Automation of Botswana Stock Exchange doubles deals

The number and value of deals on the Botswana Stock Exchange (BSE) has doubled since a state-of-the-art Automated Trading System (ATS) was introduced in August, with the end of the manual system of trade boosting liquidity.

Daily turnover now averages P4.02 million (US$502,000) up from P2.67 million (US$334,000) before the new system was introduced, Hiran Mendis, the Chief Executive Officer of the bourse, said recently.

Moreover, 1,248 deals were sealed in the last two months, compared to just 471 in the month before ATS was introduced. The new system, heralding the end of the manual trading system, has boosted liquidity, with securities changing hands at a faster rate.

“These are early days yet, but it appears the ATS is starting to take effect,” Mendis said. “For it to take full effect, the brokers and other market participants must come to grips with the system and understand how to use its functionalities. Trading is still about relationships between participants. The ATS enhances liquidity by facilitating these relationships.”

Botswana is the eighth African country to adopt the technology, after South Africa, Ghana, Nigeria, Egypt, Kenya, Zambia and Mauritius.

Prior to the introduction of the ATS, boosting liquidity was a constant challenge for the BSE, with the limits to the system meaning that larger investors and listed companies were wary of putting money into it.

Vice President Ponatshego Kedikilwe said that the new system was crucial to Botswana’s upgrade of its financial services sector as the country looked to turn itself into an investment hub.

“Botswana is ideally positioned as a hub for a broad range of financial services including banking and investment in capital markets,” he said. “The ATS is an investment that will enable us to showcase Botswana nationally, regionally and internationally.”

It is the latest step in advancing securities trading in Botswana, coming four years after a Central Securities Depository (CSD) was established. Finance and Development Planning Minister, Kenneth Matambo said that the government would continue to work on policies that would enhance liquidity within the BSE.

“These developments (CSD and ATS) will contribute to an increase in liquidity and service to attract additional domestic and foreign investors as the settlement, clearing and trading standards used will be internationally recognised,” he said. “Government will continue to focus its efforts on developing and enhancing the institutional framework and regulatory oversight of the financial markets and system in Botswana to maintain the stability of the financial system.”

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