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Financial Exchanges in Africa |
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| Author: gdz | 12 July 2007 | Views: 645 |
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GHANA Stock Exchange (the Exchange) was incorporated in July 1989 with trading on its floor commencing in November, 1990. Since then, the Exchange has been progressively strengthening its facilities for businesses and the Government to raise long term capital as well as for investors to obtain liquidity, reasonable capital safety and diversity of investments.
The Exchange is governed by a Council with representation from Licensed Dealing Members (LDMs), Listed Companies, Banks, Insurance Companies, Money Market and the General Public. The Exchange also has a well qualified and experienced management team.
During the five years of the exchange's operation, it has contributed considerably to the development of the capital market in Ghana and as a result the entire financial market is undergoing a transformation.
MEMBERSHIP
From an initial three promoters, the Exchange currently has fifty-two members made up of eleven Licensed Dealing Members (licensed stock broking firms) and forty-one Associate Members.
LDM status is open to companies incorporated in Ghana under the Companies Code, 1963 (Act 179) and partnerships incorporated under the Incorporated Private Partnership Act, 1962 (Act 152). An LDM must have minimum fixed capital of C100 million and liquid funds of at least C10 million per director or partner. They must obtain a Certificate of Specification before commencing operations and finally, the firm must be licensed by the Securities Regulatory Commission.
LISTING
There are currently twenty (20) listed companies - all equities. All types of securities including foreign registered companies' securities can be listed. Three lists are available and small and medium sized companies are provided for. The criteria for listing include capital adequacy, profitability, spread of shares, years of existence, management efficiency etc.
TRADING AND SETTLEMENT
Trading takes place on the floor of the Exchange three times a week on Mondays, Wednesdays and Fridays starting at 10.00am. Trading in Ashanti Goldfields' shares also takes place over-the-counter. Trading on the floor of the Exchange has been under the call-over system since its inception. Delivery and Settlement system is centralized but not automated. The settlement period is currently T + 10 working days. A minimum of C850 is charged on trade value not exceeding C10,000. For trades greater than C50,000 a declining rate from 2.5% to 1% as the trade value increases is applied.
MARKET PERFORMANCE AND DEVELOPMENTS
The Exchange has so far performed remarkably well. Even though it is relatively much younger than most of the other African Stock Exchanges it seems to enjoy increasingly more attention and interest. There has been coverage by most of the major electronic and printed media interested in global financial news.
In terms of index performance, the Ghana Stock Exchange was the 6th best performing emerging stock market with capital appreciation modestly put at 116% for 1993.
Then in 1994, the Exchange was the best index performing stock market among all the emerging markets gaining 124.3% in its index level. However, in 1995, the index increased by a meager 6.3% due mainly to high levels of inflation and interest rates prevailing in the country during the period. This year there has however, been an improvement.
As at 30th August, 1996, the index has risen by 20% and inflation is falling. The average rate of capital appreciation of 70% per annum since 1990 easily exceeds the annual rate of inflation in Ghana's economy for the period.
Steady improvements are being recorded continuously in trade volumes and values. From 1990 to 1992, only 4 million shares at about C350m were traded on the Exchange. However in 1994, alone, 93 million shares worth C73b changed hands. 55 million shares worth C27 billion were traded in 1995. This year, so far 24.2 million shares worth C22 billion have been sold in secondary trading.
Primary market activities too, have been on the ascendancy. Over Cl24 billion had been raised through the Exchange as at August 1996.
The simultaneous listing of Ashanti Goldfields Co. Ltd. (AGC) on the Ghana Stock Exchange and on the London Stock Exchange and the subsequent listing on New York, Toronto and Zimbabwe Stock Exchanges have given the Exchange a whole new international dimension and stature.
With its current market capitalization of some US$2 billion, the Ghana Stock Exchange, in terms of market capitalization, has become one of the largest sub-Saharan Stock Exchanges.
Significant developments have also taken place since the Exchange began its operations. The opening of the market to non-resident Ghanaians and foreigners in June 1993 was a big boost to the development of the market. Exchange Control permission was given to foreigners and non-resident Ghanaians to invest through the Exchange without prior approval. This has attracted a number of top-rated foreign institutional buyers.
