The Royal Gazette / Bermuda Stock Exchange (BSX) Index suffered a 45 percent drop in 2010 - the third successive year it has suffered a hefty falll, leaving it at 1997 levels.But at the same time, the BSX ended last year with a record number of listed securities, after attracting more international entities, and also made huge strides in establishing the Island as a domicile of choice for insurance-linked securities like catastrophe bonds.At the end of 2010, the BSX had a total capitalisation, excluding fund listings, of $319 billion, of which the domestic issuers included in the RG/BSX Index account for $1.4 billion.As in the previous two years the biggest driver of the Index’s 2010 fall was the heavily weighted Butterfield Bank, which finished the year with a share price of $1.25, less than half the $2.84 at which it was trading a year earlier.The bank stabilised from its recent turmoil after a group of mainly foreign investors ploughed $550 million into bank last March. But the massive issuance of new equity, at $1.21 per share, diluted the value of common shares and gave long-term shareholders a hit.The bank has been the major factor in the index’s steep decline from its all-time high of 5,382.06 points on July 25, 2007, to 1,149.49 on December 31, 2010.BSX chief executive officer Greg Wojciechowski said although domestic board companies had endured another tough year, the three successive years of decline may leave investors with long-term opportunities.“2010 was a challenging period for the domestic capital market,” Mr Wojciechowski said. “Trading volumes and values hit lows as investors reacted to financial market news and results posted by BSX-listed issuers.“The RG/BSX index fell by 45 percent to one of its lowest levels since 1997.“Historically, the domestic capital market tends to lag developments (negative or positive) in the larger financial markets.“Encouragingly, many markets have ended 2010 in much stronger positions. Although the Bermuda economy is in the midst of a negative economic cycle, Bermuda companies continue to operate and provide their clients with the products and services which have made them successful over the years.“During times of severe economic pressure, investor sentiment wanes, but those that are cautious, deliberate and prudent in their analysis may find solid long-term investment opportunities.”As of December 31, there were 807 listings on the BSX.The increase in catastrophe bonds listed on the BSX has been aided by a new regulatory framework for Special Purpose Insurers, introduced in 2009.Included in the new listings was the variable note programme of Lodestone Re, which is providing extra capacity for AIG’s property and casualty arm Chartis. This listing and others from Montana Re and Merna Reinsurance II raised the number of Insurance Linked Securities listed on the BSX to 19, with an approximate market capitalisation of $1.83 billion.In addition, the Exchange listed a further 124 international derivative warrants. There were also 55 new collective investment vehicles listed and seven subsequent issues from listed issuers. Noteworthy in 2010 was Butterfield Bank’s $550 million capital raise and its subsequent successful rights offering, as well as the listing of $500 million of the Government of Bermuda’s 5.603 percent senior notes and the delisting of the shares of Bermuda Container Line.BSX chief compliance officer James McKirdy said: “This activity continues to underscore that the domestic capital market works and that Bermuda-based investors have an investment appetite for well structured and regulated investment opportunities.“Also, despite challenging economic times, new listings continue to be attracted to the BSX and the year ended with a record number of listed issuers.”