Barbados: Country and Foreign Investment
Stock Exchange (BSE)
The Barbados Stock Exchange, although not large, has been moderately successful. At the end of 2011, the BSE had 26 local listings and a number of international companies including 7 banks. Its market capitalisation was BDS9.1 bn, with cross listings to other Caribbean markets also capitalised at BDS1.89 bn, an increase of 5.5% over the previous year.
From July 2000, operations at the BSE became fully computerised, increasing the efficiency and security of the market. Certificates for shares which are to be traded must be deposited with the Central Securities Depository (CSD) at the Central Bank of Barbados.
The original trading facility, the Securities Exchange of Barbados (SEB), was established in 1987, under the Securities Exchange Act, Cap 318A, of 1982. The BSE was re-incorporated on August 2, 2001 simultaneously with the enactment of the Securities Act 2001 -13, which repealed and replaced the original Act of 1982. However, the BSE remains a privately owned, non-profit organization. On July 4, 2001 the BSE switched from the manual, open outcry method of trading, to electronic trading using the order-routing method.
In anticipation of the Caribbean Single Market, the BSE has rapidly been developing links with other regional exchanges, particularly those of Jamaica and Trinidad and Tobago.
The transaction limit imposed on the Barbados Stock Exchange was increased from BDS3 million to BDS5 million by the Central Bank in August, 2003. For transactions above this is needed from the Central Bank. "This limit applies to the purchase and sale of shares and securities cross-listed and cross-traded on any of the stock exchanges in the Member States of CARICOM but does not include government securities," the Central Bank explained, continuing: "Also, effective July 15, 2003, commercial banks in Barbados may, without the prior approval of the Central Bank, approve applications up to a limit of BDS250,000 in respect of investment transactions in private sector unlisted equities in CARICOM countries."
Then in January, 2004, the Central Bank of Barbados announced that investments in certain corporate securities will no longer have to be referred to the bank, in line with a general process of investment liberalization taking place across the Caricom region. "Effective January 15, 2004, all investments in corporate securities in the form of equities cross-listed and cross-traded on the stock exchanges in CARICOM may, without limit, be approved by the Barbados Stock Exchange without reference to the Central Bank of Barbados. However, this authority does not include any government securities cross-listed and cross-traded on these stock exchanges."
In April, 2005, BSE decided to allow shares listed on the bourse to move in one cent increments. The new rules had been in the pipeline for some time and are an attempt by the BSE to harmonise with other exchanges in the region, such as Jamaica and Trinidad.
In June, 2005, BSE reduced the length of time it takes to settle stock transactions. Previously, share transactions were settled on a T+5 basis. According to General Manager, Marlon Yarde, the exchange wants to reduce this settlement cycle to T+3, a move he says will improve risk management by decreasing the likelihood of default on a transaction that is in the process of clearing.
The T+3 system is currently used by the Jamaica Stock Exchange, and it is the other exchanges in the region are also aiming to reduce the length of their settlement cycles.