Stock Exchanges News
- 4 priorities from new head of African stock exchanges 28 November 2014
The new President of the African Securities Exchanges Association (ASEA) put forward 4 strategic objectives for the member bourses. Oscar Onyema, CEO of the Nigerian Stock Exchange, was elected President after outstanding leadership by Sunil Benimadhu, Chief Executive of the Stock Exchange of Mauritius.
According to a news report in Nigeria’s This Day, Onyema said the vision is to support the effective mobilization of capital for economic development. The new executive committee to lead African securities exchanges will focus on
• Strengthen ASEA’s governance, financial and reporting framework
• Promote the sustainable development of African capital markets
• Facilitate an increase in market access at the regional level, and promote cross-listing among African exchanges
• Align the goals of African capital markets with those of the African Development Bank (AfDB).
Onyema said: “I am honoured to be elected president of ASEA which is the largest platform for Africa’s stock, futures and options exchanges. I would like to thank the outgoing Executive Committee led by Mr. Benimadhu for their stewardship of the Association over the last two years, and I look forward to working with ASEA members, our global counterparts and regulators to contribute to the association’s rich legacy, as well as to promoting our markets in a broad range of areas”.
He was elected this week at the Executive Committee meeting of ASEA after its 18th annual general meeting held in Diani, Kenya.
Exchanges and regional integration
According to this press release from Nairobi Securities Exchange, William Ruto Deputy President of Kenya opened the ASEA flagship conference: “Well-established capital markets can help African countries lessen vulnerability of their economies to external shocks, by locally marshalling funds through instruments such as bonds and reducing currency and duration mismatches.
“The exchanges have continued to foster regional integration by allowing cross-border capital raising initiatives such as public offers, bond issues and cross-listing of stocks”. He encouraged Kenyans to keep saving and to do this using the capital markets.
Benimadhu, the out-going ASEA president, welcomed the new president and committee members: “We look forward to ASEA’s continuing progress as it seeks to enhance the global competitiveness of member exchanges”.
Open up, urges investor
Allan Thomson, managing director of Dreadnought Capital, based in Johannesburg, South Africa, was reported in Kenya’s Daily Nation that opening up the markets to foreign investors would bring in much needed capital and training for the local markets: “I have respect for regulators in Africa and what they are trying to do. But it is worrying. African capital markets suffer from too much protectionism and stringent rules. The fact is that protected and inaccessible markets remain small.”
He added that membership at most capital markets was expensive, which kept away potential investors: “I once approached a securities exchange in Africa and was told to pay $1 million to become a member yet they were only five. I suggest a zero membership fee because investors bring in skills and capital,” he added.
- 9 reasons Africa tops investment agendas 28 November 2014
Here are 9 reasons why Africa is topping long-term investors’ agenda. According to press releases Eddy Njoroge, Chairman of the Nairobi Securities Exchange, told this week’s African Securities Exchanges Association conference in Kenya they are:
1. Recent research by economists indicates that 9 of the 20 fastest-growing economies are in Africa.
2. A recent report by Deloitte states that Africa’s economy will grow from $1.1 trillion to $3.9trn in the next 5 years.
3. The value of exports from Africa has risen from $170 billion in the late 90’s to $800bn last year. Africa is the only continent to have a trade surplus with China which would probably explain why several Chinese firms are setting up shop on the continent.
4. According to the African Development Bank, Foreign Direct Investment (FDI) into African economies will reach a record $80bn this year, with most of the money being directed to countries without natural resources but which nevertheless present attractive opportunities in other diverse sectors.
5. Today, Africa is the second most populous continent on earth with a current estimated population of 1.12bn. The Washington-based Population Research Bureau estimates that this population would more than double to 2.4 bn by 2050, with sub-Saharan Africa making up a headcount of 2.2bn.
6. Currently, the African middle class is estimated at 123 million with a projected rise to 1.1bn by 2060. Investor and philanthropist George Soros has termed this demographic shift as “the world’s fastest growing middle class.”
7. Infrastructure has played key part in Africa’s recent economic transformation and will need to play an even greater role if the continent’s development targets are to be realised. Africa’s largest infrastructure deficit is to be found in the power sector. The 48 countries of Sub-Saharan Africa less South Africa (with a combined population of about 780m people) generate roughly the same amount of power as Norway (with a population of 5m).
8. It is estimated that Africa’s infrastructural investment requirement will be $38bn per year and a further $37bn for operations and maintenance- an overall price tag of $75bn per annum. This translates into some 12% of Africa’s GDP. There is currently a funding gap of US$35bn per year.