The Government has also used the Exchange to privatize some state owned enterprises and banks. Notably amongst them were the Government's off-loading of its shares in Ashanti Goldfields Company Ltd. (one of the largest mining companies in the world) and Ghana Commercial Bank one of the largest Banks in sub-Saharan Africa).
A long term debt market is being developed to enable the Government and corporate bodies to issue long term debt instruments. A comprehensive educational program has been developed to upgrade the skills of professionals in the securities market.
The Exchange has improved upon the efficiency of its information dissemination and is now hooked to Reuters to enable investors have access to the Exchange's trading results and other developments. The Exchange is also on Internet and communication has been made easier both locally and internationally through e-mail.
OUTLOOK
The Exchange expects the Government to divest more State Owned Enterprises and Banks through the Exchange. The Exchange also expects more listings from the private sector. The forthcoming issues include National Investment Bank, Aluworks Ltd. and Home Finance Company Ltd. Housing Bonds.
Some corporate and government bonds are also expected to be issued and listed as part of the capital market's ongoing long term debt development program.
Work on an automated Trading, Clearing and Settlement system is to commence soon. It is aimed at enhancing the efficiency of the trading, clearing and settlement system. As at now, the Exchange operates a centralized manual clearing and settlement system. Plans are also underway to develop some new financial products such as pooled funds, commodity futures and other derivatives.
Apart from the above prospective developments, various measures are also being adopted to develop the markets and they include: improving the legal/regulatory framework; improving market surveillance, conflict resolution and enforcement mechanisms and otherwise enhancing investor protection within the Exchange; and enhancing the skills and professionalism of the Exchange's personnel as well as those of all market operators at all levels; expanding the coverage of the Exchange's promotional activities within Ghana and abroad as well as market-related professional education and training programs.
The Government, on its part, continues to pursue measures in the areas of taxation, macroeconomic policy, institutional and legal reforms as well as improvement in the infrastructure, among others, to enhance the investment environment.
All these measures being adopted and prospective developments should improve the attractiveness of the Ghana Securities Market as a foreign portfolio investment destination.
Article taken from West Africa Magazine, 23 Sept 1996 & http://ourworld.compuserve.com/homepages/khaganu/stockex.htm
South Africa Johannesburg Stock Exchange INTRODUCTION
The JSE Ltd ('JSE') is licensed as an exchange under the Securities Services Act, 2004 and Africa's premier exchange. It has operated as a market place for the trading of financial products for nearly 120 years. In this time, the JSE has evolved from a traditional floor based equities trading market to a modern securities exchange providing fully electronic trading, clearing and settlement in equities, financial and agricultural derivatives and other associated instruments and has extensive surveillance capabilities. The JSE is also a major provider of financial information. In everything it does, the JSE strives to be a responsible corporate citizen.
HISTORY
RESIDENCE
The JSE was established on 8 November 1887 and was housed on stands at the corner of Commissioner and Simmonds Streets, Johannesburg.
The second JSE building was built in 1890 on the same site as the original building.
In 1903 the JSE moved to new premises in Hollard Street which became the financial centre of Johannesburg and was to remain so for more than half a century.
In February 1960 the fourth exchange in Hollard Street was built on the same site as the old exchange. During construction a temporary home was found for the JSE in Protection House in Fox Street.
On 12 December 1978 (fifth move) the JSE took up residence at 17 Diagonal Street where JSE's stockbrokers, staff and offices were all housed in two buildings next door to each other.
In September 2000, the JSE moved premises for the sixth time to One Exchange Square, corner Maude Street and Gwen Lane in Sandton.
CORPORATE IDENTITY
The Johannesburg Stock Exchange changed its name to JSE Securities Exchange South Africa on 8 November 2000. At the same time the new 'X' logo was adopted which incorporates the initials 'JSE'.
The acronym 'JSE' was used because it has a rich heritage and strong recognition both locally and internationally.
The name 'Johannesburg' was dropped and South Africa was included because the JSE wishes to be seen as a national exchange.
'Securities Exchange' was included because the JSE wanted to expand into other financial products, and would not only list and trade stocks any longer.
