Thursday, January 21, 2021

Exchange Traded Funds conference over-booked

The Botswana Stock Exchange (BSE) ÔÇô main organizers of the inaugural Exchange Traded Funds (ETF) conference – reported on Friday that next week’s event is fully booked.

“Initially, we expected to accommodate 60 participants but demand grew to the extent that we ended up registering 102 participants. We couldn’t even take our fellow counterparts from Zambia because we’re over-booked,” said BSE Product Development Manager, Thapelo Tsheole.

The conference has attracted wide interest locally across players in the money markets, ranging from fund managers, stock brokers and finance managers. International investors were equally eager to attend the conference. Apart from conference resource persons from South Africa, only Mauritius managed to register on time. ETFs are a new phenomenon in Africa, with South Africa being the only country in Africa to embrace them in 2000 after their introduction a decade earlier.

The first were introduced in Canada in 1990 and were tracking the Toronto Stock Exchange to 60 indexes. Should things go well, Botswana is likely to be the second country on the continent to embrace the listing of ETFs in the domestic bourse.

“We are confident that we would have the capacity to handle the ETFs. We have thoroughly done our work on that for over a year now and we fully understand how they function. We have done a detailed study and covered every minute angle that is why we are now calling for this conference. We want to sensitise stock exchange stakeholders on time so that by the time we list them, people would have understood what they are,” said Tsheole.

The first draft of the listing rules has been completed and Tsheole said they are looking at finalizing the rules by the end of June this year. He added that they have identified active ETF players, who would be doing the mentoring.

“We can not yet tell when we are going to do the first listing. This is because we are still awaiting Central Securities Depository (CSD) license from the Central Bank but our partners are way ahead of us,” he explained.

A fortnight ago, Finance Minister Baledzi Gaolathe said government has funded the purchase and installation of CSD, “which is expected to go live very soon.”

Through ETFs, the BSE is expected to remedy the long standing problem of liquidity and diversity within the bourse. Despite being comparatively well capitalized, the domestic bourse is highly illiquid and is also dominated by the financial institutions ÔÇô the ETFs are expected to diversify investment portfolios. Tsheole added that they would take advantage of the fact that Botswana has no exchange controls, which would mean that investors would have a variety of options in which to denominate the ETFs.

Gaolathe is billed to officially open the conference. Speakers at the conference include Mike Brown, the first man behind the first listing of the ETFs in the Johannesburg Securities Exchange (JSE). He is the General Manager of Satrix Securities and there are currently five such products under the company with a market capitalization of R10 billion. Others are Nerina Visser ÔÇô a Quantitative Strategist at Nedcor Securities, Vuchirai Gappah of Clade Investment Management and Batsile Ngomanane of Absa. Currently, it is reported that there are 11 ETFs in South Africa.

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