Njoroge said Africa’s securities exchanges are key: “The conference gives us the opportunity to tell our own success stories; the story of an Africa that is on the rise and how we, the capital market practitioners, can transform a potential into a reality while ensuring that at all times, the fruits of economic success are widely shared across the population… Strengthening stock exchanges to support our capital-markets ecosystem will fuel economic growth. The Nairobi Securities Exchange will continue to work together with other stock exchanges strengthening Kenya’s position as East Africa’s financial services hub.”
- London Stock Exchange offering to Africa 20 November 2014
According to the London Stock Exchange, the listings of companies focussed on sub-Saharan Africa total 115 companies:
• 26 companies on the Main Market
• 3 Global Depository Receipt (GDR) listings on the Main Market
• 2 GDR listings on the Professional Securities Market (PSM)
• 84 companies quoted on AIM, the growth market
The LSE headquarters are in London and it has significant operations in Italy, France, North America and Sri Lanka and employs approximately 2,800 people.
In its press release about a link-up with the Nigerian Stock Exchange, the London bourse says it offers partner securities exchanges and investors a broad range of international equity, bond and derivatives markets, including London Stock Exchange; Borsa Italiana; MTS, Europe’s leading fixed-income market; and the pan-European equities platform, Turquoise. Through its markets, the Group offers international business, and investors, unrivalled access to Europe’s capital markets.
Increasingly important are the post-trade and risk-management services including CC&G, the Rome headquartered central counterparty clearing house (CCP) and Monte Titoli, the significant European settlement business, selected as a first wave participant in the T2S (TARGET2-Securities) European settlement engine that aims to offer centralized delivery-versus-payment. The Group is also a majority owner of LCH.Clearnet, the leading multi-asset global CCP.
LSEG offers its customers an extensive range of real-time and reference data products, including SEDOL, UnaVista, Proquote and RNS. It owns FTSE which calculates thousands of unique indices that measure and benchmark markets and asset classes in more than 80 countries around the world. African exchanges have recently been taking strong interest in FTSE products that will help their visibility and data flows.
By purchasing Sri Lanka’s MillenniumIT trading, surveillance and post trade technology some years ago, the LSEG established itself as a leading developer of high performance trading platforms and capital markets software. According to the LSE press release over 40 other organizations and exchanges around the world use the Group’s technology, although smaller African such as the Dar es Salaam Stock Exchange are switching to other systems as reported on this blog, as Millennium IT’s focus changes.
- Johannesburg Stock Exchange scores record with 395,969 equity trades in one day 19 October 2014
The Johannesburg Stock Exchange (www.jse.co.za) equity market scored a record number of 395,969 securities trades on 16 October. The total value was just over R24.6 billion ($2.2 bn).
The previous record of one day’s trading on the JSE Equity Market was just under 300,000 trades on, but the average number of trades per day during 2014 is approximately 176,000 per day on the equity market.
Leanne Parsons: Director Trading and Market Services at the JSE, says in a press release that the JSE’s trading systems handled the large number of transactions without any difficulty: “Records like this show that the JSE continues to provide a stable, credible and world class trading platform as well as access to a very liquid market with deep pools of capital.”
The JSE offers a fully electronic, efficient and secure market and is the world’s best-regulated exchange. It has world-class trading and clearing systems, settlement assurance and risk management. It has been a marketplace for trading financial products for 125 years, connecting buyers and sellers in equity, derivative and debt markets and is in the world top 20 exchanges for market capitalisation and a member of the World Federation of Exchanges (WFE).
- Total Senegal offers shares in IPO until 7 Nov for BRVM listing 13 October 2014
Total Senegal is bringing the first initial public offer (IPO) of shares to the growing Abidjan-based Bourse Regionale des Valeurs Mobilieres (BRVM) since 2010, with shares on sale until November. Parent company Total Outre-Mer is selling 8.9% of the shares in the oil products company , in a share offer that began 8 Oct and closes 7 Nov.
Reuters quotes Odile Sene Kantoussan, chief executive of brokerage company CGF Bourse, based in Dakar, saying: “This operation … consists of the divestment of 290,000 shares held by Total Outre-Mer in Total Senegal’s capital..The shares will be listed on the (BRVM) alongside 22% of the capital representing the stake of minority shareholders, bringing the floating capital on the Bourse to 30.9%. ” The ordinary shares each cost XOF 12,000 (CFA franc) equivalent to USD 23.19, with a minimum subscription of 5 shares, according to this announcement by Compagnie de Gestion Financière (CGF Bourse), which is sponsoring broker and Société de Gestion Intermédiation (SGI) in a syndicate of 20 brokers placing the shares. Initial priority is giving to investors in Senegal before extending across the CFA zone. The shares have XOF 1,000 nominal value according to the information memorandum available here. The transaction value is XOF 3.48 billion ($6.7million).
