The Ministry of Finance in Brunei has granted a license for the establishment of the country's first securities exchange. International Brunei Exchange (IBX) is a company registered in Brunei but is a wholly owned subsidiary of Nesdex, a Singaporean based company backed by Taiwanese money.
Nesdex is aiming to create an internationl securities market that enables the listing, trading, settlement and clearing of securities on the IBX. International investors will be able to access the system through a series of local portals called CityDEXes in the world's major financial centres.
According to the Nesdex website, "Nesdex is creating a network of nodes, CitiDEXes, in each of the world's major financial centres. Orders are routed by each CitiDEX to IBX where they are matched and the subsequent transaction is cleared through Nesdex International Clearing. The CitiDEXes serve as satellite hubs for all of the local participants in the various offshore markets to connect to IBX through the Nesdex global e-financial network. They also provide business and technical support to IBX members in individual markets, and work to increase the influx of offshore liquidity to local domestic markets."
By granting of this exclusive license to IBX, Brunei is taking a big step in its ambitious goal to establish itself as an offshore financial centre. Primarily, the Sultanate is seeking to capitalize on the growing interest of middle eastern and Asian investors in Islamic financial instruments. These investors will now be able to to buy and sell equity and derivative products which adhere to these shari'ah rules on the IBX platform.
"This move reflects Brunei Darussalam's open and pro-active approach towards promoting its financial sector and its economic development," says BC Yong, CEO of IBX. "Brunei Darussalam is the ideal location to establish IBX and is perfectly positioned to develop into one of the key financial centres in the Asia region."
Since 2000, Brunei has been trying to diversify its economy away from the state's oil and gas revenues. It decided to set up the Brunei International Financial Centre (BIFC) as one of the planks of that move. The country has swiftly enacted legislation to make Brunei an attractive offhsore financial centre.
Crucially, Robert Miller - an affable New Zealander - was recruited to be the chief regulator and head of supervision in the country. Miller is the architect of many of the world's offshore regulatory systems including those found in the Cook Islands, Bermuda and Labuan. His time in the country has been spent well with almost 20 new pieces of legislation already in place, bringing Brunei up to global standards in financial regulation.
The establishment of the new exchange is the latest move in Brunei's efforts to improve its financial architecture. "In the process of seeking suitable partners to establish a securities exchange in Brunei Darussalam, BIFC explored a number of options," Miller comments. "This is a milestone in the development of Brunei Darussalam as an international financial centre."
The country is also bidding to be the main exchange at the heart of a new International Islamic Money Market, comprising Malaysia, Indonesia, Bahrain and Sudan. This announcement may help Brunei's bid for that role.
