MIH invests in Bermuda Stock Exchange, sees exchange traded risk opportunity

The Bermuda Stock Exchange (BSX) has a new investor in Miami International Holdings, Inc. (MIH), which has acquired a controlling stake in the Exchange and sees potential synergies between its platform and reinsurance, ILS and traded risk opportunities.

Miami International Holdings, Inc. (MIH) is the parent holding company of a number of options exchanges, the MIAX Exchange Group™, and says that acquiring a controlling stake in the BSX aligns with its corporate strategy and will provide another platform to further expand its technology, derivatives trading and regulatory expertise.

“We are very pleased to welcome the BSX to the MIH family,” said Thomas P. Gallagher, Chairman and CEO of MIH. “As we looked to establish our international presence and address emerging markets such as digital assets, we found that the Bermuda government’s commitment to fintech regulation, with legislation such as the Digital Asset Business Act 2018, coupled with Bermuda’s established (re)insurance market, made the BSX and the country of Bermuda, very attractive to us.”

MIH has a focus on leveraging the specialism that the BSX has built up in reinsurance and insurance-linked securities (ILS), as it has become the dominant exchange globally for the listing of catastrophes bonds and other ILS instruments.

The BSX developed its offering during the explosion of growth in the ILS market of the last two decades, during which time it has become the leading place for cat bond and other ILS instrument listings.

MIH clearly sees opportunities to help the BSX build on its success, with Gallagher saying, “Bermuda’s (re)insurance industry and the BSX’s contribution to its products and services is strengthened by our ability to provide additional support to the evolving global (re)insurance market through innovative products such as exchange traded risk. This transaction enables both MIH and the BSX the ability to offer innovative products and services on a global scale.”

The BSX also has a central role in the development of Bermuda’s domestic and international capital market activities, helping to attract global capital to the island and its markets, particularly of note in the insurance-linked securities and cat bond space.

“We are thrilled to be partnering with such a well-recognized exchange operator and technology innovator as MIH,” explained Greg Wojciechowski, CEO of the BSX. “This alignment better positions both parties to compete and serve customers across a broad range of asset classes by uniting our brands, expertise and infrastructure. Since the creation of the BSX in 1971, we have fostered growth and maturity within Bermuda’s domestic capital market, (re)insurance market and now we turn our sights to fintech. We are honored that MIH has recognized these attributes in the BSX and its acquisition of a controlling ownership position reflects the confidence that MIH has in the BSX, Bermuda and its economy.”

Bermuda’s Minister of Finance, the Hon. Curtis L. Dickinson, JP, MP, also commented on the transaction, “The Digital Asset Business Act 2018, or DABA, is pioneering legislation developed by the Bermuda government to match the pace of the ever-changing fintech industry. DABA provides a credible regulatory framework to regulate and protect those in the digital asset business while simultaneously promoting technical and business innovation. The Bermuda government is pleased to see MIH’s commitment to innovation and the growth of the digital asset industry, and now that MIH has completed its acquisition of a controlling interest in the BSX, we are confident that DABA will enable both MIH and the BSX success in this emerging market.”

We spoke with BSX CEO Wojciechowski who said, “Globally, industries continue to look to technology to make processes more efficient while leveraging advances to undertake more complex tasks.

“Regulated exchanges provide unique, independent, third party platforms which bring buyers and seller of products together so deals can be executed at the best price based on the market.

“Exchanges are aggregators of liquidity. As the insurance and capital markets continue to converge and investors get more comfortable consuming insurance related securities, there will be a greater need for those instruments to be supported by traditional regulated exchange platforms. Given our mandates to provide equal access and transparency, it’s a logical fit.

“Bermuda and the BSX are a unique place to support and nurture innovation in the exchange traded risk space as the market evolves.”

Gallagher also said, “MIH fully understands the importance and the significance of the BSX to Bermuda, and we remain committed to maintaining the BSX’s heritage and existing operations. We are delighted to partner with the BSX team that has helped to expand Bermuda’s domestic capital market and we will continue to support Greg Wojciechowski in his endeavors as a member of the Board of Directors of the World Federation of Stock Exchanges (WFE), of which the BSX is a full member.”