The ownership of local companies ought to be spread more broadly across the Island, investment analyst Mr. Jeff Conyers told Hamilton Rotary Club yesterday.

Mr. Conyers, president of First Bermuda Securities, said: "Right now, there are not enough people participating in the process of owning local stocks.'' To say that the local stock market was driven by yields was too simplistic, said Mr. Conyers.

"People are too scared to sell their shares because they are afraid they will not be able to buy them back at any stage,'' he said. "There's not enough liquidity in the market.'' In the 12 months before FBS began over-the-counter trading of stocks in May, 1992, 11 million shares had changed hands -- representing two percent of the market capitalisation, he said.

"The average length of time that some held onto the stock of a Bermuda company was 50 years,'' said Mr. Conyers. "Basically, people bought shares and held onto them until they died.'' Owning local shares during the 1940s, 50s and 60s was virtually a privilege open to the chosen few, he added.

"The president or chairman of an institution would keep two for themselves and give one to whoever was coming in,'' he said. "They were run as a closed club.'' FBS was committed to creating greater liquidity and encouraging more Bermudians to start holding local shares.

Mr. Conyers said that, in 1991, his firm realised that a trend was about to happen whereby people would move away from debt financing.

"In the late 1980s, people realised this wonderful thing called debt was not such a good idea, after all,'' he said.

Many people had borrowed to move into real estate because they anticipated a greater return on their money.

Now there was a shift into equities, he said.

He said he was "astounded'' at how Bermudians had responded to FBS' daily trading of local stocks.

"In the seven months to December 31, 1992, we found that we were doing about 10/15 percent of the volume of the Bermuda Exchange and a further 20/25 percent of the Exchange volume off the Exchange,'' he told the Rotary Club.

"Once they were exposed to this system, Bermudians were very keen.'' A greater market liquidity could prevent some firms from going bust, argued Mr. Conyers.

Company owners sometimes ran profitable businesses which ended up failing because the personal debts of the owner were too vast.

"These are the companies which need to grow,'' said Mr. Conyers. "Why not take away the debt and replace it with equity? "People are worried about losing control but you can still control a company effectively with smaller blocks of shares.'' Bermuda Commercial Bank, which was minority owned but seemingly controlled by Barclay's Bank was a classic example.

Mr. Conyers called for local companies to review their bye-laws, which often gave the Board a veto over new investors who want to buy shares in their firms.

"This is a silly rule,'' said Mr. Conyers. He also called for the introduction of a central transfer agency to speed up the process of the transfer of share ownership, which he said currently took between two and six weeks to take place.

"That's too long for the new volume we anticipate,'' he added. PHOTO Mr. Jeff Conyers.