Last week's Bermuda Stock Exchange (BSX) index's record high was a staggering 52 percent higher than it was at the start of the year, BSX CEO, William Woods said yesterday.

The Island's two largest banks almost doubled their share prices during a significant bull run of the BSX domestic listings this year.

And while the index was muscled higher by the heavy weighting of bank stocks, the current index will soon be replaced by the launch of a main board, a small cap stocks and a composite (all stocks) index.

Following that launch, a special low cost mutual fund product will be introduced for new investors, enabling them to "buy the index'' with the purchase of one security.

As part of a number of new initiatives planned for the next 12 months, SCRIPS will be a fund that buys all of the listed stocks in exactly the same weighting as they have in the composite index, thus tracking the composite index.

Mr. Woods said that SCRIPS will be the vehicle by which small local investors can start to "own a share of Bermuda'' and by which more foreign investors can buy local stocks.

He said: "We will be targeting investments as small as $500 initially, with increments of $50. We plan for SCRIPS to become an important part of every Bermudian's long term savings plan, whether to pay for college fees for children or for your pension plan.'' Just the third broad-based mutual fund designed to pick stocks in the local market, SCRIPS is expected to be attractive to long term local institutional investors, such as pension funds.

The BSX is also working on a trade guarantee system for investors to encourage investors to execute all trades in local securities on the BSX.

The Exchange, the world's first fully electronic offshore securities market, has found increasing support from international listings. It has also seen support from local firms including ACE Ltd., EXEL Ltd., Mutual Risk Management Ltd. and Jardine Matheson Group in terms of secondary listings. More than 150 issues, including domestic (34) and international equities (15), mutual funds (94), debt issues (9) and depositary receipt programmes are now listed, as total market capitalisation is in excess of $37 billion. The BSX hopes to have 100 mutual funds listed this year and double that figure next year.

But speaking to Hamilton Rotarians, Mr. Woods made it clear that the BSX was also interested in helping small Bermuda companies expand.

He said: "The Exchange provides an important fund raising facility for local companies.

"We also have a small capitalisation stock section for companies with market capitalisation below $10 million. This is a section which we will be more vigorously promoting in the coming months. Our target is very much on the small Bermuda companies that need more capital.

"We want to work more closely with the Bermuda Small Business Development Corporation to facilitate the raising of capital through the Bermuda Stock Exchange.'' The BSX is also bent on adding value to Bermuda's domestic and international insurance markets, including the studying of the feasibility of listing some of the new securitised risk products, such as cat bonds, where catastrophe risk is packaged out as a traditional fixed income security.

The Exchange is also using consultants to develop the BSX/FTSE (the UK-based Financial Times and the London Stock Exchange) Bermuda Insurance Index, the first index to track the performance of Bermuda-based insurers.

There are already indications from the market that it would provide a useful barometer for the health and vibrancy of the Island's offshore insurance market.

The BSX, fully regulated by the Bermuda Monetary Authority, has already won recognition from the US Securities and Exchange Commission and is in the process of seeking recognition from the appropriate UK authorities and will eventually seek recognition from other appropriate bodies in Europe and Japan.

The Exchange's web site has been a phenomenal success with 50,000 "hits'' a month on the Internet.

Contract details are now being finalised for the implementation of the new, fully electronic trading settlement system, which should be on line early in the new year. Three more trading members are in the process of being approved to join the current nine members of the Exchange. The nine include the three banks, and the six non-bank members include international brokerages Tremont Capital and Nomura Securities (Bermuda), the latter of which is part of the largest securities brokerage house in the world.

Said Mr. Woods: "The interest levels in the US, Europe and Asia for membership in our exchange is growing. This is reflected in the trading volumes that we are experiencing on the Exchange.

"We trade not only domestic securities, but also international securities, primarily with our members focusing on US equities, which can be traded in Bermuda in advance of the New York Stock Exchange, because we are one hour ahead of the New York time zone.'' He pointed to early indications of the success of crossings, the BSX's new trading facility introduced last October.

The facility allows trading members of the Exchange to conduct transactions in which they handle both sides of the trade. The trades may include international securities not listed on the BSX and may be made at any time.

In the calendar year 1997 to date, crossings on the BSX have totalled over 124 million securities, valued at more than $8 billion, with trading in US equities currently at a volume of about a billion dollars a month.

KEY POINTS New mutual fund planned Proposal to help small businesses Possible BSX listing of cat bonds Three more trading members likely on Exchange BSX CEO -- William Woods yesterday BUSINESS BUC