Central Bank of Bahrain Gov. Rasheed Mohammed Al-Maraj hosted more than 400 businessmen, bankers, investors and ministry officials at a ceremony marking the launch of the BFX at the Ritz Carlton Hotel in Manama.
"The establishment of the BFX will result in additional business and employment opportunities in Bahrain and the region," said Al-Maraj. "The Central Bank of Bahrain welcomes BFX to Bahrain and is proud that the central bank's long track record and reputation as a transparent and effective regulator was a major factor in its location decision."
BFX is the brainchild of Jignesh Shah, chairman and group CEO of the Mumbai-based Financial Technologies Group. Named as India's youngest billionaire in 2008, Shah noted that with Asia's impressive economic growth figures, the exchange would give investors in the Gulf Cooperation Council states opportunities to look East and have access to Islamic investment instruments at the same time.
"The launch ceremony marked the culmination of two years of concentrated work, during which time our teams have been working to ensure a seamless launch of operations. We are particularly proud of Bait Al-Bursa (House of Exchanges) which is the first dedicated Islamic transaction platform in the region," Shah said.
"I am happy to say we have received interest from key Islamic financial institutions, a considerable milestone which demonstrates the appetite for our services, as well as serving as proof to Bahrain's strong status as a financial center," he said.
In a recent study by Canada's Fraser Institute, Bahrain was ranked as No. 1 for economic freedom in the Arab world. The country's mature and well-established business hub, attractive tax rates and its well-respected regulatory authority were cited as reasons for choosing Bahrain as the site for the BFX.
Managing Director Arshad Khan listed the exchange's growth drivers as access to a wide range of liquidity through a deep and diverse financial community, Bahrain's free-trade environment with zero corporate taxes and the Middle East's first exchange to launch Shariah-compliant financial products.
Scheduled to commence live operations Feb. 7, the BFX will see two phases in its roll out. In the first phase, its Islamic division, Bait Al-Bursa, will launch its e-Tayseer platform for general use followed a month later by its conventional division. The phased approach has been designed to allow market traders adequate time to develop their business in the Islamic division ahead of the conventional market launch. BFX also set up an investor training academy, which will help investors understand the available products and the circumstances for which they are best suited.
The exchange will be located on the 12th floor of the Bahrain Financial Harbor Tower. Access through its electronic trading platform and the BFX plug-and-trade trading floor will allow market participants to raise capital, manage risk and enable investment in a secure environment with central counterparty clearing, settlement and depository.
Perhaps the most significant aspect of the exchange will be that the region's liquidity can now be invested from the region rather than turning to financial houses of Europe, North America or the Far East.
"What BFX is offering is that 'right option' for investing in diversified products like equities, bonds, currencies and commodities that would enable the investors to spread and reduce their risks,"
said Arshad Khan said. "By using a single exchange and yet being able to diversify their investment portfolio, they are much better protected and their potential returns are much better than in investing in a single asset class."
