Archive for the 'Integration' Category
March 5th, 2010 by Tom Minney
Imara Holdings Ltd (www.imaraholdings.com), an investment banking and asset management group with operations in 10 countries mostly in southern Africa, aims to expand in Zimbabwe, according to Zimbabwe’s Herald newspaper. It is currently listed on the Venture Capital Market board of the Botswana Stock Exchange (www.bse.co.bw) and the Herald reports that it wants to buy the rest of the shares in Zimbabwe’s Imara Capital Zimbabwe (Pvt.) Ltd (www.imaracapital.com), which it owns 32%, and also to dual list on the Zimbabwe Stock Exchange (www.zse.co.zw).
The report says that Imara Holdings has proposed a share deal in which local shareholders and the management will get a shareholding in the parent in return for their shares in the local company. The dual-listing on the bigger exchange could make the shares more liquid and the dollar-based ZSE is attractive to international investors. Imara management reportedly refused to comment, possibly while the transaction is under approval by authorities.
Imara Holdings website does not mention the transaction, although it has been publishing cautionary announcements since 31 July 2009. It describes the group as “medium sized”. It has offices in Botswana, Malawi, South Africa and the UK, and associate offices in Malawi and Zimbabwe as well as working relationships with Stockbrokers Zambia, Namibia Equity Brokers and Mac Capital in Dubai.
According to the Holdings website: “We are independent and privately owned, enabling objective decision-making in the service of our clients. We are active participants in the region’s financial markets and maintain one of the largest research coverage of regional equities. Funds under management exceed US$ 135m and funds under administration exceed US$750m.”
Imara group services fall into three primary operating areas:
• Corporate Finance & Advisory Services
• Institutional and Private Client Asset Management
• Securities Trading
Imara Capital is one of the associates listed in Zimbabwe, others being listed on the website as Imara Edwards Securities (Pvt) Ltd, Imara Asset Management Zimbabwe (Pvt) Ltd and Imara Corporate Finance Zimbabwe (Pvt) Ltd. The Herald report says these are wholly owned by Imara Capital.
On 8 January Imara signed a licence agreement to become the 7th member of Global Alliance Partners (www.globalalliancepartners.com), of which Mac Capital Dubai is already a member. Bernard Pouliot, chairman of GAP and of the Quam Group based in Hong Kong, said Imara joins the alliance at a very opportune time when Chinese interest in Africa is growing: “Imara is good for the alliance and for China. Alongside other members of GAP, we are committed to hit the ground running when an umbrella investment scheme by African countries is developed and eventually implemented.”
The other GAP members are Quam Financial Services Group for Hong Kong and China, Capital Partners Securities for Japan, KT ZMICO for Thailand, Thanh Cong Securities Company for Vietnam, and Westminster of Hudson Securities in USA.
In December, Imara Holdings announced it had recently acquired a majority equity stake in the Botswana stockbroking company Capital Securities (Pty) Ltd., one of 4 licensed stockbrokers on the Botswana Stock Exchange, established in March 1999.
“Shareholders are advised that negotiations relating to a further regional acquisition, which was announced in a Cautionary Announcement published on 31 July 2009 and in subsequent renewal announcements, are still ongoing. Shareholders are therefore urged to continue to exercise caution in their dealings in Imara securities,” says the Botswana announcement published in December.
February 21st, 2010 by Tom Minney
According to Zimbabwe’s Herald newspaper (www.herald.co.zw), it is only months before the introduction of a hub-and-spoke interconnectivity model for SADC stock exchanges as “the first significant step towards the integration of one of Africa’s economic regions”.
According to reports, stockbrokers have sought a vehicle to provide information on companies operating in the region, monitor their performance and explore opportunities for clients. Geoff Rothschild, Director: Government and International Affairs at South Africa’s JSE Ltd (www.jse.co.za) and outgoing chair of the Committee of Southern Africa Development Community Stock Exchanges (COSSE), grouping 10 southern African bourses, is quoted as saying the system would “expose our neighbours’ business organisations to local and international investors. This hub will allow exchanges to connect to each other’s platforms and ultimately allow investors to trade on all SADC exchanges through their local brokerage.”
Major investment is needed to upgrade technology for the region’s exchanges and, although many are willing, financing is still being sought. The hub-and-spoke model is being developed by the Mauritius securities market, including the Central Depository and Settlement company, which has experience of capital markets development in other parts of Africa.
