NEW TRADING FACILITY LIFTS VOLUMES OVER $5 BILLION IN 1997
In October 1996, The BSX created a new trading facility allowing trading members to make crossings on The BSX. A "crossing" is a transaction in which one trading member handles both sides of the trade. These trades may include international securities not listed on The BSX and may be made at any time.
We have attached an attractive fee structure of just $0.50 per trade with a minimum of $5 and a maximum of $50 for a basket of stocks. These fees are significantly lower than competing jurisdictions. Attached to this note is The BSX regulations which set out the fee structure.
In 1997 To date crossings on The BSX totaled over 75 million securities with a value of over $5 billion.
Bermuda's time zone gives us a natural advantage in this area, as we open up 11/2 hours ahead of the New York market and are also open after New York closes. US institutions trade large blocks of US securities away from the US exchanges outside of the NYSE's trading hours have closed (see recent Wall Street Journal Article attached). For example, NYSE Rule 390 permits trading in listed securities on exchanges other than those of the US provided that (amongst other things) the trades occur outside of exchange trading hours. Traditionally, these trades have gone to both London and Hong Kong for this purpose. The crosses may also be made on the NYSE but only after regular hours and between 4:00 p.m. and 5:15 p.m. (EST) after which an overseas exchange must be used.
Some of these trades are for a single security, but more often than not they comprise a "basket" of securities - for example all of the S&P 100 or 500 constituent stocks - which are traded simultaneously between one buyer and one seller.
At the moment all such cross trades are reported by the US institution to the New York Stock Exchange (NYSE) on a Daily Program Trade Reporting (DPTR), and to the NASD, in respect of NASDAQ and OTC stocks (on Form T) and to the AMEX, in respect of AMEX stocks, on a weekly basis. There is no requirement that the offshore exchange is "approved" by the NYSE in any way for the purposes of Rule 390.
The NYSE and NASD do not restrict the price at which such crosses are executed and this is freely negotiated between the two parties.