Total has already listed its Ivory Coast subsidiary among the 37 companies listed on the BRVM which trades securities from 8 nations across the West African region.
According to another news report by Agence Ecofin, Gabriel Fal, Chairman of the BRVM and Edoh Kossi Amenounve, CEO, hosted a ceremony for the offering on 10 Oct. It reports that the BRVM’s market capitalization has soared past XOF6 trillion ($11bn) driven by demand for Sonatel – the previous Senegalese listing in 1998 – and capital increases by subsidiaries of Bank of Africa group.
In April Fal was reported to forecast other potential BRVM listings could include Ivorian banks, Banque Internationale pour l’Afrique de l’Ouest en Cote d’Ivoire and Societe Ivoirienne de Banque, 51% owned by Morocco’s Attijariwafa Bank, as well as Matforce, a Senegalese company which provides energy equipment, an insurance company based in Dakar and a Canadian gold mining company operating in Cote d’Ivoire.
After the sale and listing, Total Outre-Mer will own 23.1% and Total Africa Limited will own 46%.
See the CGF Bourse website for details on the share offer.
- Nairobi SE appoints Andrew Wachira as acting CEO 10 October 2014
The Board of Directors of the Nairobi Securities Exchange appointed Andrew Wachira as the Acting CEO of the exchange, effective from 1 Oct 2014. Peter Mwangi left on 30 Sept, as reported on this blog. The process to recruit a permanent Chief Executive is ongoing.
According to the NSE announcement, lawyer Mr. Wachira has over 10 years’ experience at the Nairobi exchange. He has been the Head of Compliance and Legal Department, NSE since 2009. He has a Bachelor of Law Degree from the University of Nairobi and is an Advocate of the High Court of Kenya. He is a member of the Law Society of Kenya.
Board Chairman Mr. Eddy Njoroge said: “Andrew has been instrumental in the implementation of a number of key initiatives at the exchange. His experience, leadership skills and wealth of knowledge will ensure a smooth transition for the exchange. As we formalise the substantive recruitment of a Chief Executive, we are confident that he will execute this interim position commendably.”
- Nairobi SE trades bonds on new automated trading system 10 October 2014
The Nairobi Securities Exchange (www.nse.co.ke) is trading corporate bonds and Government of Kenya treasury bonds on an automated trading system. It marks another step forward for South Africa’s financial software development company Securities Trading & Technology Pty (STT), which also supplies the STT bond trading system used by the Johannesburg Stock Exchange (JSE), Africa’s most liquid bond market.
The new system allows on-line trading of debt securities and is integrated with the settlement system at the Central Bank of Kenya (CBK) for treasury bonds. It offers true delivery-versus-payment (DVP) to mitigate risk. In August 2014 the NSE increased the number of settlements in treasury bonds to 3 per day, with settlements at 11:00, 13:00 and 15:00 each day so that a bond trader can buy a Kenyan treasury bond and sell it the same day.
The new STT automated trading system (ATS) also is efficient, scalable and flexible, and supports trading in bonds that have been issued in different currencies.
Peter Mwangi, CEO of the Nairobi bourse, said in a press release: “This is a significant step towards the exchange’s goal of ensuring that the secondary market becomes more transparent and the price-discovery mechanism is beyond reproach.
“The multicurrency trading functionality of the new system means that foreign-denominated bonds can now be listed and traded on the NSE. With this development, we look forward to the listing of the Government of Kenya Sovereign Bond at the exchange.” He was referring to Kenya’s debut $2bn Eurobond that was successfully floated on the Irish Stock Exchange in June after attracting bids for 4 times the initial target.
Nairobi’s stock market was reported to be working with the Central Depository and Settlement Corporation (CDSC) and the CBK for settlements of corporate bonds.
It also follows the South African practice and allows reporting of bond prices by yield (i.e. the current interest rate to investors). According to an earlier report in Standard Media, Mr Mwangi said: “the bond trading system.. will allow reporting of bond prices by yield… Decision-making will be faster and this should spur further liquidity in the bond market.”
The STT system supports market-making, a 2-way-quote trading model, ability to integrate with regulators’ surveillance systems and ability to report transactions that are concluded over-the-counter (OTC) for purposes of settlement.
