The automated trading system which Uganda Securities Exchange (USE) switched to on July 20, has increased the volume of turnover at stock by Shs17 billion, which signifies the importance of the system.
An automated trading system is a computerised-based trading application set up to automatically buy and sell securities on an exchange.
Speaking during the launch of the system at the Kampala Serena Hotel yesterday, USE chief executive officer Paula Bwiso said: “Since the beginning of the year, we have realised a Shs130 billion turnover. Out of this, Shs17 billion which represents a growth of 12 per cent in turnover has been realised since we started automated trading on July 20.”
Mr Bwiso said automation enhances both liquidity and flexibility with regard to the time it takes to conclude a deal, adding that 68 per cent market participants are foreigners who have been investing actively in Uganda’s stock since the beginning of the year.
“Automaton has already brought about efficiencies and reduced on the settlement time from five to three days which is in line with international standards,” he said.
As of August 31, USE market capitalisation was Shs24.9 trillion, down from Shsh27 trillion in July. The drop has been blamed on price decline on Umeme’s counter.
Mr Bwiso said currently, there are 27,000 shareholders who have Securities Central Depositary accounts out of the 100,000 shareholders that have been registered by the different brokerage firms since the creation of the stock exchange.
Prime Minister Ruhakana Rugunda, who launched the automated trading system, said: “As government, we shall look to seek the options of rising funding for our long term infrastructure projects through long term bonds that are listed on the Uganda Securities Exchange.”
Dr Rugunda said government will support the Capital Markets to enable it stimulate capital mobilisation to meet the long term investment desire of Ugandans and international investors.
Explaining the importance of stock exchange, he said USE contributes to wealth development, financial services and provides a platform for investment for local and foreign investors. Through this platform, companies can raise relatively cheaper long term capital and facilitates the secondary trading of shares.
“Capital Markets are therefore a vital engine of economic growth because they have a profound impact on the rate at which our economy grows and create jobs as they form the backbone of our stock market and ensure a stable fair and efficient market structure,” he said.
Uganda Securities Exchange market capitalisation as of August 31. This is down from Shs27 trillion realised early July.