If Bermuda-based multi-billion dollar reinsurance firms were ordered out of the New York Stock Exchange because of theoretical changes in US tax regulations, they could bring their heavyweight presence to bear on Bermuda's BSX index.

But would the Island's stock exchange cope with giants like Ace and XL Capital whose daily share movements are normally counted in the millions of units compared to the few thousand shares typically exchanged when current BSX members such as Devonshire Industries, BF&M and Kentucky Fried Chicken Bermuda are traded?

It is a tantalising postulation put forward as a scenario by a speaker at the International Reinsurance Summit when looking at what may occur in the wake of insurance/reinsurance investigations of recent years in the US and attempts to address the issue of offshore-domiciled companies which do business in the US escaping tax obligations.

Intrigued to hear of the idea, Greg Wojciechowski, president and CEO of the Bermuda Stock Exchange, expressed confidence that the BSX, established in 1971, has the structure and ability to "scale up" its all-electronic system to accommodate the Island's giants.

The Island's stock exchange is already highly regarded on the international scene and is the only offshore stock exchange that is a full member of the World Federation of Exchanges.

It handles domestic companies of the magnitude of Butterfield Bank, which has a market capitalisation of $1.7 billion, and also acts as a secondary market for a raft of international companies with a Bermuda presence, including HSBC.

The scenario of Bermuda-based companies with US operations potentially being forced to delist from US exchanges was expressed as an opinion by Richard Hershman, senior managing director of forensic litigation consulting for US company FTI Consulting.

He was part of a discussion panel at the International Reinsurance Summit held in Hamilton last week, which looked at insurance industry investigations and where they might lead.

Mr. Hershman told delegates that one discussion that had been around "forever" was that of tax advantage.

"It is there, there is a whole community (including) the US government looking at not just tax havens like this in the reinsurance industry, but overall. There have been bills going back to 2002 and 2003 to try to establish some form of additional adjustment to the tax advantage, but they haven't gotten through," he said.

"But there are (other) bills that are winding their way through that range from things that, I was almost going to say punitive, such as if someone is going to operate their business from Bermuda, set up an operation (here), but then have material operations in the US and avoid tax, well then maybe they shouldn't be traded on the US stock exchange. That would be okay if they traded on the Bermuda Stock Exchange. So this is a political issue that is a hot potato."

This week BSX president Mr. Wojciechowski could see no impediment to the BSX handling such a shift in the primary market listings for large Bermuda-linked companies, should the scenario ever become a reality.

He said the Index was firmly committed to the domestic capital market but also sees huge potential in the international markets.

As stock exchanges around the world trend towards amalgamations, forming strategic partnerships or aligning with others, the BSX was keeping a close watch.

"The BSX has been careful in having regulations that are uniquely ours and that are deployed in a well respected jurisdiction. We have a fully electronic exchange with which I see so many opportunities to expand," said Mr. Wojciechowski.

Specifically, on the prospect of handling a shift of major international companies to the BSX, he commented: "Our whole system is electronic and scaleable. The issue would be getting the order to us. Brokers could have a trading desk that links to the BSX. The settlement could be done here and the shares could be held here. It is technically possible for the BSX to handle that business."