Electronic trading in Uganda another step to East African market

The Uganda Securities Exchange (www.use.or.ug) is set to introduce electronic trading before the end of 2009 and an East African common stock market to be launched in January 2010, says a report in East African Business Week (www.busiweek.com) newspaper. The report cites a speech by Japheth Katto, the Chief Executive Officer of the Ugandan Capital Markets Authority, saying that eventually investors will be able to buy shares in any listed company of the Member States.

Uganda passed a Securities Central Depository Act early in 2009. A report in the New Vision newspaper (www.newvision.co.ug) says that the USE is set to change rules and start to move from paper certificates and manual clearance and settlement of transactions to electronic settlements and investor receipts from October. Hardware and software have been tested, and electronic trading has been anticipated since earlier this year.

“Electronic trading on Ugandan’s stock market will be good for regional integration because it will be possible to have one East African stock market,” Katto is reported to have said.

The Nairobi Stock Exchange started electronic trading four years ago. The USE still faces usual challenges of African securities markets, including: low levels of domestic savings (reportedly 15% in Uganda); low awareness; thin supply of new equities; an underdeveloped pension sector which has not been liberalized; underdeveloped life insurance sector; and the current global financial crisis.

However, the regional integration project seems to be gaining momentum, including a customs union protocol. The Monitor newspaper (www.monitor.co.ug) reports that the East African Community Secretariat (www.eac.int) is holding consultations in the five partner states from 7-25 September on an East African Monetary Union (EAMU). They consultations target stakeholders such as: ministries of finance, EAC, trade, planning, etc; central banks, regulators; bureaus of statistics; bankers associations; academia; parliamentarians; the private sector and civil society. It is supported by the European Central Bank (www.ecb.int).

According to reports, the launching date for the political federation is set at 1 January 2010. After the customs union, the EAC will progress to a common market and harmonizing labour policies and legislation.

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