Zimbabwe Stock Exchange Chief Executive Emmanuel Munyukwi has been elected chair for the next 2 years. Lusaka Stock Exchange chief executive Mrs Beatrice Kansa is deputy chair. Mr Munyukwi, a former banker, is quoted as saying: “The position will help to put Zimbabwe back on the regional securities map and also enhance the visibility of ZSE to investors.”
CoSSE was established in 1997 and meets quarterly, its members with established exchanges are: South Africa, Namibia, Botswana, Mauritius, Mozambique, Swaziland, Tanzania, Malawi, Zambia and Zimbabwe. Its objectives include increased co-operation and links in operations, communications, regulations, technical skills development and other areas between the stock exchanges and to make SADC securities markets more attractive to local and international investors.
February 21st, 2010 by Tom Minney
The Uganda Securities Exchange (www.use.or.ug) was set to open the Securities Central Depository at the end of last week. The SCD is an electronic system of keeping traded shares records at the stock market in a single location and would end the issuing of paper certificates as evidence of ownership.
According to the Monitor newspaper (www.monitor.co.ug), the SCD was to “go live” on 18 February, quoting Ms Harriet Kiwanuka, the head of trade, research and market development, USE. The move will prepare the USE for electronic trading of shares and is another step towards link-up in the regional markets, including the advanced Nairobi Stock Exchange.
Stockbrokers are set to ask owners of the paper certificates to return them in exchange of electronic transaction accounts, similar to bank accounts.
Ms Kiwanuka is reported as saying both new paper certificates and electronic accounts will be issued until the USE adopts electronic record keeping and trading.
Mr Peter Okoed, the senior portfolio planner at stockbroker Dyer & Blair (www.dyerandblair.com), is reported in Monitor as saying that the SCD will make the exchange attractive to foreign investors who are usually discouraged to invest by the communication that it takes for them to receive their share certificates.
With this system, investors will only trade their shares after getting electronic accounts.
February 10th, 2010 by Tom Minney
There are several initiatives underway to link Africa’s exchanges, chiefly to make them more economically efficient through achieving better liquidity and thus becoming more responsive and attractive to investors. Talks have been continuing for over 15 years, but recently several starts have been made.
One promising initiative is the Africa Board, offering leading African companies the chance to have a dual listing on South Africa’s JSE Ltd. (www.jse.co.za), Africa’s leading securities market, with good trading,clearing and settlement systems. The aim is that the shares would be traded on both the JSE and the home market. However, so far Namibia’s Trustco is the only listing, although talks continue with top listed companied in several African countries and with stock exchanges, regulators and other stakeholders.
Other initiatives to achieve more liquidity, many of which can develop in parallel and most of which should be encouraged, include a hub-and-spoke technology link-up being developed by the Committee of SADC Stock Exchanges and international broker link-ups through stockbrokers such as Auerbach Grayson (www.agco.com), Exotix (www.exotix.co.uk) and Securities Africa (www.securitiesafrica.com).
African Capital Markets News recently visited Johannesburg. We print an EXCLUSIVE email interview with Geoff Musekiwa (Business Development Manager, Africa Desk of the JSE Ltd.) on 2010 prospects for Africa’s securities exchanges.
ACMN: What are your strategic priorities for 2010?
GM: We will be cementing and building on the relationships that we created with all stakeholders in 2009, continuing with the outreach so that there is greater awareness of the Africa Board. Ultimately we expect the traction to culminate in a number of listings on the JSE Africa Board.
ACMN: What developments do you expect on Africa’s securities exchanges in 2010, including in terms of regional integration?
GM: 2009 was a very trying year for most exchanges from a return perspective, with the fortunes of most exchanges only turning towards the end of the year. One hopes that this year there will be renewed confidence in those markets in line with developments in global markets. There have been various initiatives towards integration, notably in East Africa, SADC and West Africa. The extent of progress will obviously differ across the regions and our expectation is that discussions will continue until member constituents find common ground.
ACMN: How is technology affecting the progress of the Africa Board and the African exchanges? What are the significant developments?
