The year 2020 was a year of unprecedented challenges and changes due to the COVID-19 pandemic. The COVID-19 triggered the global closures of businesses and lockdowns, impacted oil prices, and affected the volatility of financial markets worldwide. The steadfast commitment of the management team of Bahrain Bourse (BHB) has been able to convert challenges into achievements despite the adverse market conditions. Operational resiliency at Bahrain Bourse ensured the achievement of multiple forefronts on the legislative and technical aspects to ensure the implementation of BHB’s strategy that aims at positioning BHB as a dominant regional hub for alternative asset classes.
In terms of legislative developments, Bahrain Bourse began the year 2020 by adopting its new listing rules. The roll-out of the new listing rules comes in line with BHB’s ongoing efforts to contribute to the development of the equities market by offering a more attractive and flexible platform for both investors and issuers which will in return boost liquidity in the market. The listing rules included enhancing the corporate actions timeline, and the implementation of new procedures related to listed companies with accumulated losses of 20% and above of its share capital.
The year 2020 witnessed the establishment of the Amanat Investor Protection Funds Program. The program was launched to ensure investor protection, management and administration of cash dividend distribution for all listed companies. The roll-out of the program is part of BHB’s strategic plans to ensure an up-to-date and comprehensive register for investors to enable swift cash dividends in the future.
As part of Bahrain Bourse’s ongoing efforts to develop the capital market in the Kingdom of Bahrain, and following the adoption of the new listing rules, BHB introduced amendments to the corporate action timeline to provide further flexibility for shareholders to conduct their trading transactions post the recommendation of declaration of dividends announced during the General Meeting date.
Within the same context, Bahrain Bourse adopted new procedures for listed companies with accumulated losses of 20% and above of its share capital. The new procedures aim to promote fairness and enhance transparency in the market to protect and assist investors and others in taking well-informed investment and trading decisions.
Bahrain Bourse in collaboration with the Central Bank of Bahrain (CBB) has introduced the Murabaha service this year for banks and corporates to go in line with BHB’s strategic goal of “Cultivating Capital Raising & Investment Opportunities”. With the launch of the service by eight financial institutions, the service aims to meet the growing needs of interbank, corporate and retail clients, which supports Bahrain Bourse's efforts to expand and diversify its provided services and cater to various market segments through a new and unique line of service. In addition, Bahrain Clear (Bahrain Bourse’s fully-owned subsidiary) rolled-out its Virtual AGM Management Service to listed companies within its efforts to enhance its post-trade services and going line with the precautionary measures taken to fully support investors, issuers, and all related stakeholders during the COVID-19 pandemic. Bahrain Clear also offered the Skiplino service as part of Bahrain Clear’s efforts towards digital transformation. The Skiplino service provides an alternative channel for serving investors which aims at enhancing efficiency and increasing the accessibility of Bahrain Clear’s services to investors.Work is currently under way in collaboration with Bahrain Clear to establish and ensure readiness of the infrastructure of Bahrain’s Private Market for closed shareholding companies. The market will offer a suite of new and unique services to closed companies. The project has reached its final phases, and we look forward to the launch upon completion of all regulatory requirements.In line with Bahrain Bourse’s strategy to cultivate operational efficiency, BHB was included under AUB’s Trader to complement Bahrain Bourse’s expansion strategy for Bahrain Trade’s network, and aims to encourage active retail participation and increase its accessibility through various online trading platforms.Expanding Regional & Global Outreach
Bahrain Bourse continued its efforts to attract international investments in 2020 by holding a virtual roadshow in collaboration with HSBC with participation from a number of regional and international financial institutions and investment banks. The roadshow showcased Bahrain Bourse’s market developments and plans in the pipeline.
Bahrain Bourse also signed a Memorandum of Understanding (MoU) with Israel Diamond Exchange (IDE) to explore areas of mutual interest and joint cooperation between the two exchanges, hoping that this MoU will help explore joint initiatives that will create efficient commercial opportunities between the Kingdom of Bahrain and State of Israel.
Furthermore, Bahrain Clear signed a Depository Agent (Custodian) Agreement with First Abu Dhabi Bank (FAB) to offer custody services to regional and international investors. The agreement is in line with Bahrain Clear’s efforts to enhance post-trade services and expand outreach to regional and global investors.
