Milestone Year for the BSX

Hamilton, Bermuda: 4th  January 2006 - The Bermuda Stock Exchange (BSX) today reported that 2005 was a milestone year for the Exchange following its receipt of two critical overseas regulatory recognitions.

The BSX/RG Composite Index ended the year at 3,884.08, up 21.1% compared with 2004. Domestic trading volumes increased from 2.6 million shares to 2.9 million shares with a corresponding value of over $75 million.

The BSX International Crossing Market ended the year with 857 million shares traded and an associated value of $47 billion. The total market capitalization of the BSX as at 31 December 2005 (excluding fund listings) stood at over $300 billion of which approximately $2.0 billion represented the domestic market.

As at 31 December 2005, 362 issuers were listed on the BSX. Included in the new listings in 2005 were: Renaissance Securities EuroNote Programme and Butterfield Bank's Subordinated Note issue. There were also 26 new collective investment vehicles listed and 26 subsequent issues processed during the year.

In making the year-end announcement, BSX President and Chief Executive Officer Greg Wojciechowski noted, "2005 has been a milestone year for the Exchange, one of which I am personally proud, as I am certain are the stakeholders, clients and supporters of the BSX.  This year through the efforts, commitment and dedication of the BSX Team, the Council of the Exchange, the BMA, the Ministry of Finance and the many users and supporters of the BSX, the Exchange was granted two very important and significant regulatory recognitions.  The Australian tax authority's recognition of the BSX as an Approved Stock Exchange was granted in June and shortly thereafter in September, the UK's Financial Services Authority granted Designated Investment Exchange status to the BSX."

Mr. Wojciechowski went on to note: "These recognitions are clearly substantial developments for the BSX and have been achieved as the Exchange has demonstrated to its overseas regulatory peers that the controls, infrastructure and regulations in place by the BSX for the Bermuda capital market embrace and meet internationally accepted regulatory standards.  From a commercial point of view, we look forward to these developments generating even more interest in the BSX and Bermuda and are proud that our overseas peers have recognized the hard work and commitment of the BSX Team and Bermuda's regulatory community."

In closing Mr. Wojciechowski stated: "The BSX is eagerly looking forward to 2006 and the exciting developments that are anticipated and I have every confidence that our dedicated team of stock exchange professionals is in a strong position to support the continued development of the Exchange and the domestic and international financial services industry to ensure that Bermuda's position as the world's premier offshore business jurisdiction continues to grow."

Note to Editors:

UK FSA - Designated Investment Exchange Status

1)      According to the The Financial Services Authority's (FSA) website, www.fsa.gov.uk, the FSA is an independent body that regulates the financial services industry in the U.K. It has been granted a wide range of rule-making, investigatory and enforcement powers to promote efficient, orderly and fair markets and to help consumers achieve a fair deal.

In furtherance of the above, the FSA has been given the power under the Financial Services and Markets Act to fulfill the following four statutory objectives:

·        Market confidence;

·        Public awareness;

·        Consumer protection; and

·        Reduction of financial crime.

2)      Designated Investment Exchange

As set out in the FSA's Consultation Paper CP0 5/6 submitted in April 2005, The FSA proposed to amend the definition of "designated investment exchange" in its regulatory glossary to include the Bermuda Stock Exchange (BSX).

Under published guidance, the FSA determines whether the investment exchange provides an appropriate degree of protection for consumers, having particular regard to:

·        the relevant law and practice, including the regulatory framework in which the investment exchange operates, in the country or territory in which the

·        investment exchange's head office is situated and any other relevant country or territory; and

·        the rules and practices of the investment exchange.

The importance of the designation is summarized as follows:

·        The list of Designated Investment Exchanges provides UK investors and their brokers with a reference point for those non-UK exchanges which, while not carrying on a regulated activity in the UK, have appropriate standards of investor protection.

·        Second, under certain rules, UK authorized firms may treat transactions effected on a Designated Investment Exchange in the same way as transactions on a recognised investment exchange.  The direct consequence for firms is that these transactions will attract a significantly lower position risk requirement and reduce their costs; and

·        A third benefit is that UK authorized firms may take advantage of the exemptions granted under Rule 30.10 of the US Commodity Futures Trading Commission's Rules and sell investments listed on a Designated Investment Exchange to customers located in the USA.

3)      List of BSX Regulatory Recognitions:

·        UK FSA , Designated Investment Exchange

·        World Federation of Stock Exchanges, Full Member

·        Bermuda Monetary Authority, Recognised Investment Exchange

·        US Securities and Exchange Commission, Designated Offshore Securities Market

·        The London Stock Exchange, Registered Organisation

·        IOSCO, Affiliate Member

·        Australian Tax Authority; Approved Stock Exchange under Australia's Foreign Investment Fund (FIF) taxation rules.

·        Appointed Agent, Bermuda Ministry of Finance

Australian tax authority - Approved Stock Exchange under Australia's Foreign Investment Fund (FIF) Taxation Rules

The essential function of the designation is to provide clear guidance to Australian taxpayers of when unrealized gains on investments held in a foreign country by Australian taxpayers may be exempt from the Foreign Investment Fund taxation measures.  The most widely applied exemption from the FIF taxation rules occurs when the foreign company is principally engaged in an eligible (or active) activity, one that does not fall on the "black list" of activities which is detailed in Schedule 4 of the Australian Income Tax Assessment Act 1936.  There are two methods by which to determine whether a foreign company is principally engaged in eligible activities, the first is if it is listed on an Approved Stock Exchange and the other is by reviewing the financial activities of the company as set out on the company's balance sheet.