The Barbados Stock Exchange (BSE) is to join the blockchain revolution by soon opening up a market for crypto-assets, BSE Managing Director Marlon Yarde has revealed.
And the stock exchange is anticipating regulatory approval for the trade in securitized digital tokens, while proceeding on a three-prong plan to boost the exchange’s global profile, he said.
Crypto-asset is the umbrella term for a digital asset or token which uses cryptography, peer-to-peer networking, and a public ledger to regulate the creation of new units, verify transactions, and secure the transactions without a middleman’s intervention.
“With the onset of [the] tokenization revolution, the BSE is focused on facilitating and trading of those securitized tokens,” Yarde told the BSE’s recent 6th annual conference on Corporate Governance and Accountability at the Hilton resort under the theme Brexit and Beyond.
“We are hopeful, in fact let me be bold and be clear, we are confident that our regulator, the Financial Service Commission will support us in pursing this new and innovative direction,” he said.
He made no mentioning of legislation nor gave a timeline for implementation, but Yarde said the BSE was in the final stages of negotiating with a global player to provide a trading platform for securitized tokens.
“Once the final agreement is signed off by management, it will be passed on to our external legal counsel for review and finally to our board for consideration and approval,” he said.
He unveiled a three-pronged strategy for further growing the local stock exchange, in a bid to facilitated capital mobility in Barbados and place greater focus on ensuring “excellent corporate governance” in an effort to instill investor confidence.
Under the plan, the BSE’s Junior Market is to be relaunched and rebranded as the Innovation and Growth Market (IGM) of the BSE. The stock exchange will also continue to promote the International Securities Market (ISM), and boost the ISM as the trade platform of choice for crypto-assets, Yarde said.
While several small companies could benefit from the IGM, some incentives must be put in place, he added.
“We have been lobbying Government repeatedly over the years for the correct implementation of these incentives. We hope with the kind assistance of our Minister of Finance these incentives will finally be enacted, so that the decade ahead and beyond will be characterized by sustainable prosperity both for local and international businesses in Barbados,” said Yarde.
Regarding the ISM, part of the strategy involves the BSE achieving recognized stock exchange status in key international markets including the US, UK, Canada and Hong Kong, the BSE manager said.
“This will put our feet in the door, so to speak, and strategically place us in a position to garner new listings,” he said.
The BSE is in the process of applying for recognized stock exchange status in the UK and working towards becoming a designated offshore securities market with the US Securities and Exchange Commission, he said.
“We are also developing key relationships with the London Stock Exchange and the Toronto Stock Exchange to facilitate eventual cross-listing for our ISM listed companies,” he added.
Minister in the Ministry of Finance Ryan Straughn, delivering remarks on behalf of Prime Minister and Minister of Finance Mia Mottley, threw his support behind the involvement of blockchain technology on the BSE.
Fintech (financial technology) companies could play a role in the opening up of the stock market to small businesses and more residents by providing open-source technology, the minister said. This would enable the average citizen the opportunity to deal with their finances at their convenience and at reduced rates, he added.
Straughn signalled the Government’s committment to broadening the creation of wealth and opportunity across Barbados, adding that he believed the BSE could be a facilitator of that wealth creation.
“We therefore feel that the stock exchange must adapt beyond its current model if it is to truly achieve financial relevance to the masses in the 21st century,” said Straughn.
“Fintech and the digital space is now our reality. While I acknowledge that shares on the Barbados Stock Exchange are now held by firms in this space, significant opportunities can be had by onboarding the new and emerging technology. The Barbados Stock Exchange can employ the use of financial technology firms to assist in educating the public in terms of what goes on in the stock market,” he said.
In addition, said Straughn, the BSE could partner with fintech businesses to allow them to “leverage the platform in order to raise capital to fund their businesses”.
“Opening up the stock market for fintech is critical as this has the capacity to simplify a system which is currently structured too difficult for ordinary investors with little knowledge. This will benefit not only the regulator and the startups, but also the national economy and the drive to more financially inclusive.
While the BSE recorded moderate growth over the past five years, the finance minister said, there was a decline in the number of listed securities from 26 to 18, a decrease in listed companies from 20 to 17, as well as a general decline in trading activities over the years.