Three East African countries have joined forces to implement a World Bank-funded financial project that aims to connect regional stock markets electronically. This means they can operate as a single market with a view of reducing the cost and time of trading in shares of companies listed on markets across the borders.
Uganda , Rwanda and Tanzania are set to start trading as a single market before the end of this year (2020) after interconnecting their trading systems and hooking to the EAC Capital Markets Infrastructure (CMI) Information Technology platform.
Investors in the three countries will buy and sell shares of companies listed in any of the countries without going through different stockbrokers.
Currently, Ugandan stockbrokers take the largest share of stock trading commission at 3.28 per cent of the value of the transactions, not only within East Africa but in the entire African continent.
In Rwanda and Tanzania brokerage commission on equity trading are regulated at 1.5 per cent while in Kenya the applicable commission is limited to Ksh100 (1$) for odd lot transactions up to Ksh3,000 ($30) and 1.8 per cent for odd lot transactions in excess of $30.
The East Africa Securities Exchange Association (EASEA) said the project that has dragged for more than five years largely due to payment dispute with the software provider and lack of integration between CMI software and the trading systems of the participating states — Uganda, Tanzania and Rwanda — will remove obstacles on stock trading in regional markets, spur activities and boost liquidity in underperforming markets once operational.
“We are doing the final testing on our system for the CMI project. We are ready psychologically and technically we are working on those technicalities that are remaining. On the other hand Tanzania and Uganda are technically ready,” Celestin Rwabukumba, the association’s chairman and Rwanda Stock Exchange CEO told The EastAfrican.
“Everything should be ready by the end of this month and then we agree on the time of the launch because 95 per cent of the work has been done. The launch cannot go beyond December because we cannot afford to go beyond that time,” he added.
Pakistan-based InfoTech Private Ltd had been contracted to provide the software connecting the trading platforms of the Uganda Securities Exchange, Dar es Salaam Securities Exchange and Rwanda Stock Exchange to enable them to run as a single market in real time.
Kenya, which runs the largest stock market in the region […]