GM: There is a move from the exchanges that are still paper-based, to make their trading electronic so that they can make cross-border trading for dual-listed stocks easier and possibly in readiness for eventual integration. International investors also need a certain level of comfort in the systems they utilize to trade and automation is definitely a key requirement. As part of the JSE Africa (ex-SA) strategy, stock exchanges can utilize the existing JSE platform by linking their systems for trading, clearing and settlement. Thus far, only Namibia has taken up this offer.
ACMN: Initially some exchanges claimed the Africa Board would take liquidity, reducing it even further for African exchanges. What is your response? Do you think that stakeholders and exchanges are starting to change their views?
GM: The key objective of the JSE Africa Board was to assist in the development of the other exchanges on the continent. We have looked empirically at the benefits of dual listings particularly regarding liquidity in the home exchange in the long term. When some JSE issuers sought dual listings in London in the 90s, there was a similar outcry from the local stakeholders. In fact the reverse occurred – as the companies increased their pool of investors and accessed more capital they began to have an increased interest from investors, greater following from analysts and were able to transform themselves into truly international companies without losing their identity. The downstream benefit, in addition to increased volumes on the JSE, was an increase in interest not only on those companies but in SA as an investment destination. This is what we would like to achieve through dual inward listings onto the Africa Board. The increase in liquidity of stocks trading on the Africa Board will be the most persuasive argument to the stakeholders that may still doubt the motives of the Africa Board
ACMN: Any details you can give of listings planned or other developments?
GM: It would be premature to give details of expected listings before the announcements are made but stakeholders will be kept abreast of developments at the appropriate times.
ACMN: How is the interest from institutions and brokers? Which stockbrokers can buy and sell on the Africa Board?
GM: Interest in Africa as an investment destination has grown over the years, mainly because of its perceived low correlation with developed markets. Consequently there has been a proliferation of Africa Funds with a distinct mandate to invest on the continent. But there remain a few challenges (some perceived and some real) that hinder the successful and efficient execution of trades including but not limited to liquidity, different regulations and logistical challenges. Brokers and fund managers are naturally excited about the Africa Board because it offers them an opportunity to trade African assets on a platform that they are fairly comfortable with, so we are in effect bringing the rest of Africa to their doorstep. The benefit for the other exchanges will come through over time, as the standard of the Africa Board constituent issuers will demystify any notions that investors may have on African capital markets.
The brokers that can buy and sell on the Africa Board are those that are members of the JSE. Trading can either be done directly through the JSE members, or through brokers in the home country, who will in turn instruct the JSE member. In order to take advantage of the opportunities that the Africa Board offers, it is important that the brokers on the continent foster cross-border execution relationships with each other, thus creating mutual economic benefits for the brokers.
ACMN: What’s the 2010 outlook for African exchanges?
GM: As global markets recover, there are increasing indications that portfolio flows into Africa are beginning to tick upwards. One hopes this will trigger a renewed interest in listed securities and also provide the necessary capital to allow issuers to resuscitate plans that they had shelved amidst the crisis. We stand ready as the JSE Africa Board to assist issuers to achieve these objectives.
December 19th, 2009 by Tom Minney
It has been very difficult to get any news out of the African Stock Exchanges Association (www.africansea.org) conference in Abuja 2009 (Dec 2-4). As far as we can tell, no press releases were put out and neither ASEA secretariat nor the press liaison people from the Nigerian Stock Exchange have been replying to emails.
The following news extracts have been put together from a range of media sources:
West African Exchanges to integrate
Three West African stock exchanges signed an agreement to integrate their markets and to introduce common listing and trading rules, according to a joint statement issued at the ASEA conference. The bourses are Ghana SE, Nigeria SE and the Bourse Regionale des Valeurs Mobilieres, which serves Benin, Burkina Faso, Guinea Bissua, Ivory Coast, Mali, Niger, Senegal and Togo.
Ekow Afedzie, deputy managing director of the Ghana Stock Exchange, reportedly said they had agreed that stockbrokers who meet “certain standards” will acquire a “common passport” that will qualify them to trade on any of the exchanges in the region. Listing and trading rules will be harmonized and legislation will be changed where necessary to pave the way for the integration.
African Index
ASEA plans to create an African stock index in 2010, according to the GSE’s Afedzie. He reportedly said ten countries, including Ghana, Nigeria, Mauritius and Kenya, have signed up to participate. FTSE will compute the index and no decision has yet been taken on which companies will constitute it.