In enhancing the bond trading system, the Nairobi Securities Exchange acknowledges the vital role that a vibrant secondary market for active African bond trading continues to play in raising long-term capital for the Government and corporate entities. County governments can also use the same system to raise capital through issuing and listing county bonds.
Ms. Michelle Janke, Managing Director of Securities Trading & Technology said: “I am delighted to have partnered with the NSE, all teams have put in an enormous effort to take the market live”. The market went live on 26 September.
The Dar es Salaam Stock Exchange went live using the STT system on 27 June, as reported on this blog, after switching from Millennium IT system.
- Direct market access links West Africa securities exchanges 7 October 2014
The framework for linking the capital markets of West Africa was recently published. First step is direct market access (DMA), allowing a stockbroker on one West African exchange to transact directly on the Nigerian market through the order-management system of an approved Nigerian stockbroker.
The Nigerian Stock Exchange has outlined how this would work in its capital market. The initiative is part of a West African Capital Markets Integration (WACMI) programme, aiming to establish a harmonized regulatory environment for issuing and trading securities across West Africa. The overall programme will be rolled out in 3 phases:
Phase 1: Sponsored Access
Phase 2: Direct Access by Qualified West African Brokers
Phase 3: Integrated West African Securities Market.
The first phase will allow brokers in member countries of WACMI to trade securities and settle in markets other than theirs through local brokers in those markets. In Nigeria, this means that stockbrokers that are not registered market operators in Nigeria can participate in the market through remote access to the NSE’s trading facility through a local Dealing Member firm (stockbroker) licensed by the exchange.
This Day newspaper in Nigeria reports that Oscar Onyema, Chairman, West African Capital Markets Integration Council (WACMIC) and CEO of the NSE, said WACMI aims to ensure successful integration of the various stock exchanges in the West African sub region. Achieving integration would enable momentous growth in region’s markets and would attract investment flows, while creating a much larger market for local and international businesses:
“Additionally, integration will enable the movement of capital within the region, creating flexibility for issuers looking to raise capital and investors looking to invest across member states. Furthermore, integration would speed up the development of our various domestic financial systems, promoting increased competition and innovation, as well as offering opportunities for risk diversification.”
Direct market access – the mechanics
The current direct market access programme is only available to NSE dealing member firms with Order Management System (OMS) vendors been certified by the exchange.
Phase 1 is in two sub-phases: Direct market access (DMA) and sponsored access (SA). The current announcements relate to the first, direct market access. This means that a Sponsoring Member firm in Nigeria can allow a Sponsored Participant who operates in a WACMI member country to the NSE’s trading system under the SM’s trading codes via the SM firm’s order management system and using the dealing member firm’s infrastructure.
In order to allow direct market access to a sponsored participant (SP), the sponsoring member (SM) must notify the NSE of the DMA and should get a “no objection” letter. The application process includes giving full address and contact person for the SP and a “Letter of Good Standing” in respect of the sponsored participant (SP) issued by the domestic securities exchange where the SP is an active stockbroking member.
The notification of DMA should also include a copy of the risk policy/framework that the SM plans to use in monitoring the SP’s trading activities. If it later makes any changes to the risk framework it must tell the NSE’s Broker Dealer Regulation department within 1 business day via email or letter format. It will also include the name and registered or business address of the vendor providing the order management system to the sponsoring member (SM).
If the exchange has an “objection” it will advise the sponsoring member of the problems and can ask for more information, before granting the “no objection”.
The sponsoring member will also help the sponsored participant to establish settlement accounts either with a custodian or with the Central Securities Clearing System plc, which has been the clearing and settlement house of the Nigerian capital market and the NSE since 1997. Once this is set up, the SM will also inform the NSE about it.
The second step, sponsored access, will mean that the SP uses the exchange’s infrastructure. It will submit orders to the exchange’s trading system directly, but under a SM firm’s trading codes and without passing through a SM firm’s order management system. Instead, the SP’s orders pass through a series of validation checks carried out by the exchange and the orders are monitored by the SM firm as they happen (in “real-time”).
Sponsoring broker responsibility
According to the notice, issued by Olufemi Shobanjo, Head of Broker Dealer Regulation at the NSE: “It is imperative to emphasise that Dealing Member firms (the Sponsoring Members) will ultimately bear any risks associated with, and will be held liable for any infractions resulting from the Sponsored Participant’s (SP) trading activities. In line with this, The Exchange may request any information from a Dealing Member firm, regarding its trading activity.”