In 2005, the JSE revisited its corporate identity and it was decided to change the name JSE Limited
TRADING
In 8 November 1887 trading commenced by way of open outcry on a trading floor.
In March 1996, trading on the Johannesburg Equities Trading (JET) system commenced. 800 securities were transferred in the 3 month period from 8 March 1996 to 7 June 1996.
On 7 June 1996 the trading floor closed after a 108 year era.
By Monday 10 June 1996 the JET System was fully operational.
The JSE moved to JSE SETS in May 2002, thus commencing the new trading platform arrangements with the London Stock Exchange and allowing JSE investors access to world class technology.
GOVERNANCE
From inception, the JSE was run as a stockbroking member organization with a President chairing a Committee of members. Sub-committees were appointed to deal with various aspects of the JSE business and were chaired by members of the stockbroking community.
In 1986 the first full time President, Tony Norton, was appointed for a five-year term. A Chairman from the stockbroking community chaired the Committee.
In 1991 Roy Andersen became the second President (also a five year term)
In January 1997 Russell Loubser became the third President.
In December 2001 a new constitution was adopted and the first Board of the JSE was appointed. This Board replaced the Committee. The members of the Board were for the first time selected from the wide body of stakeholders of the JSE. The Executive Committee, headed by a CEO (the former President), was now charged with the day to day running of the JSE. With the introduction of the Board, Russell Loubser assumed the position of CEO from Jan 2001. Advisory Committees were appointed to fulfill the role of the previous sub-committees. The Committees advise on matters such as:
Listings
Memberships
Clearing & Settlement
Trading
Financial Derivatives
Agricultural Products
SAFEX
In May 2001 SAFEX and JSE members agreed to the acquisition of the business of SAFEX (South African Futures Exchange) by the JSE. The effective date of the transaction was 6 August 2001. The JSE agreed to retain the SAFEX branding and created two divisions - SAFEX Financial Derivatives and SAFEX Agricultural Products.
2006 - The SAFEX Financial Derivatives is now referred to as SAFEX Equity Derivative
LONDON STOCK EXCHANGE (LSE)
During 2001 the JSE concluded two agreements with the LSE entailing technology and business arrangements. The business arrangements envisage co-operation with regard to data dissemination and the possibility of remote membership and dual primary listings on both exchanges.
On 13 May 2002 the JSE commenced trading on the LSE SETS system, and is known as JSE SETS in South Africa. In addition the LSE provided the JSE with a data dissemination system known as InfoWiz.
FRONT END TRADING SYSTEM: GL TRADE
On 6 September 2001 the JSE and GL Trade unveiled their new business relationship for GL Trade to provide trading front-end technology for JSE SETS.
FTSE / JSE
In March 2001, the JSE and FTSE announced that a new index series would replace the current JSE Actuaries Indices.
In June 2001, the FTSE/JSE Africa Index Series Advisory Committee was appointed. The committee consists of various index market players.
In October 2001, the Advisory Committee signed off on the new Ground rules, new sector classification and Free Float principles for the new series.
On 2 January 2002, FTSE commenced calculating real-time the new FTSE/JSE Africa Index series for indicative purposes only, and these became available on the JSE and FTSE websites.
On 21 June 2002, the current JSE Indices ceased to be calculated and the new FTSE/JSE Africa Index Series was launched on 24 June 2002.
On 3 January 2006, the FTSE/JSE indices were re-classified according to the FTSE/Dow Jones Industry Classification Benchmark (ICB).
STRATE (SHARE TRANSACTIONS TOTALLY ELECTRONIC)
STRATE is South Africa's first electronic settlement and depository system for dematerialized equities. It dispenses with paper certificates and the risk associated with paper settlement.
The JSE was fundamentally instrumental in the development of STRATE which started life as a division of the JSE in 1997.
The company, Share Transactions Totally Electronic Limited, was formed in November 1998.
The first phase of STRATE was implemented at the end of September 1999. Between then and the end of March 2002, every JSE listed equity will be migrated for settlement through STRATE.
