BSX Launches Automated Settlement System

The introduction of the BSD, a state of the art, fully electronic clearing, settlement and depository service, on 30th November reaffirms the Exchange's commitment to meeting international market standards of operation.

In making the announcement BSX President and Chief Operating Officer, Greg Wojciechowski, noted, "The move to an automated central clearing and settlement system is a natural progression for the BSX, which, as a full member of the World Federation of Exchanges, is committed to meeting and exceeding international securities market standards. The use of central securities depository organizations and shorter settlement cycles has been universally accepted as critical in the reduction of settlement and transaction risk, making securities markets more efficient."

The BSX likens the new system which will €˜de-materialise' (replace) share certificates, to electronic banking, as Mr. Wojciechowski explains, "In much the same way that electronic banking reduces the need for physical currency, the BSD automates settlement and de-materialises share ownership replacing physical share certificates with electronic, book entry records held in investor accounts within the BSD."

In short, the BSD will make it safer, quicker, easier and cheaper for shareholders to trade and monitor their investments.

The introduction of the BSD will be phased over several months, starting 30th November 2001. The Bank of N. T. Butterfield & Son Limited (BNTB) has been selected as the first €˜depository eligible' security. This means that as of 30th November, anyone holding BNTB shares will be able to enter their share holdings into the BSD through a BSD participant. BSD participants include BSX Trading Members, banks, custodians and other providers of nominee account services.

As of 14th December, only BNTB shares that have been entered into the BSD system will be available for trading on the BSX. This means that anyone wishing to sell BNTB shares on or after this date will be required to enter those shares into the BSD before initiating a sell order. To avoid

any confusion BNTB shareholders are encouraged to de-materialise their bank shareholdings now rather than later.

Mr. Wojciechowski went on to note that, "Once BSD goes live on 14th December the trading system will only accept BNTB shares which have been entered into the BSD system, so if a member of the public is contemplating selling all or any part of their Bank of Butterfield position in the near term, they are urged to consider entering those shares in to a BSD account now.

De-materialising share certificates is a simple process, shareholders need only present their physical share certificates to a BSD participant, who in turn will arrange for them to be entered in a BSD account in either their name or that of a nominee. Once the position has been entered into the BSD the physical share certificates will be cancelled and replaced by book entry records which will be reflected in regular account statements from the broker."

The BSX went on to explain that shareholders who do not plan to sell in the near term may continue to hold their physical share certificates for as long as they wish, however the BSX stressed that going forward, anyone wishing to sell BNTB or any other shares entered into the system, by way of the Exchange would be required to de-materialise their assets before any trade could be initiated. Similarly, those purchasing BNTB shares after the 14th December, can request a share certificate for the transaction, but the process will be much slower and far more costly than having the position held in the BSD.

BNTB will be the first security entered into the system but others such as the Bank of Bermuda, Argus and BELCO will be phased in as soon as possible thereafter. The BSX anticipates all Main Board and Small Cap companies will have become depository eligible by Fall 2002. In the meantime, all non-BSD eligible securities will continue to trade and settle as per current market practice.

The Exchange urges anyone with questions regarding BSD generally or BNTB's or other domestic share holdings to contact the broker of their choice, or other financial institution to discuss the matter further.