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The East African : Jul 26th 2015
MONEY AND EQUITY MARKETS JULY 25-31,2015 KILL ILLEGAL TRADE By JAMES ANYANZWA The EastAfrican T he East African economies are working on harmonising levies paid by investors trading in bonds and shares as preparations for a joint securities exchange gathers momentum. The move will also see listing fees, commissions and other charges in the capital markets synchronised across the region. But no common position has been reached by the regional finance ministers on the harmonisation of domestic taxes undermining the free movement of goods and services across the region. It is argued that differences in income, capital gains, excise and value added tax rates have made it difficult for companies doing business across the region to operate efficiently. Discussions are under way un- der the auspices of the East African Securities Regulatory Authorities (EASRA) to administer similar stockmarket charges across the region in an effort to make regional capital markets attractive to both local and foreign investors. Kenya’s Capital Markets Authori- ty acting chief executive Paul Muthaura said negotiations over modalities of implementation are ongoing. “That is a continuous discussion that we are having. Harmonisation of these charges is part of a long term initiative by EASRA to establish a single capital market for the region,” Mr Muthaura said. Currently, the cost of trading in shares and bonds differs across the EAC member countries. Harmonisation of capital markets charges is part of the integration agenda of the EAC financial sector. The graphic alongside shows the total fees paid by investors in the different bourses as a percentage of the value of transactions in shares and bonds, further broken down into brokerage commissions, transaction fees, investor compensation fund fees and CDS settlement fees. An issuer of securities to the pub- lic is charged 0.15 per cent of the value of the issue by the Capital Markets Authority (CMA) of Kenya while approval of listing by introduction is 0.25 per cent of the value of the issue subject to minimum fee of Ksh50,000 ($485.01) and maximum of Ksh5 million ($48,501.3). Approval fee for rights issue is 0.25 per cent of the value of the issue. The data shows Kenya and Ugan- da are more expensive for stock investors with each country charg- ing 2.1 per cent fee on the value of the transaction compared with Tanzania (2 per cent) and Rwanda (1.71 per cent). Kenya is, however, the cheapest for bond trading, charging 0.034 per cent as commission on bond transaction compared with Uganda (0.05 per cent), Tanzania (0.0625 per cent) and Rwanda (0.81 per cent). Transaction size Below Ksh100, 000 ($970.02) Transaction size Brokerage Commission (pc) 1.78 Brokerage Commission (pc) 0.024 Transaction Fee (pc) 0.12 Transaction Fee (pc) 0.004 Uganda Securities Exchange (USE) EQUITY Transaction size Any amount Transaction size Any amount Transaction size Up to Rwf 100m ($135,441) Transaction size Any amount Brokerage Commission (pc) 1.7 Brokerage Commission (pc) 0.031825 Brokerage Commission (pc) 1.5pc USE (pc) 0.14 USE (pc) 0.015675 Transaction Fee (pc) 0.14pc Capital Markets Authority (U) (pc) 0.14 BONDS Capital Markets Authority (U) (pc) 0 Investor Compensation Fund (pc) 0.02pc Compensation Fund (%) Securities Central Depository (SCD)(pc) 0.00125 0.00125 Rwanda Securities Exchange (NSE) EQUITY Securities Central Depository (SCD)(pc) 0.05pc Tanzania Securities Exchange (NSE) BONDS Brokerage Commission (pc) 0.08 Transaction Fee (pc) 0.05 Investor Compensation Fund (pc) 0.02 Investor Compensation Fund (pc) 0.12 BONDS Investor Compensation Fund (pc) 0.004 Central Depository& Settlement Corporation 0.002 Total Cost to Investor (pc) 0.034 SOURCE: NSE,DSE,USE, RSE Securities Central Depository (SCD)(pc) 0.03 Nairobi Securities Exchange (NSE) EQUITY Central Depository& Settlement Corporation 0.06 Settlement Guarantee Fund (pc) 0.01 Total Cost to Investor (pc) 2.1 Total Cost to Investor (pc) 0.18 Total Cost to Investor (pc) 1.71 Total Cost to Investor (pc) 0.05 Compensation Fund (pc) 0.02 Securities Central Depository (SCD)(%) 0.1 Total Cost to Investor (pc) 2.1 EAC bourses working on uniform fees for trades in bonds, shares Ha≥monisation of capital ma≥kets cha≥ges is pa≥t of the integ≥ation agenda of the EAC financial secto≥ 51 Ugandan bou≥se goes elect≥onic By BERNARD BUSUULWA The EastAfrican THE UGANDA Securities Exchange officially launched its electronic trading platform on Monday, a development that heralds shorter settlement times for investors and faster trading cycles for stockbrokers. The electronic platform is backed by three data service operators in an arrangement expected to guarantee stable connectivity in the event of network failures. A wireless digital network covering all stockbrokers will be rolled out in early August to enable traders from have access to the trading floor from their office desks, the bourse’ management said. Through installation of the automated trading system (ATS), turnaround times for settling trades done at the bourse have been reduced from five to three days, a shift in trading operations that promises increased efficiency and higher returns for investors who make frequent transactions, observers said. Widespread entry of offshore portfolio investors in young, emerging markets has raised the demand for sophisticated trading platforms that accommodate quick entry and exit transactions done across different markets. More transactions On its second day of opera- tion, a large transaction worth Ush4.058 billion ($1.2 million) was recorded on the Umeme Ltd counter with stockbrokers concluding the deal in less than two minutes, sources claim. “The offshore investors have shown strong interest in the ATS platform, with many of them already consulting their stockbrokers on how to utilise the system through virtual links. Within a month, all stockbrokers will be in a position to access the platform in their offices. However, the negative impact of tight monetary actions is still being felt in the equities market,” said Paul Bwiso, USE chief executive. A pre-close auction session in- tended to promote market making activities has been incorporated under the new trading platform. Through market making ac- tions reflected in formal bargaining discussions carried out after normal trading hours, stockbrokers are able to review benchmark prices for listed companies and bring them closer to prevailing market valuations, experts pointed out.
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