Barbados opens door to international trading and fund-raising

BY AVIA COLLINDER Business reporter

Friday, February 03, 2017

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Jamaican firms — categorised as potential sponsors and issuers — are being encouraged to bring the local investment community on board for participation in the new International Securities Market (ISM) launched by the Barbados Stock Exchange (BSE) in 2016.

Marlon Yarde — Managing Director of the ISM — indicates that issuers on the international exchange will benefit from many double taxation treaties, the ability to raise capital via the offshore market at reduced rates, and increased access to niche financial products not readily traded on larger exchanges.

At the 12th annual Investment and Capital Markets Conference held in Kingston last week, Yarde told the audience that the ISM was another alternative for investors who were seeking options outside of traditional banking.

"One of the key developments in the region has been the creation of the International Securities Market (ISM) by the Barbados Stock Exchange. The ISM is a completely separate market from the regular market in Barbados — one that is primed to feature innovative, well-crafted and compliant financial structurings for astute investors," Yarde said.

The ISM is a market for the listing and trading of securities by issuers who may or may not be incorporated in Barbados that would otherwise be listed and traded on other exchanges around the world. It is a market for international investors, high net worth individuals, similar to the second-tier markets of Canada, UK and the US.

The ISM offers options to secure funding and trade. The stock exchange head indicated that while the platform is targeted for local operators in Barbados, international service providers can also become listing sponsors by registering as International Business Companies (IBC) in Barbados, which will satisfy the island’s Financial Services Commission.

In order for the securities of the issuer to qualify for a listing, the issuer must have a listing sponsor — a company or partnership approved by the Exchange to procure and secure listings.

Listing sponsors may also double as trading members, provided they are structured to provide such services. Such potential sponsors include accounting firms, fund managers and trust companies, among other service providers. They can register as traders on the exchange.

Yarde noted that double taxation agreement advantages reduce tax burdens for issuers and investors on gains and dividends.

Traders, he said, will get access to new streams of financial products, secure the ability to trade cross-listed securities for arbitrage opportunities, and access back-end opportunities to procure further business for their respective firms.

"We are primed to accommodate the staple products, including equities, corporate debt, property funds — you name it," he outlined.

"Barbados offers an exceptional tax treaty network of double taxation agreements (27 and counting), Bilateral Investment Treaties (nine and counting) and Tax Information Exchange Agreements (three signed, with two awaiting ratification). Barbados is the only low-tax wealth management jurisdiction in the Caribbean with a comprehensive tax treaty network," Yarde continued.

Noting that initial and annual fees are extremely competitive compared to similar benchmark exchanges, he said that for issuers, listing on the ISM can be a cost-effective forerunner to an onshore listing with some of the world’s largest exchanges: "One is able to test market liquidity on a relatively inexpensive platform," he advised.

"For trading members, listing sponsors, and other service providers, the ISM’s low-cost structure, relative to other emerging-market exchanges, makes it an attractive platform to conduct business. With fees set 30-50 per cent below benchmark exchanges, the ISM offers significant cost savings to all market participants — a critical factor in this increasingly competitive environment."

The Barbados Stock Exchange was originally established in 1986 as the Securities Exchange of Barbados, as the regulator and facilitator of trading in Barbados. On August 2, 2001, under the Barbados Companies Act, it became the Barbados Stock Exchange Inc. to focus primarily on facilitating trading.

On December 22, 2015, the exchange demutualised to become a shareholder-owned, for-profit company.

The Market Cap of the companies listed, as at June 30 of this year, was BDS$9.25billion or US$4.6billion.

Yarde noted, "We have over three centuries’ worth of trade history with the United Kingdom, over a century’s worth of the same with Canada, and decades of experience in financial and business management services.

"Simply put, Barbados is a uniquely structured offshore business jurisdiction. International agreements entered into, using Barbados as an intermediary, are well supported by law and enforcement rights."

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