Bermuda: Guide To Listing On The Bermuda Stock Exchange

Last Updated: 11 September 2012
Article by Cameron Adderley


The BSX continues to attract international recognition.

As the world's largest offshore fully electronic securities market, it offers a diverse range of listing and trading opportunities for both international and domestic issuers of equity, debt, depository receipts, insurance securitization and derivative warrants.

Internationally recognised as an appealing venue for the listing of hedge funds, fixed income structures and investment fund structures. The BSX also operates a Mezzanine Market for early stage companies. All in all, the BSX provides a focus offering unique products for the offshore market, thus contributing to its growth and success.

The BSX describes itself as committed to meeting and exceeding international securities market standards. Since the late 1980's the introduction of a central securities depository and shorter settlement cycles have been universally acknowledged as the best way to reduce risk and make securities markets more efficient.

Another contributing factor to the Exchange's success is the BSX's 'light but effective' regulatory environment which makes it conducive to new and innovative product listings, especially 'institutional only' securities. The BSX is bound neither by European Union Listings Directive, nor United States Securities Exchange Commission (SEC) regulations.

As a full member of the World Federation of Exchanges, the BSX has been acknowledged by its peers to meet the highest regulatory and operational standards. Similarly the US Securities Exchange Commission recognises the BSX as a 'Designated Offshore Securities Exchange' (DOSM). The BSX also enjoys recognition by the Bermuda Monetary Authority, as a Recognised Investment Exchange and an Approved Stock Exchange; the London Stock Exchange, as a Registered Organisation and the IOSCO, as an Affiliate Member. BSX is also recognised as an approved Stock Exchange under Australia's Foreign Investment Funds (FIF) taxation rules, and in October, 2011, the Minister of Finance for Canada approved the addition of the Bermuda Stock Exchange to the list of designated exchanges under the Income Tax Act (Canada)

The BSX has also been approved by the UK's Financial Services Authority ("FSA") as a 'Designated Investment Exchange'. Many potential investors recognise this as a seal of approval from the FSA as to the effectiveness of the BSX's rules and its internal regulatory environment as well as the operation of the BSX, supervision, membership, price information, clearing and compliance arrangements.

As a designated investment exchange, FSA authorised firms are allowed to treat transactions on the BSX in much the same way as if they were trading on the UK's recognised investment exchanges. As a consequence, investment by an FSA firm in a BSX listed security will now incur a significantly lower position risk requirement, which in turn reduces overall transaction costs. HM Revenue & Customs also lists the BSX as a Recognised Stock Exchange.

BSX lists institutional funds under a "commercially sensible" regulatory environment that meets international standards. The BSX does not impose minimum capital requirements or investment restrictions (with the exception of disallowing a fund to take control of its underlying investments) and allows flexibility for hedge funds and the use of prime brokers.

Bermuda has earned a reputation as a world-class centre of commerce, featuring a business-friendly environment, a stable and growing economy, and an unmatched collection of talent and intellectual capital in key sectors, including insurance, financial services, and more recently, electronic commerce. In particular, Bermuda is a major international market for insurance and reinsurance. As at 31 December 2011, the BSX listed over $3billion in listed catastrophe bonds ("cat bonds") and other insurance linked securities ("ILS") on the exchange.

As of September 2012, the BSX's website reports that 35 ILS are listed on the exchange with a total value of US $4.988 billion. The BSX, together with the Bermuda Monetary Authority ("BMA") has been working hard to promote Bermuda as the main listing destination for ILS.

Of the 35 listed insurance linked securities on the BSX, 7 are securitization programs, 19 are notes issued under these programs, 7 are tranches of ILS notes issued as stand-alone securities and 2 are specialist exchange trade fund classes.

The momentum is driven largely by the BMA's revised regulations, which in late 2009 established a new designation for 'special-purpose insurers' (SPI) as part of its supervisory scheme. In April, 2012, the BMA reduced the annual fee for SPI's by nearly 50%. This has been a very positive step for SPI's setting up in Bermuda wanting to issue ILS such as catastrophe bonds, and the BSX have been able to offer them the option of listing these ILS on the exchange.


The key strengths of the BSX may be summarised as follows:

  • efficient, time sensitive and cost effective trading;
  • de-materialising shares through the Bermuda Securities Depository service ("BSD") removes the need for physical settlement;
  • listed Bermuda exempted companies enjoy free transferability of their shares;
  • responsive and approachable Market Authorities;
  • international standards of issuer regulations;
  • premier location;
  • meets highest regulatory and operational standards; and
  • investment funds may benefit from the "Launch and List" facility agreed between the BMA and the BSX whereby fund formation and listing approvals run concurrently.


The instruments which can be listed include:

  • shares, units or other interests in investment funds;
  • debt instruments;
  • equities;
  • insurance related securities;
  • derivative warrants; and
  • depository receipts.


Section 1 of the BSX Listing Regulations applies to all proposed issuers. Due to the variety of Listing Regulations applicable to the different types of issuers mentioned, a detailed analysis is not provided. However a brief summary of the Listing Regulations that applies to all issuers is given. The first stage in the making of any application for admission to the Official List is the appointment of a Listing Sponsor. The applicant must have a sponsor at all times while making the application. Once listed, the sponsor ensures compliance with ongoing obligations. The BSX maintains a list of approved sponsors from which new applicants may find a Listing Sponsor, or alternatively a BSX Trading Member. As a registered BSX Listing Sponsor Appleby Securities (Bermuda) Ltd. is able to sponsor the listing of all types of securities , other than Primary Equity listings which are co-sponsored with a BSX Trading Member).

The listing procedure comprises four steps:

a. Satisfying Listing Conditions

Before a security is considered for admission to the Official List certain conditions must be met. These conditions are vetted by the sponsor.