Enhancing Market Literacy & Investment Awareness
Despite the challenges of conducting programs during 2020, Bahrain Bourse continued most of its awareness and financial literacy programs in a virtual manner. BHB kicked-off the 3rd edition of the Smart Investor Program, and continued conducting the Investment and Saving Sessions in collaboration with Bahrain Institute of Banking & Finance (BIBF). BHB also took part in IOSCO’s 2020 World Investor Week (WIW) for the 3rd consecutive year to demonstrate its ongoing commitment towards enhancing market literacy and investor awareness in collaboration with local, regional, and international organizations. As part of its participation in the WIW, Bahrain Bourse virtually rang the market-opening bell for financial literacy to join over 35 other global exchanges to mark the occasion over a week of bell-ringing activities, and demonstrate its ongoing commitment towards enhancing market literacy and investor awareness in collaboration with local, regional, and international organizations.
During the year, Bahrain Bourse joined the Middle East Investor Relations Association (‘MEIRA’) Board of Directors. This milestone has been achieved following BHB’s efforts to promote and develop best practices in Investor Relations (IR) and enhance transparency across the Kingdom’s capital market.ESG
As part of Bahrain Bourse’s efforts to promote sustainability and transparency in Bahrain’s capital market, BHB issued its Environmental Social & Governance (ESG) voluntary reporting guidelines for listed companies. The guidelines aim to encourage and assist listed companies in disclosing ESG information that investors can utilize to make informed and responsible investment decisions. The issuance of the guidelines also demonstrates BHB’s formal commitment as a Partner Exchange Member of the Sustainable Stock Exchanges (SSE) initiative and a member of the World Federation of Exchanges to drive sustainability in the capital market of the Kingdom of Bahrain. Bahrain Bourse also signed an MoU with the Supreme Council for Environment to encourage listed companies to comply with the environmental rules and requirements and to disclose information related to environmental compliance in its issued reports.Awards
This year, Bahrain Bourse achieved “Excellence in Customer Service Award” via the National Suggestions & Complaints System ‘Tawasul’, for its exceptional performance and efficient response via ‘Tawasul’. The award recognizes BHB’s efforts to ensure open communication channels with all capital market stakeholders, which further enhances the transparency and fairness in the Bourse and helps meet the needs of all stakeholders.
Looking into Bahrain Bourse’s financial performance in 2020, BHB achieved an operating revenue of BD 3,038,940 (including the operating income, interest income, and the Government’s financial support to Bahrain Clear’s employees due to the COVID-19 pandemic) compared to BD 2,868,145 in 2019 (after excluding BD 418,520 for one of non-recurring revenue items), reporting an increase of approximately 6%. The total operating expenses decreased slightly from BD 3,782,196 in 2019 to BD 3,621,214 during 2020. The deficit also declined by to BD 582,274 in 2020 compared to BD 914,051 in 2019.Acknowledgements
On behalf of myself and Bahrain Bourse’s Board of Directors and Management team, I would like to express my thanks and sincere appreciation to His Majesty King Hamad bin Isa bin Salman Al Khalifa, King of the Kingdom of Bahrain and His Royal Highness Prince Salman bin Hamad Al Khalifa, Crown Prince and Prime Minister for their guidance and continuous support to Bahrain Bourse, and their ongoing efforts to support the prosperity of the country.I would also like to take this opportunity to pay tribute to the late Royal Highness Prince Khalifa bin Salman Al-Khalifa who played a dominant role in supporting the development of the capital markets sector in the Kingdom of Bahrain to be in line with other regional and international markets.I would like to extend my gratitude to H.E. Zayed bin Rashid Al-Zayani, the Minister of Industry, Commerce, and Tourism (the ‘Shareholder’) for his continuous support extended to Bahrain Bourse in its various initiatives and programs. I would also like to thank the Chairman and Board Members of the Central Bank of Bahrain (CBB), and the Governor of the CBB H.E. Rasheed Mohammed Al-Maraj and all CBB employees for their ongoing support to Bahrain Bourse. I would also like to thank the Board of Directors, whose term has ended this year, for the efforts they have put to develop the Bourse during their tenure.I would like to extend my thanks and gratitude to our issuers, investors, and members and custodians, and stakeholders for their continued support and confidence as we look forward to another year of key milestones achieved in the coming year. Most importantly, I thank the talented team of professionals behind Bahrain Clear and Bahrain Bourse, whom have shown strong resilience and adaptability during this exceptional year.
Abdulkarim Ahmed Bucheery
Chairman of Bahrain Bourse and Bahrain Clear