According to Bloomberg, African stock exchanges rank among the worst performers in 2009, although the MSCI Emerging-Markets Index surged 74%. Ghana’s All-Share Index lost 48%, more than any other of 90 primary indexes tracked by Bloomberg. The Nigerian Stock Exchange’s All-Share index is the second-worst performer, declining 36%, while Kenya’s Nairobi All-Share index is sixth-lowest, dropping 5.5%.
Integration and better regulation the answers
Integration of the 28 ASEA stock exchanges to make cross-listing and Africa wide issues easier will assist in capital raising and wooing back foreign investors who pulled out of Africa at the onset of the global crisis. Product diversification could be another tool to boost market liquidity.
Nigeria’s Vice President Goodluck Jonathan reportedly told the conference: “The timing of the crisis has given African capital markets the opportunity to learn from the mistakes of the more advanced markets in the developed world.” He urged the markets to work together to seek “protection from the consequences of the greed and regulatory failure in the more advanced markets”.
He said the crisis offers opportunities to players in African markets who are alert and able to adapt quickly to the changing environment. But he warned that market innovations must be based on economic fundamentals, warning that any irrational exuberance would always come back to haunt nations. Market development and growth must be inclusive and not limited to a select few people and the crisis has clearly demonstrated the critical role of the state in the financial intermediation process and in the maintenance of financial stability through appropriate regulation and supervision.
Acting Director-General of Nigeria’s Securities and Exchange Commission Daisy Ekineh called for retooling and re-orientation for market regulators and operators in the light of the several challenges facing them: “Such challenges as the shallowness of the market and the relatively unsophisticated investing African populace that is vulnerable to misguided investment advice and other malpractices must be addressed.”
Director-General of the Nigerian Stock Exchange Ndi Okereke-Onyiuke urged African Heads of State to make it mandatory for all African countries to establish commodities exchanges through which they can develop their commodities markets.
Zimbabwe Stock Exchange chief executive Mr Emmanuel Munyukwi was reported in local media as saying: “One thing that clearly came out was that there is still appetite for African markets and deliberations were centred on what we should do as the continent to sustain foreign investments.” He said the conference noted tight controls were one of the major impediments to the inflows of foreign funds on African markets.
Delegates examined the challenges faced by African securities exchanges in entrenching strong corporate governance, which was agreed to be more important than financial issues. The participants opted for regulations or compliance of upholding corporate governance ethics, in preference of self-regulation. A representative of the International Finance Corporation reportedly cited the Brazilian Stock Exchange as an example and urged African stock exchanges to adopt similar stringent listing requirements, disclosure mechanisms and high corporate governance standards. While disclosure and transparency were needed, the quality of information published was critical.
Pension funds could boost the growth of African markets and they could have a wider remit to invest in private equity and infrastructure. The size of pension funds could be increased through penetration into the informal sector, which enhances the contributory rate of pension funds.
December 17th, 2009 by Tom Minney
The curriculum of the Securities Industry Training Institute (SITI) has been launched in Kampala, Uganda. Its establishment in September and development have been funded by International Finance Corporation, the private sector investment arm of the World Bank, as part of its Efficient Securities Markets Institutional Development programme (www.ifc.org).
SITI aims to standardize training on a wide range of programmes on capital markets and investments, corporate finance, asset management, entrepreneurship, corporate governance and other related fields of study. Eventually, all brokers, fund managers and investment advisors will require certificates to operate.
Simon Rutega, CEO of the Uganda Securities Exchange (www.use.or.ug), launched the institute and says it will serve the East Africa trading market that is gradually being integrated. He is Chairman of the Board of SITI East Africa and other members are reportedly Rose Mambo (CDSC Kenya), Jonathan Njau (chief executive of the Dar-es-Salaam Stock Exchange), Robert Mathu (executive director of the Rwanda Capital Market Advisory Council) and Peter Mwangi (chief executive of the Nairobi Stock Exchange).
Future training programmes include training for board members of USE in February, and training for the media. Rutega reportedly said: “The intention is to have as many people trained as possible. The point there is also the integrity and standardization of the market.”
The institutions – Uganda, Nairobi and Dar es Salaam securities exchanges and Rwanda’s Capital Markets Authority agreed a standardized curriculum which will be administered by SITI.
