When Greg Wojciechowski joined the Bermuda Stock Exchange (BSX) in 1993 as project manager, numbered ping-pong balls were pulled from a hat to select the order in which brokers would trade.

The ping-pong ball system was replaced by an electronic system in the same year and the exchange today propels itself into the 21st century with the launch of the Bermuda Securities Depository (BSD).

Making the announcement yesterday, Mr. Wojciechowski, who is now president and chief operating officer, said the introduction of BSD, a state of the art, fully electronic clearing, settlement and depository service reaffirms the exchange's commitment to meeting international market standards of operation. Mr. Wojciechowski said: "The move to an automated central clearing and settlement system is a natural progression for the BSX, which, as a full member of the World Federation of Exchanges, is committed to meeting and exceeding international securities market standards. The use of central securities depository organisations and shorter settlement cycles has been universally accepted as critical in the reduction of settlement and transaction risk, making securities markets more efficient."

The BSX likens the new system - which will "dematerialise" share certificates - to electronic banking, as Mr. Wojciechowski explained: "In much the same way that electronic banking reduces the need for physical currency, the BSD automates settlement and dematerialises share ownership replacing physical share certificates with electronic book entry records held in investor accounts within the BSD."

In short, the BSD will make it safer, quicker, easier and cheaper for shareholders to trade and monitor their investments.

The introduction of the BSD will be phased in over several months, starting today. The Bank of N.T. Butterfield and Son Ltd. (BNTB) has been selected as the first depository eligible security which means that as of today, anyone holding BNTB shares will be able to enter their share holdings into the BSD through a BSD participant which include BSX trading members, banks, custodians and other provisions of nominee account services. As of December 14, only BNTB shares that have been entered into the BSD system will be available for trading on the BSX. This means that anyone wishing to sell BNTB shares on or after this date will be required to enter those shares into the BSD before initiating a sell order, and Mr. Wojciechowski recommends that BNTB shareholders dematerialise their bank shareholdings now rather than later to avoid confusion.

He explained that dematerialising share certificates was a simple process: "Shareholders need only present their physical certificates to a BSD participant, who in turn will arrange for them to be entered in a BSD account in either their name or that of a nominee.

Once the position has been enOnce the position has been entered into the BSD, the physical share certificates will be cancelled and replaced by book entry records which will be reflected in regular account statements from the broker."

Shareholders who do not plan to sell in the near term may continue to hold their physical share certificates for as long as they wish, however, the BSX stressed that going forward, anyone wishing to sell BNTB or any other shares entered into the system by way of the Exchange would be required to dematerialise their assets before any trade could be initiated. Similarly, those purchasing BNTB shares after December 14 can request a share certificate for the transaction, but the position will be much slower and far more costly that having the position held in the BSD. Other BSX listings such as the Bank of Bermuda, Argus and Belco will be phased into the BSD and Mr. Wojciechowski said that the BSX anticipates all Main Board and Small Cap companies will have become depository eligible by Fall 2002. In the meantime, all non BSD eligible securities will continue to trade and settle as per current market practice.

The BSX was founded in 1971 and is the world's leading fully electronic offshore securities market. Last year was a record for the Exchange with overall trading volume in excess of 5.6 billion shares representing a total share value of $230 billion.