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Welcome to the Guernsey Finance podcast page.
Our podcasts bring you all the latest news and insight from Guernsey, the global finance specialist, as well as audio from some of our online events.
Brandon 0:04
Hello and welcome to the We Are Guernsey podcast where we bring you interviews with leaders from the global finance industry, as well as news and developments from Guernsey's financial services sector. My name is Brandon Ashplant and I'm Senior Strategy and Technical Executive here at Guernsey Finance. Guernsey is a leading global finance centre working with clients and business across the globe to deliver industry-leading expertise and products. The success of the industry here is underpinned by economic substance, political stability, and asset security and we're committed to the cause of sustainable finance. To find out more about Guernsey's success in sustainable finance tune into our sister podcast, the Sustainable Finance Guernsey Podcast. Today I'm delighted to be joined by Cees Vermaas, CEO of The International Stock Exchange. Cees has held this role since October 2020, and has more than 20 years experience within international financial market infrastructure. Cees studied at The Hague University of Applied Sciences in his native the Netherlands, gaining a Bachelor of Engineering in Business Administration and Engineering. Since then, Cees has held senior positions at stock exchanges, including as CEO of Euronext Amsterdam. TISE, as it's commonly known, is celebrating its 25th anniversary this year, and recently launched a private market offering which we will be talking about in this episode today. So without further ado, welcome Cees.
Cees 1:31
Thank you very much. Nice to be here Brandon.
Brandon 1:33
Good to be here with you. So thanks for joining us. Firstly, just tell me a bit about your career prior to taking up post at TISE.
Cees 1:41
I can tell you a lot about my career because it goes so fast. It started in the 90s actually, mainly after my studies in Information Technology and Logistics. At the end of the 90s I got involved with the Amsterdam Stock Exchange or the Amsterdam exchange, is actually helping to build an axis accessibility for international investors into the main market of the stock exchange. And from there, it was all about capital markets as you said. We created Euronext, I was part of the first international merger which led to Euronext, which is the European exchange. I worked for a New York Stock Exchange, I worked for Chicago Mercantile Exchange. And now for The International Stock Exchange in the channel islands.
Brandon 2:31
So quite a global career. For those listeners who don't necessarily know much about TISE, as I mentioned, it's commonly known here as TISE, please can you let them know what it is and what you're offering more broadly.
Cees 2:45
So we are called The International Stock Exchange that means actually we do an international offering. Obviously, we are based here in Guernsey and regulated by the GFSC. So we have an exchange license just like London Stock Exchange or the Europe Stock Exchange. But we are mainly a niche kind of player, we are mainly active in so called Depth securities, which is loans, actually corporate loans. And the standardised product is called bonds. So actually 98% of our business is bond markets. And we are actually a major player in the European timezone in what we are listing. On top of that we have, following our exchange license, we do also have stocks. So we have so called public markets for local companies, which are listed, like ourselves. That is fairly small. And that led actually to our rethinking of that model, which led to what we discussed a bit later, the private markets kind of offering.
Brandon 3:51
Cool. So this year, as you mentioned, you launched the new offering. Can you talk us through the background in terms of TISE's private market offering and how the decision came about to branch into this space because it's sort of a new space in many respects.
Cees 4:07
It is a new space and it's a trend in the International Stock Exchanges industry across the globe, especially the western world. What we have seen over the last 10 to 15 years there's an enormous kind of growth of private money going around investment etc. And at the same time the exchange models, they have been developing itself in high volume transactional business and data surfaces. You can see that around the world. So actually what came in between and didn't get enough attention is actually these small and medium enterprises. So you can still list on an exchange, but you don't really get the liquidity you would like to see as an owner of that company. You don't have enough access towards investors, there is considerable bet kind of valuation process of your price, you know, what's the value. So that actually put us on the path to saying there must be a better model in a private environment to facilitate companies or private structures in a more broader sense, with the platform and with utilities, tools, in order to manage their controlled capital markets. And this is where the idea started.
Brandon 5:31
And I suppose the obvious follow up question to that would be, why would a company be keen to use the private market offering?
Cees 5:37
Because you know, if you grow as a company, and you start, that's the ideal kind of world. You start a kind of idea that you create a company, you grow, grow, grow, you need money to invest, in order to grow your company and to adjust your strategy. If you become sizable enough, you have an equity kind of environment, you have investors, your employees, or directors are participating in your capital. And you don't have a mechanism to deal with it properly. And there's no exit strategy for investors to step out or even to step in. So we created it under control of the company, the issuing company, as we say, platform which enables them to manage their registers of shareholders in an efficient way to schedule transfer of ownership processes or via auction and bespoke auction mechanism. And also to arrange the whole settlement. So updating the registers afterwards, and the money flow between the buyer and the seller. And that makes it just very easy. It is actually an exchange in a closed room, under your own control. So you don't have the regulatory burden of public markets, you provide very professional service to your investors, and you have an up to date administration, which is just needed. It's also required as managing a company.
Brandon 7:03
So in a way, I guess it allows users to maintain a degree of control that they otherwise wouldn't have if they went down the public route. So that's I guess, a key benefit, isn't it?
Cees 7:12
That is actually a very important one. What what a lot of privately owned structures see is if you go to a public market, you don't know who's buying your shares and who's building up positions and trying to influence actually your destiny. And that is absolutely, if you're an entrepreneur, or founder, you don't want that.
Brandon 7:35
No,definitely not.
