What you need to know:
Manual. Trading on Uganda Securities Exchange is still done using markers.
Kampala. A new securities exchange, ALTX Uganda, will start trading in May 2015, company officials have revealed.
The new automated exchange, a competitor to Uganda Securities Exchange (USE), will have the task of attracting Ugandan Small and Medium Enterprises (SMEs) to list shares and participate in borrowing money using the stock exchange.
Mr Joseph Kitamirike, a co-founder and chief executive officer ALTX Uganda, told reporters on Tuesday that they are testing the automated platform, and expect to launch it by May 2015.
In March 2014, ALTX were issued a licence by the Capital Markets Authority (CMA) but had to fulfil some requirements before they could start facilitating transactions.
“We are delighted to have successfully completed the first phase of our implementation of the exchange technology suite provided by GMEX Tech, a fully managed service and we are on our way with the User Acceptance Testing, taking us towards our goal of launching ALTX Uganda by May 1, 2015,” Mr Kitamirike revealed.
Trading in shares on Uganda Securities Exchange is still done in manual format with the plans to automate it dating as far back as 2010. Trading is done on a whiteboard using markers. ALTX wants to tap into automation which allows transactions to be completed in real time.
“When we introduce automated trading, we hope the market will like it because you complete a transaction in two minutes,” he said.
Currently on the USE, it takes a day or more to complete a transfer of shares from a buyer to seller. Launched in 1997, the USE has 16 listed companies, none of which are SMEs. Attempts have been made; including creating a segment for SME’s, but to date, none has been able to list.
Mr Kitamirike admits that SME’s have governance issues to sort but adds “it will take time” to bring them on board.
ALTX is proposing to bring new products to the Ugandan market including hedging products to mitigate currency fluctuations, commodities trading and debt instruments. These, according to ALTX, will attract investors and companies to the capital markets.
However, all these require regulatory approvals from the CMA and ALTX revealed they had submitted various applications.
“We have received three sets of rules for approval from ALTX Exchange, which we are currently reviewing. These are the depository receipts rules, Exchange Traded Funds Rules and the Asset Backed Securities rules. The review from the process takes up to about 45 working days, but our aim is to always be as efficient and effective as possible,” Mr Charles Nsamba, the acting communication and investor education officer and Public Relations manager at CMA, told Daily Monitor in a phone interview.
How the USE operates
USE was founded in June 1997 and is operated under the jurisdiction of Uganda’s Capital Markets Authority, which in turn reports to the Bank of Uganda, Uganda’s central bank. The exchange started trading in January 1998. At the time, the exchange had just one listing, a bond issued by the East African Development Bank. As of July 2014, the USE trades 16 listed local and East African companies and has started the trading of fixed income instruments.