Trading volume of Bermuda dollar securities rose only slightly in 1996, figures obtained from the Bermuda Stock Exchange (BSX) reveal.

BSX chief executive officer William Woods said though yearly volume of local issues was up 3.1 percent, it was "disappointing.'' For the year ended December 31, 1996, local stocks and bonds worth $36.5 million changed hands compared to $35.4 million in 1995.

In 1994, trading volume of Bermuda dollar securities was $77.7 million. In 1993, securities worth $60.4 million were traded, (1992: $16.5 million, 1991: $9.3 million, 1990: $12.6 million, 1989: $20.5 million, 1988: $24 million).

"One of my objectives for 1997 is to increase local market liquidity and volume through a campaign of investor awareness,'' Mr. Woods said.

Part of that move will be the introduction of an index tracking fund, similar to Toronto Indexed Participation Shares (TIPS), giving investors the opportunity to buy shares in a fund which represents all local stocks, he said.

Though year local share volume was up marginally, many local stock prices, among them all financial institution issues, fell The Royal Gazette reported on December 20.

Blue chips companies continue to trade below book value.

On the slump of 1996, analysts said investors were looking to diversify, especially into the booming US market.

Gulfstream Securities Ltd. managing director Carolyn Hall said her clients were last year selling compared to 1992 and 1993 when they bought.

"There were more buyers than sellers up until the 1994 budget. Since then, buyers are looking overseas,'' she said. The 1994 budget eased foreign investment restrictions. "We went from more buyers than sellers to more sellers than buyers.'' This order imbalance is reflected in the depressed local share prices, she said.

As well as a poor year for local stock prices, the BSX index, a statistical composite of 20 top Bermuda companies, with the three banks holding about three-quarters of the index weight, was off. The index opened the year at 970.89, peaked at 1000.35 in June, and finished the year at 918.39, down 5.4 percent over the 12 months.

Since commencement of daily trading four years ago, the worst decline came two months ago when the index bottomed out four times in a week.

Punctuating lacklustre local stock prices, the index set record lows on the last two 1996 trading days.

Despite these declines, the BSX took big steps in its offshore securities market strategy in 1996, including a Securities and Exchange Commission offshore securities market (DOSM) designation, cross trading and the appointment of former head of private banking at JP Morgan & Co. Inc., Arthur Sculley, as BSX chairman.

The DOSM, a milestone for the BSX, gives a "new level of credibility,'' Mr.

Woods said.

It allows trading of regulation S stocks, US company shares issued offshore US. Reg S trades on the BSX are anticipated this year, Mr. Woods said.

In October, the BSX started crossings which added $3.37 billion worth of trading, captured primarily from the London market, to the year's overall trading volume total of $3.41 billion.

BUSINESS BUC