Cees 7:36
So we avoid that with this kind of system.
Brandon 7:38
Definitely. So where do you expect to see demand come from for the private market offering, primarily?
Cees 7:45
I think we learned a lot locally here in the in the environment. Guernsey is a rich kind of environment of family offices and family offices, they maintain and they invest in their portfolio, where they are public and private kinds of structures. I think we learned especially from that environment, that it needs to be more advanced and more under control. So we worked with a pilot company from the environment, which is, by the way, a very international company, but based here in Guernsey, how that should work. And actually they came along in that whole process. Unfortunately, I can't mention the name yet, but that will come soon. And they helped us to develop that. So what we actually primarily think is that via the environment ecosystem in Guernsey, and the family offices and all the context and the participation they have in companies, that's the first kind of attention point for our markets. But we would like to grow more into the UK markets, European markets, and eventually we set up our system in the cloud. So it's technically enabled to be a global offering to offer that also for international companies from South Africa, from Asia, from the United States. Actually everywhere where Guernsey Finance is also having their contact points.
Brandon 9:12
Interesting. So as we mentioned in the intro, TISE is celebrating its 25th anniversary this year. So that's quite a milestone - a quarter of a century. And you've led TISE of course for the last well nearly two and a half years. And so what are some of the key ingredients to its ongoing success?
Cees 9:29
I would start to answer using just the environment. It's just a such an attractive environment to work and to live. And it's here that reflects also in who we are. If you look at the team, we are somewhere around 37 people at the moment, 12 nationalities, which says a lot about the environment. And people have a very kind of healthy work life balance. There's generally happiness in the firm, I think that is a major ingredient. And on top of that, obviously, very talented people willing to learn, willing to work hard. And to help to grow the company. Another point is about the environment of Guernsey. It's very well connected. I have been always working in commercial and financial centres like Paris and London and New York and Chicago. And I didn't once have the feeling that we are here isolated, we are absolutely not. It's incredible the kinds of connections we have. So all of that together makes Guernsey a fantastic place to work and live from.
Brandon 10:47
Brilliant. And so what do you see in terms of being on the horizon long term for TISE?
Cees 10:52
Long term our strategy is, you know, we've now diversified in private markets, we think that that might really accelerate in the coming years, but also on our bond business. So we do approximately 1000 listings per year, new listings, we would like to also grow that basis. So we are enabling our systems in order to scale up. In the European environment, the bond markets are approximately 25,000 new listings per year. So we only have a certain percentage, and we are very ambitious in order to grow, scaling up and diversify our business.
Brandon 11:35
And TISE has also diversified into the sustainability realm, of course, several years ago with the launch of what was initially TISE green, and then TISE sustainable. And obviously, there's a broad range of ESG products there. Can you tell me more about that?
Cees 11:49
What we do is, in general, because we are focused on corporate and corporate loans, is that we celebrate if the activity or the company itself is putting their activities or their aims for investments on to ESG. So we would like to make that feasible. And that's the least we can do as an exchange. So we have that segment, that ESG segment, and we market that and we promote that very much. And we see that also gradually growing. So while we started from almost nothing, we are now with our ESG segments, somewhere between 12 and 15 billion of finance capital into the green segment.
Brandon 12:33
And of course, you know, it'd be wrong to not mention the current economic climate, you know, global inflation or stagflation in many respects. How has the current economic conditions impacted TISE and the listing space more broadly?
Cees 12:48
Well, in general, obviously, our clients are suffering from the market situations. And in the exchange world, if you want to establish price, because you make deals on the market, whether they're private or their public, you are subject to stable interest rates and inflation rates. That hasn't been the case, especially last year. So we have seen, for instance, in one of our segments, which are high yield bonds, that it was difficult to price. Normally, that isn't a substantial part of our business. That's just decreased a lot. But the good thing is that TISE is already diversified enough that actually, we did financially very well, we are still doing very well. And actually, we go through our best years ever in the last two to three years, including this year. But we also see now that stabilising or topping out interest rate prices and inflation, although on a different level, is helping us to get that kind of high yield bond business back. So it's, of course we are operating internationally. So we are affected by what our clients are affected by, but diversified enough in order just to deal with it.
Brandon 14:01
Brilliant. And just to end, Guernsey as a jurisdiction offers many sort of benefits to financial service providers broadly across across the sub sectors. How does Guernsey as a jurisdiction benefit TISE directly?
Cees 14:14
Well it's the international connections, it's the regulatory environment, which is following very high standards. It's the healthy work life balance, as I mentioned before. I am at the, let's say, the more later stages of my career personally, and I've been very much involved in very vibrant kinds of environments. And I would lie if I say that Guernsey is not, you know, one of the best places where I've ever been, and where I have been working.
Brandon 14:49
Brilliant. So, well thank you very much for joining us on the podcast today.
Cees 14:53
Thank you so much Brandon.
Brandon 14:54
It was great to talk to TISE and where Guernsey stands in the world of stock exchange listings and security services. Thanks also to you for listening. If you enjoyed this discussion we have a backlog of interviews on the We Are Guernsey podcast channel, you can check them out by searching for We Are Guernsey on your preferred podcast platform. We also have links to Cees and TISE in our show notes so check them out to hear more from them. To find out more about Guernsey and its specialist financial services sector, head over to our website Weareguernsey.com. We look forward to welcoming you back to the podcast but until then, it's goodbye from Guernsey.
Transcribed by https://otter.ai