Tuesday, March 21, 2023

BSE in a bid to increase market participation

The Botswana Stock Exchange (BSE) is to take a giant leap into the future next month by inviting two Information Technology (IT) vendor companies to demonstrate their capability in designing and installing central depository system aimed at shoring-up the image of the exchange.

The oriental companies, CSD of Mauritius and Millennium Technology of Sri Lanka, are expected to stage a demonstration at the Gaborone International Conference Centre towards the end of next month.

Chief Executive Officer of BSE, Hiran Mendis, who stepped up to the helm two months ago, said the aim is to try to install the system within six months in a bid to install confidence and wider market participation.

“The stock exchange should have some basic infrastructure and this is what we are trying to do.

“At the point in time, we do not have a central depository system and heavily rely on the call over system. The current system is cumbersome and it is open to fraudulent activities,” he said.

The central depository system is an electronic system which enables the sale and transfer of shares to be done over the computer and have real time transfers. It is aimed at cutting out some of the cumbersome and long paper work activities which involves transfer secretaries.

Under the current system when one buys shares he has to approach a stockbroker and wait for some days before he or she gets a share certificate from the transfer secretaries. The system is risky and is prone to be contaminated by some fraudulent share certificates, insider trading and some transfer cancellations.

BSE took a deliberate decision some years ago to try to enhance its image in an attempt to attract more local and international investors.

Some of the measures which are to be put in place include the strengthening of the exchange regulations, establishment of the central depository system and automation among others.

“This market is dominated by domestic institutions. You cannot really say you have a market because it is dominated by local institutions which might be thinking the same way.

“You need the views of the retail and international players in the market to really call it a market,” Mendis said.

It is hoped that once the central depository system is in place, BSE will embark on an automation process that will allow traders to participate in the market through the internet and its branch offices across the country.

The move to be successful needs heavy investment in the form of creating awareness through seminars, student education and introduction of stock exchange subjects at schools.


Read this week's paper