Ownership of the Bermuda Stock Exchange (BSX) could extend to the public, said that organisation's new CEO yesterday.

Mr. William Woods, speaking at the Hamilton Rotarians' weekly luncheon, said the recent offer to expand ownership to new trading members "lays the framework for a potential public offering (IPO) of shares in the exchange company itself, to the Bermuda public.'' Exchange-listed companies may also have ownership, he said.

Currently the Island's banks own and operate the exchange with new trading members having a future 15 percent ownership option.

New trading members include the three banks' broking companies and three Island firms not affiliated with the banks, First Bermuda Financial Services Ltd., Lines Overseas Management Ltd. and Matheson Investment Management (Bermuda) Ltd. Other non-bank affiliated firms may be approved later.

By initially expanding ownership of the exchange company to new trading members there is a separation of those stock broking members from the shareholders of the exchange company and this is a "very important and forward looking step'', he said.

"It opens up all sorts of possibilities of bringing in equity joint venture partners to help us develop the BSX.'' An IPO, though not guaranteed, is "definitely in our thinking'', he said. But before a public offering takes place there are other aspects of the exchange which need to be completed, like improvements to its electronic trading systems, a new central clearing mechanism and a new compensation scheme, designed to protect domestic investors who trade through exchange members.

New international and domestic listing rules will also have to be finalised.

On the international front, the rules are designed to give Bermuda a competitive edge in certain niche areas and attract companies to chose Bermuda as a secondary listing site.

"Although this international market will be separate from the domestic market it will be dependent on us having an open and efficient domestic market in order to obtain international recognition for the BSX,'' said Mr. Woods.

"At this stage the BSX does not have the resources to provide a primary level of regulation for international issuers who issue their securities to retail investors,'' he said.

The initial main focus for the secondary listings are Hong Kong companies and international insurance companies which have already chosen to incorporate in Bermuda, he said.

"Our longer term goal, however, is to develop the infrastructure in Bermuda that will support a truly offshore and liquid capital market where companies will come for a primary listing,'' he said.

And an amendment to the Companies Act may be needed to facilitate international companies offering their securities to Bermuda investors so they are not regarded as "doing business'' on the Island.

To raise its profile, the exchange will be organising presentations around the Island to explain how securities trading works and why securities investment can be a part of an individual's financial planning.

Mr. William Woods