African Capital Markets News » IT

African securities markets – shock move to integrated trading pool

Tom Minney — Thu, 01 Apr 2010 09:56:33 +0000

Fears of the potential impact of IT disruption on African capital markets, combined with a long-running initiative to pool fragmented markets for more liquidity, led to a shock decision by the African markets association today to switch to a single African market platform at short notice.
The pioneering African Securities Markets Association market body says that all markets should be closed by 12 noon today(Thursday), while trading on the new platform is expected to start with effect from 9am on 6 April, giving traders and market institutions a very busy long weekend to set up alternative infrastructure.
“The main aim of the new system, called FITS, is to ensure that we can go on trading shares, bonds and other securities despite any possible terrorist attacks or power cuts”, said Bernani Madofo, IT spokesperson for ASMA, said in a news release: “At the same time, we are taking the chance to combine all markets in one trading pool, and at a stroke eliminating the small and fragmented markets that have been harming efficiency and capital raising in our great continent”.
The new system will revolve around a return to floor trading in a single African location. All securities, including bonds, shares and derivatives, will be listed on electronic screens, and traders will set up offices nearby before heading down to the trading floor. Traditional trading systems including verbal and physical transactions, backed up by prompt data entry, have frequently been shown in leading research studies to be more effective for trading, turnover and market pricing efficiency than expensive computer systems. Broker Japie Enroni said of his former trading screen “It’s like watching paint dry, I’d love some action”.
After hurried debate, in a shock electronic ballot the ASMA membership voted to set up the new exchange in the International Conference Centre, Seychelles are now busy setting up offices in IT enabled locations such as Club Meditrade and five star hotel Le Bigroller, while working around the clock to gearing backoffices for settlement and clearing using the revolutionary Fun In The Sun (FITS) integrated “umbrella” client and trade settlement system using L-ounger software.
Extra liquidity is likely to be gained after trading hours as Africa’s tens of thousands of stockbrokers gather in local hostelries to prepare their throats for the next day’s trading action.

COSSE’s hub and spoke model

Tom Minney — Tue, 16 Mar 2010 14:28:06 +0000

Sunil Benimadhu, Chief Executive Officer of the Stock Exchange of Mauritius:
We have had lots of discussion on how to link different markets. Lots of work has been done from a technical standpoint. We will keep national exchanges as they stand and enable their members to reach the members of different exchanges. Technically it is possible, now we need to raise the financing and also to be clear that the investment will need to make sense in terms of flows from increased traffic.
In order to get more liquidity, we need to increase the free float, currently many companies have requirement of 20% free float but even that may not be available for trading, for instance controlling shareholder may still sit on a big shareholding and keep it from trading.

SADC stock exchanges move towards links

Tom Minney — Sun, 21 Feb 2010 09:54:55 +0000

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.

Cost cut on real-time JSE data

Tom Minney — Tue, 09 Feb 2010 23:29:15 +0000

Financial information company McGregor BFA (www.mcgregorbfa.com) is offering investors new products, Realtime, which will stream data from South Africa’s JSE Limited securities exchange at lower cost. The company will work with customers to see how much customization is needed for them to feed the data into their existing systems.
McGregor product manager Glenn Orford is reported in Business Day newspaper (www.businessday.co.za) as saying it will: “not only deliver a very competitive offering in terms of price and functionality, but our ability to customise the solution based on the client’s specific requirements will undoubtedly make it quick and easy to slot into existing systems.”
The fee could be a flat monthly rate or a fee per user and could also vary if the client wanted financial ratios and other components. According to operations manager Sandy Kerkhove the product could be as low as R55 (US$7.14) per month per terminal, excluding undefined JSE royalties.
McGregor says it aims to provide real-time foreign exchange rate data within the next two to three months and it is deciding whether to include other exchanges beside the JSE. McGregor reportedly has not decided whether or not to introduce real- time coverage of securities exchanges other than the JSE.
According to the company website: “The McGregor BFA Realtime product set provides a platform for both the corporate and private user to view real time stock market information streamed live to your desktop.”
The offering includes: Pure Internet delivery, live streaming prices, live indices and stock market announcements service (SENS), user portfolios and selective ticker.

Trade Google, Microsoft and other blue chips on the JSE Derivatives exchange

Tom Minney — Thu, 17 Dec 2009 15:36:16 +0000

South African investors can trade two of the best-known IT names through the listing of single stock futures (SSFs) on Microsoft (www.microsoft.com) and Google (www.google.com) on the JSE Limited (www.jse.co.za) on 11 December.

“The listing of SSFs on these two IT stocks, as well as the present SSF listing on Apple, will allow South African investors to further diversify their portfolios,” says Allan Thomson, Director of Derivatives Trading at the JSE.

Other International Derivatives (IDX) products trading on the JSE include “blue-chip companies” such as Berkshire Hathaway, Bank of America, Nokia, LVMH Moet Hennessy Louis Vuitton, BP, Vodafone and GlaxoSmithKline. Contracts are priced and settled in South African rand.

IDX listed on the JSE can be purchased through any JSE-registered broker in the same way as local derivatives products. This offers investors international exposure cost-effectively on a trusted trading platform with none of the counterparty risk associated with over-the-counter trading. Retail South African investors can trade in these 2 US companies without using their ZAR2 million foreign allowance but institutional investors have to comply with foreign portfolio regulations.

Microsoft Corporation is the world’s leading computer technology provider and largest manufacturer of software products. Its most profitable products are the Windows operating system and the Microsoft Office suite, according to the JSE press release. The company is headquartered in Redmond, Washington and is listed on NASDAQ.

Launched in 1996, Google Inc is a recent arrival but has taken the lead as the world’s most popular Internet search tool. The company derives the major portion of its revenue from advertising related to its Internet search, email, online mapping and social media services. Google has its headquarters in Mountain View, California and is listed on both NASDAQ and the London Stock Exchange.

Nairobi SE readvertises for IT system for stockbroker back offices

Tom Minney — Wed, 14 Oct 2009 10:53:33 +0000

The Nairobi Stock Exchange (NSE) has just readvertised its request for IT firms and others to express their interest in providing a Broker Back Office (BBO) system to handle administration and client accounts for its 18 active and licensed stockbroking members. The closing date is 27 October. The request was previously advertised in August.

The NSE advertises the request on its website (www.nse.co.ke) and says it acts on behalf of Central Depository and Settlement Corporation, the Capital Markets Authority, and the Kenya Association of Stock Brokers and Investment Banks.

The request says the vendor should be able to provide automated solutions to individual brokerage firms which they can integrate with the electronic trading, central depository and the national clearing and payment systems. The system should support trading of both equity and debt instruments, including full internet trading.

Services required include acquiring, installing, testing, training and commissioning the system, and support and maintenance afterwards.

Preference will go to systems capable of centralized control and in-built risk management mechanisms across the entire trading process. The system should have detailed audit trail and log file tracking. It should support multiple-branch access including agencies and must ensure controlled access to client details maintenance, order management, on-line bank reconciliation and distinct client accounting linked to the firm’s core financial system. It should be able to interface with multiple trading systems by use of FIX protocol (a way for systems to exchange financial information) and link directly to markets and support Straight Through Processing from trade to settlement.

It would be good if the system could handle brokers’ processes such as: everything from marketing to allocation on Initial Public Offers, helping ensure compliance with regulations, dealing on own account, discretionary portfolio management, and recording complaints via the web.

For more details, check the NSE website. Expressions of interest must be in the tender box at NSE by 4pm on 27 October.