According to Rwanda’s New Times newspaper, CMAC Operations Manager Celeste Rwabukumba says all practitioners will be required to have training by SITI to learn the rules and regulations of the industry: “This is a good development which will give market actors the understanding of the regional market, experience, how the business operates as well as the harmonization of the regional stock markets.” Rwanda has seven registered stock brokers companies which focus mainly on corporate finance, stock brokerage and advisory services among others.
According to the report, only Tanzania in the region has a certification programme.
November 19th, 2009 by Tom Minney
The African Securities Exchanges Association (ASEA) is set to discuss “Global Crisis: Opportunities for African Capital Markets” within 2 weeks, at its next annual conference (www http://www.aseaabuja2009.com). The 13th ASEA conference will be hosted by the Nigerian Stock Exchange (NSE – www.nigerianstockexchange.com) from 2-5 December 2009.
This is the leading annual meeting for stakeholders in Africa’s capital markets and securities exchanges, including stock exchange managers, regulators, clearing and settlement agencies, investors, stockbrokers, banks, issuers and listed companies, and other market stakeholders and intermediaries. ASEA (www.africansea.org) has 20 member exchanges, serving 27 countries as some are regional exchanges.
African markets were hard hit from 2008 as world stock prices plummeted. However many African companies’ earnings and business prospects were not harmed, due to economic delinkage, giving rise to buying opportunities. The crisis created urgency for creative strategic implementation, including further regional integration, stockmarket liquidity, and product diversity and risk management. Other discussions cover foreign investment, public-private partnerships and technology drivers for African growth and securities markets.
Wed 2 Dec will feature internal ASEA meetings. On Thur 3 Dec, Dr. Goodluck Jonathan, Vice-President of the Federal Republic of Nigeria, will be guest of honour. Director General and Chief Executive Officer of the NSE, Professor Ndi Okereke-Onyiuke, will open the conference and other speakers should include ASEA President Maged Shawky, Daisy Ekineh, Acting DG of Nigeria’s Securities & Exchange Commission and Mallam Sanusi Lamido Sanusi , Governor of the Central Bank of Nigeria.
Conference topics include:
• Attracting foreign investment,
• Role of stock exchanges in creating good governance,
• Development of pension funds as players in African markets,
• Exchange technology: acquisition costs, speed and efficiency, surveillance and risk .
• Integration through strategic relationships
• Infrastructure projects
• Stock exchange demutualization
ASEA’s aims are systematic mutual cooperation, joint programmes and exchange of information, materials and personnel between member securities exchanges. Regional financial integration will help the effective mobilization of capital to accelerate Africa-wide economic development.
September 18th, 2009 by Tom Minney
Africa’s biggest exchange the JSE Ltd. – the Johannesburg Stock Exchange in South Africa – has seen increased revenues. The SA interest-rate market is set for dynamic new change after the JSE consolidated its merger with the Bond Exchange of South Africa (BESA). The exchange is adding new products, including derivatives, to give investors exposure to leading international shares and commodities.
JSE revenues depend on volumes of equities traded. According to a statement of the interim results to June 2009 (www.jse.co.za) released in August : “The volatile conditions in the first half of 2009, combined with increased foreign investment in South African equities, boosted trading volumes and therefore revenues. However, there was a significant fall in volumes of derivatives contracts traded (off a high base).”
The number of trades in spot equities soared by 31% to 9.96 mln (2008: 7.62 mln). Group revenue climbed 7% to R544.5 million ($72.9 mln) compared to the period to June 2008: R508.8 mln. Fixed costs remained controlled and this boosted profit before net financing income by 9% to R206.1 mln (June 2008: R188.8 mln).
Key development was the finalization of the merger of BESA under a “Scheme of Arrangement” and on 22 June the bond exchange became a 100%-owned subsidiary of the JSE. BESA’s market operations have been merged with the JSE’s existing Yield-X division to form a new interest-rate division, which runs the combined products. It is also developing a fresh interest-rate strategy for the South African fixed-income market and this will be finalized in consultation with market participants in due course.
BESA’s operating activities and personnel were integrated into the JSE. Former chair Nonkululeko Nyembezi-Heita joined the JSE Board, with Jonathan Berman, also a former non-executive BESA director, as her alternate.