- JSE and ASEA host African exchanges for capacity-building 10 September 2014
Best wishes to the organizers and all the African exchanges personnel attending the Building African Financial Markets (BAFM) seminar in Johannesburg from 10-12 September!
The Johannesburg Stock Exchange (JSE) and the African Securities Exchanges Association (ASEA), supported by the World Bank Group, are hosting the third BAFM seminar this week, bringing together representatives from stock exchanges, regulatory bodies, stockbroking firms and other interested parties from several African countries including Nigeria, Mauritius, Zimbabwe and Malawi.
Topics to be covered include the future of African stock exchanges and whether they can play a meaningful role in the growth and development of the African continent. Zeona Jacobs, Director: Marketing and Corporate Affairs at the JSE, says in a press release: “Stock exchanges play a crucial role in the development of economies by allowing companies to raise capital through an efficient and transparent platform.” Jacobs says the conference provides an opportunity for exchanges from around the continent to share ideas and learn from each other’s experiences.
“Exchanges are key parts of the economies in which they operate. Initiatives such as this form an integral part of the continued development of sustainable economies within the continent by enabling open conversations about how to strengthen investor confidence, address governance issues and promote financial literacy.”
The conference will also include sessions around the development of commodity markets, exchange traded funds, electronic bond markets and demutualisation.
- Nairobi Securities Exchange CEO Peter Mwangi moves to Old Mutual Kenya 10 September 2014
The well-respected CEO of the Nairobi Securities Exchange (www.nse.co.ke), Peter Mwangi, is to take up a new job as Group CEO at financial services company Old Mutual Kenya with effect from 1 October. Mr Mwangi has served at the NSE since 24 November 2008 and his contract was renewed in 2011 but according to regulations a CEO of an exchange can only serve 2 terms.
Mr Mwangi and his top team have made huge progress in boosting the activity and standing of the NSE. Kenya’s Standard reports that major strategic projects implemented while he was CEO include:
- Trading treasury bonds on the automated trading system,
- Reducing the trading and settlement cycle to four days
- Demutualizing the exchange and selling its shares to the public.
Local press reports that in a statement sent to newsrooms Mr Mwangi says he expects the bourse to build on the foundations it set to be one of the most efficient and well capitalized exchanges on the continent.
Old Mutual continues in expansionary form in Africa, and an analyst reports: “Old Mutual has been accelerating its growth agenda within the African continent, expanding its footprint both organically and inorganically and Mr. Mwangi’ s appointment comes at an exciting time for the Group as whole as he will be in charge of spearheading Old Mutual agenda in this region. In 2013, the Group announced that it plans to invest $500M in East and West Africa, and we have already seen this as the Group has established operations in Nigeria and Ghana. In Kenya, the Group acquired Faulu Kenya which is in the process of been integrated in Old Mutual’s operating model.”
Tavaziva Madzinga, Old Mutual Africa Chief Operations Officer, was quoted on CapitalFM: “With the Group’s focus on growing in East Africa, and Kenya in particular, Mwangi will guide the delivery of Old Mutual’s commitment to provide affordable insurance and banking solutions to millions of Kenyans.”
Peter Muthoka, Chairman of the Board of Directors of Old Mutual was reported as saying: “The importance of our customer cannot be emphasised enough. We are dedicated to our vision of becoming our customers’ most trusted financial partner and we look forward to working closely with Mr Mwangi in serving Kenyans to empower them financially to achieve their goals.”
According to his profile on Businessweek: Before joining the NSE Mr Mwangi had been CEO and Managing Director of Centum Investment Company, (formerly, ICDC Investment Company until it changed its name in 2008) from December 2004 to October 15, 2008. He had joined been company secretary from 2000 to 2004 and has also been Investment Manager. His working career began as a Technical Officer in the Kenya Air Force, where he was involved in the maintenance of avionic communication systems and the development of the Air Force’s information and communication technology (ICT) strategy.
His degree is BSc in Electronic Engineering from University of Nairobi. He is also a Member of Certified Public Accountant of Kenya (ICPAK) and the Institute of Certified Public Secretaries of Kenya (ICPSK) and is a Chartered Financial Analyst.
He serves as a Director of UAP Insurance Sudan Ltd., Kisii Bottlers Limited, Mount Kenya Bottlers Limited, Rift Valley Bottlers Limited, Eveready Batteries Limited, KWAL Holdings Limited and Central Depository & Settlement Corporation Limited. He serves as a Director of Nairobi Stock Exchange Ltd., and Wildlife Works Inc. He is also a member of the Institute of Directors (IOD).