The Central Bank of The Bahamas (CBOB) has reversed its decision to send its government securities portfolio to private brokers, instead announcing that it will continue to accept new and existing individual investors “until further notice”, according to a notice released by the bank.
In February, the CBOB announced that it would discontinue its brokerage services to the public and have the portfolio spread among private broker dealers. However, this move by the bank was met with ire from many holding government paper. Some small investors saw the move as stymieing their ability to continue to invest smaller amounts in government stocks, given that the move to a broker dealer will come with added costs.
The CBOB seems to have heard those cries from the public and decided to hold off on the move.
“Further to our market notice of February 3, 2022, advising of the discontinuation of brokerage services to the general public, the Central Bank, considering market feedback, has decided to continue to accept applications for domestic government securities from new and existing individual investors until further notice,” the bank said.
“As a result, individual investors may continue to submit applications directly to the Central Bank to purchase and sell securities.”
In February, the CBOB explained in its market brief for the fourth quarter of 2021 that while it began trading on the Bahamas International Securities Exchange (BISX) in that year, there had been “little trading activity” that did not involve transactions through the Central Bank itself.
The report explained that the CBOB continued to try to encourage the Bahamian public to use brokers to transact the purchase of government securities, after its announcement that it would completely move out of issuing government securities by the beginning of 2022.
“Heavy reliance on the Central Bank for acceptance and processing of IPO subscriptions by the general public continues to counter market efficiency,” The CBOB said.
“The impending deployment of the Bahamas Government Securities Depository (BGSD) and its enhanced features will assist in decentralizing the bond issuance process, allowing for a more integrated government securities market.”