services such as international debt issues.

A key driver in the growth of this asset class is a very low correlation to the broader financial markets. ILS, and in particular the catastrophe bond, is one such security that has limited direct correlation to what happens in the broader capital markets. Professional investors like this inherent, built-in natural hedge to add to their portfolio.

In fact, when investors sought liquidity, they looked to the ILS positions they held due to their financial performance and stability throughout the period of market volatility.

An exciting priority for the BSX team has been developing an Environmental Social and Governance (ESG) strategy for ILS and other securities that have ESG-compliant attributes. Our intention is to create a specific board on which these securities can seek listing once they illustrate their commitment to BSX ESG guidelines. The World Federation of Exchanges has, for the last several years, made ESG a key element of its strategic mandate through encouraging capital market infrastructure operators to help their clients – investors and listed issuers – become more aware of the importance of ESG issues and adopting an ESG lens through which to view their commercial operations. ILS appears to address key elements of ESG standards as these securities when triggered, provide much needed capital to help countries, cities, and businesses rebuild following the effects caused by natural catastrophic events. Funding provided through ILS vehicles add to the resiliency of a country, city, or community.

It is clear the global discussion and awareness of ESG issues is dynamic and rapidly developing. In Bermuda, and within our core industry segments and the ILS space, climate change and climate risk finance has been a central focus of discussion and product innovation. Through the use of these bespoke financing vehicles, much-needed capital can be raised and directed to places in times of severe need that help cover the cost of restoration and as a result narrow what is referred to in the industry as the protection gap.


As President and CEO, what are your main priorities for the Bermuda Stock Exchange in 2021?

The BSX strategy was to build the exchange infrastructure and enact regulation that helped capital creation for the domestic market and ensconce retail level investor protection in exchange regulation, all the things that one would expect in modern capital markets. While continuing to focus on the development of the domestic capital market, the Exchange also continues to work on developing its international capital market support and business expansion.

A recent and significant development for the BSX is the integration into Miami International Holdings, Inc.’s (MIH) group of securities exchanges which obtained full ownership in 2020. This partnership will assist MIH in expanding its world-class technology, derivatives trading and regulatory expertise to address emerging markets, such as digital assets, and provide the BSX with additional support in the evolving global reinsurance risk market and substantial upgrades to the Exchange’s technology infrastructure. The Exchange continues to focus on business expansion and the development and support of the domestic and international capital markets. Despite the systemic pressures across the broader capital markets early on in the pandemic, the ILS asset class has performed well and continues to be transformed by ILS structures and investors continuing to allocate to ILS securities.

Together with the MIAX Group, we will seek opportunities that leverage the work of the government of Bermuda and the BMA in codifying and creating a fit for purpose and prudent regulatory framework for the licensing and oversight of digital asset products.

In a recent and exciting development, the BSX approved for listing the Hashdex Nasdaq Crypto Index ETF, a crypto currency exchange traded fund that is based on a Nasdaq Crypto Index. We anticipate that this security will begin to trade in the near future. As we look at the new world of digital assets and cryptocurrencies, and how the traditional exchanges and these new platforms and asset classes co-exist we are certain there is an opportunity for the BSX to be part of this global development.


How would you describe the business climate in Bermuda, alongside the experience of living and working in the country? What is Bermuda’s unique value proposition compared to other small island economies and what is it like to live there?

One of the many things most striking about Bermuda, and that some people are surprised to learn, is that the island is a thriving international financial center. When you are in the city of Hamilton there is a very real sense of business being conducted here. There are representatives of every large insurance and reinsurance company in local affiliate offices, and as you walk down the street you will recognize the global household names. The depth of intellectual capital, experience and knowledge based in Bermuda is extraordinary. Bermuda is an efficient and connected island and the support services such as telecommunications and health care are world-class.

On another note, Bermuda has a very strong tradition in scientific research through entities such as the Bermuda Institute of Ocean Sciences which, since 1903, has been home to scientists that are researching the health of the ocean and atmospheric changes. Very recently an international project to help protect the Sargasso Sea, in which Bermuda is located, received USD 3 million through a first-of-a-kind grant. The funding for the Sargasso Sea Commission was provided by the Global Environment Facility and will be accompanied by USD 25 million from a range of partners to help create a high seas ecosystem.


What would be your final message of trust in Bermuda for our readers of Newsweek?

The level of sophistication of the jurisdiction, our regulatory reputation, innovation and the proximity to key gateway financial services centers are key Bermuda advantages. Bermuda stands out for options in the risk transfer spectrum, including ILS which is why we saw growth this year. It is a unique position for Bermuda compared to other jurisdictions that do not have the depth of intellectual expertise as we do in insurance and risk transfer. That promises to grow with the impact of climate change and the large protection gap that exists throughout the world.

While the world adapts to a ‘new normal’ the BSX will play a critical role in many aspects of the global financial infrastructure and remains one of the world’s preeminent offshore securities exchanges and Bermuda the place where business happens.


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