The JSE added a new International Derivatives Market (IDX) as “an innovative series of derivatives on large foreign companies” which it says are “in response to client demand for rand-denominated exposure to well-known companies listed offshore”. According to JSE Chair Humphrey Borkum, writing recently in Business Report newspaper: “Essentially a market maker bank will buy the foreign share and write the South African investor a single stock future which will then trade on the JSE’s SAFEX trading platform. This enables South African investors, without exchange control restrictions, to trade and gain exposure to internationally listed shares such as BP, Vodafone, Smith Kline, Rio Tinto, Nokia and newcomers Warren Buffet’s Berkshire Hathaway and Bank of America.
There are now 29 of these international companies available on IDX none of which are listed on the JSE. I notice that in the latest Fortune 500 listing of the world’s largest corporations BP is at number four and Berkshire Hathaway at 41.”
In January, the exchange launched the cash-settled Chicago Corn futures contract under licence from the Chicago Board of Trade (CBOT) Group. This month (September 2009) it plans to launch rand-denominated contracts in platinum, gold and oil under licence from CBOT.
The announcement further says the JSE “encouraged institutions to reduce risks by bringing exposure to derivatives on-exchange, using Can-Do instruments”. It also “bedded down the new derivatives trading and clearing systems implemented late last year” while nearly doubling the number of currency derivatives contracts traded (on the previous period).
In February, the JSE launched its Africa Board, designed to attract dual listings of leading companies listed on African exchanges “as part of the JSE’s strategy to promote the growth of African capital markets’. It listed Trustco Ltd from the Namibian Stock Exchange as its first counter.
Borkum also advised investors that Exchange Traded Funds (ETF’s) are a value for money investment which advisers often do not promote, due to lack of commission. There are 26 ETFs listed including SA equities, international equities, dividend, bond, property, commodity and currency ETF’s An ETF is an investment product which tracks the performance of a basket, known as an “index” of shares, bonds or commodities but is not actively managed – it just represents the price changes of the index securities.
In the results announcement, Borkum and JSE CEO Russell Loubser state: “The JSE will continue to focus on increasing liquidity and improving market competitiveness. In the equity derivatives market, the exchange will work with clients who previously traded off-exchange but who now want to trade on-exchange to manage risk.
“Moreover, new products planned for the second half in cash and derivatives markets should provide trading volume in the medium term. The JSE remains committed to delivering value to issuers and investors.”
September 14th, 2009 by Tom Minney
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.
August 22nd, 2009 by Tom Minney
Tanzania seems to be warming to the idea of linking the East African stock exchanges, in what could eventually be the development of a major regional market.
According to local media reports, Acting CEO of the Dar es Salaam Stock Exchange Mary Mniwasa said it is ready to join a software called Smart Order Router which links the securities exchanges of the East African Community member states. She is reported to have said the system will allow a stockbroker from the DSE, the Nairobi Stock Exchange and the Uganda Securities Exchange to see the markets and trade across borders without physically contacting a local market stockbroker.
The report quotes Simon Rutega, CEO of the USE, as saying Uganda fully supports the proposed integration of stock markets in east Africa. They have started using Central Depository Securities for holding securities and assisting in settlement.
The DSE and USE have long been dogged by lack of liquidity and outside investor interest. The newspaper cites a study by Codogan Financial & Associates, funded by the Efficient Securities Markets Institutional Development Initiative of the International Finance Corporation, part of the World Bank group. According to this, there are simply too few institutions and individuals who wish to invest in East Africa. The objective of the EAC stockmarkets integration is to enable consolidated EAC capital to flow and participants to operate freely across borders
The integration is being guided by an East African Securities Exchange Association, comprising the chief executives of the four exchanges – Dar, Nairobi, Uganda and Rwanda’s recently formed Over-The-Counter market. The original timetable was set in 2008 when the association resolved that a single clearing and settlement infrastructure was to be implemented within 3-6 months after January 2009. Senior members of the NSE are doubtful on progress.
One of the initiatives of the association is to integrate trading, clearing and settlement infrastructures within the EAC to facilitate a faster trading system within the bloc.
Tanzania has previously barred non-citizens from participating in initial public offers, such as when a 21% stake in the National Microfinance Bank was floated last year. In March 2008, it blocked its citizens from participating in the Safaricom IPO in Kenya.