The BSE was established in 1987 by Amiri decree[3] and officially commenced operations on 17 June 1989, with 29 listed companies.

It operated as an autonomous institution supervised by an independent Board of Directors, chaired by the Governor of the Central Bank of Bahrain.

As of 2015[update] foreigners can purchase, own or sell bonds, units of mutual funds, and warrants of domestic joint-stock companies.

They have voting rights on all matters submitted for approval, and receive dividends and other distributions tax free.

The BSE management is continuously monitoring and reviewing the exchange's existing laws and procedures in an effort to further develop and enhance its contribution to the economy of Bahrain.