The sponsor must make certain that all of the necessary documents required in support of the listing application are appropriately filed with the BSX and it is the duty of the Sponsor to communicate with the BSX during the listing application.

b. The Application for Listing

The applicant must submit certain documents to the BSX as required by the BSX Listing Rules.

The documentation that must be filed with the BSX are:

  • Formal letter of application;
  • Draft prospectus/Offering Memorandum;
  • Certificate of incorporation or equivalent;
  • Certified copy of issuer's constitution;
  • Audited annual report and accounts (for the last 3 years or since inception);
  • Certified copies of resolutions authorising issue of the securities;
  • Issuer's Undertaking to comply with its continuing obligations consequent on listing, together with equivalent directors' declarations and undertakings;
  • Copy of document of title to be used for the issue;
  • Certified copy of material documents referred to in the prospectus/Offering Memorandum.
  • Auditor's acceptance letter;
  • Listing sponsor's declaration; and
  • For Secondary Listings only - proof that a Primary Listing on a recognised exchange exists and is in good standing.

The prospectus must contain information that enables an investor to make an informed assessment of the activities, assets and liabilities, financial position, management and prospects of the issuer - as well as of its profits and losses and of the rights attaching to such securities. The regulations provide guidance on all the prospectus items.

The BSX Listing Regulations are available from your Listing Sponsor, or on the BSX website

c. Approval

The BSX seek to respond within two business days with comments on each draft of the prospectus. The BSX guarantees response from the Listing Committee within seven business days once complete applications are submitted. In most cases the entire listing process can be completed within two weeks, from receipt of the final prospectus.

d. Listing

If the Listing Committee approves the application, the Listing Document is then filed and the securities are admitted to the Official List.

The BSX requires continuing obligations which include:

  • Prompt notification to BSX and shareholders of material events to allow them to evaluate the financial position of the issuer and to avoid the creation of a false market. Material events are circumstances that may be expected to affect market activity or the price of the listed securities;
  • Net Asset Value ("NAV") calculations (for funds);
  • Audited annual report and accounts, as well as preliminary results;
  • Copies of shareholder notices or circulars; and
  • Notification of any material changes to the constitution, change of name, change of directors.

The BSX also provides a facility for the secondary listing of a company's securities and funds which are already listed on one or more other recognised stock exchanges.

A secondary listing on the BSX may be obtained in respect of Securities that have a primary listing on a recognised exchange. To be eligible to be listed on the BSX, the issuer must be suitable for listing and will generally be required to meet the BSX's ongoing disclosure obligations (which are usually met by providing proof that the listing with the primary exchange is in good standing, and providing the BSX with copies of all filings made with the primary regulatory exchange, including, most importantly, recent financial statements).


Debt securities are only eligible for listing provided they are fully negotiable and freely transferable. The Listing Regulations that apply in this area are streamlined and rely more on full disclosure than prescriptive regulations for investor protection purposes. This means that debt listings can be completed within a matter of days. The BSX seeks to respond within 48 hours with comments on each draft of the prospectus and the BSX Listing Committee responds within seven days once complete applications are submitted.

The BSX lists debt issuance programmes and securities (such as medium term notes or credit-linked notes), asset-backed securities, convertible bonds, Specialist Debt Securities, Eurobonds, and other bonds which, by their nature are generally purchased by experienced investors. (See section 6 below for information about the listing of Insurance Securitization programs and securities).

In addition, the issuer of debt securities must either:

  • be a supranational body recognised by the BSX; or
  • be a government (or a government agency whose obligations are guaranteed by a government); or
  • be an exempted company incorporated in Bermuda with consolidated net tangible assets of at least $10 million; or
  • have a primary listing for its share capital on a recognised stock exchange; or
  • restrict investment in its listed debt securities to qualified investors in accordance with terms acceptable to the BSX.

For the duration of the listing, the issuers must maintain a paying agent either in Bermuda or another location agreed by the BSX. Debt securities must also be eligible for deposit in a recognized clearing and settlement system.

The applicant must submit certain documents to the BSX as required by the BSX Listing Regulations. The documents to be provided are the same as for the other collective investment vehicles above. The draft prospectus however must include the issuer's financial information and similarly be reviewed by the BSX. The prospectus must contain information that enables an investor to make an informed assessment of the issuer and securities.

The regulations provide guidance on the following prospectus items:

  • BSX standard disclaimer.
  • Summary of key aspects of the Issuer's constitution.
  • General information about the issuer, its advisors and other key service providers, and the prospectus.
  • Information about the securities as well as the terms and conditions of their issue and distribution.
  • General information about the group's activities.
  • Issuer's management.
  • Material contracts.
  • Provision of key documents for inspection by the public for a minimum of 10 working days.

As with all instruments listed on the BSX, there are continuing obligations. This information is similar to the obligations required for listing equities and will be available to debt issuers from their Listing Sponsor, or occasionally from the BSX itself. The debt issuer must maintain a paying agent in Bermuda, or another location agreed to by the BSX, for the duration of the listing. The debt securities must be eligible for deposit in a clearing and settlement system recognised for this purpose by the BSX.

BSX must be informed by Debt Securities Issuers in relation to changes in the terms of debt securities, decisions to pass interest payments, any purchase, redemption or cancellation of debt securities, important changes, proposed drawings, the closure of books and winding up or liquidation. If the issue carries conversion rights for, or a guarantee by, another company, adequate particulars must be available for that company. Listings for subsequent issues under a BSX-approved debt issuance program may be accomplished immediately by filing with a simplified "term sheet" consisting of the relevant basic information accompanied by a simple application letter referring to the program.

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