STRATE is also settling the trades of the Namibia Stock Exchange. STRATE's technology allows trades to be settled from any country in the world as STRATE is connected to SWIFT, an international network.
STRATE will also strive to settle trades in securities other than equities.
LISTING REQUIREMENTS
Prior to 1995 the Listings Division worked with a set of requirements which had been compiled in 1987. However, these requirements were more a statement of general principles and many of the Division's rulings and interpretations were based on unwritten practices, thus leading to uncertainty on the part of corporate finance practitioners and their clients.
The redraft of 1995 was both a codification of these unwritten practices and an assimilation with international best practice.
SADC (Southern African Development Community) exchanges brought their listings requirements into line with those of the JSE in the fourth quarter of 2000.
The 1995 Listings Requirements were again updated in line with international best practice prevailing in countries like Australia, Hong Kong, North America and the United Kingdom in October 2000.
The October 2000 requirements are currently being reviewed to a minor degree following the introduction of STRATE and the need for new corporate action timetables, the amendment to the South African Companies Act permitting price stabilization, and rules for derivative-based share repurchases.
SENS
On 18 August 1997, the JSE introduced a real time news service for the dissemination of company announcements and price sensitive information. SENS aims to ensure early, equal and wide dissemination of all information that is expected to have an effect on the prices of securities that trade on the JSE. It improves communication between listed companies and the investing community.
The JSE Listings Requirements were amended in order to accommodate the introduction of SENS. The principal amendments are contained in Schedule 19 to the JSE Listings requirements.
The requirement to release announcements through SENS became obligatory with effect from 15 October 1997.
Announcements received by SENS that have been authenticated and approved (where such approval is required) are transmitted electronically to the major wire services. Customers to these services then have access to the full announcements, as released.
Listed companies are however, still required to publish announcements in the press, once announcements have been issued through SENS.
SRI (Social Responsibility Index)
The JSE launched a Social Responsibility Investment Index ('SRI Index') on 19 May 2004 with the announcement of the names of the 51 companies constituting the index.
The index focused on the debate around corporate social responsibility and sustainable business practices, and to enable socially responsible investment to take in South Africa.
The SRI Index is founded on the three pillars of environmental, economic and social sustainability, and will measure the triple bottom line performance of companies listed in the FTSE/JSE All Share Index.
The philosophy of the Index is that profit-making entities must ' at least ' perform on the triple bottom line, which encompasses economic, social and environmental performance. As corporate governance is the foundation in which each pillar of the triple bottom line is embedded, it is dealt with separately in the Index.
The SRI Index Criteria are customized to the South African and African context, and could be an inspirational benchmark for all organizations regarding best practice in the triple bottom line.
Alt X
Alternative Exchange, better knows as AltX, was launched in October 2003 as a parallel market or alternative exchange for small to medium and growing companies. It is the sum of partnership between the JSE and government's Department of Trade and Industry.
The AltX is hailed as Africa's first alternative market, a growth exchange for young, innovative companies and investors.
LID
LID is a world-class work flow management, imaging and information system. It facilitates the electronic submission, processing and approval of prospectuses, pre-listing statements and circulars related to company listings.
The system was initiated in December 1998 and was implemented in two phases with the final phase being completed at the beginning of 2000.
ETF/SATRIX PRODUCTS
Exchange Traded Funds are the most convenient and cheapest method of investing in the top performing shares listed on the JSE. The Satrix products give investors exposure to the price and dividend returns of the shares that make up the most popular benchmark indices.
Each Satrix product aims to provide the investor with the total price and dividend return of the index over which it is listed.
SATRIX 40
Satrix 40 tracks the performance of the ALSI40 index, the top 40 shares listed on the JSE.
Satrix 40 was listed on 27 November 2000 - the first exchange traded fund to be listed on the JSE.
Return to investors since inception to 31 March - 28,2%
SATRIX FINI
Satrix Fini tracks the performance of the FINI15 index.
Satrix Fini was listed on 15 February 2002.
Satrix Fini is the most convenient way to invest in a composite of the top 15 shares in the JSE financial sector.
Total return to investors for the year to February 2003.
Return to investors since inception to 31 March 2004 - 13,3%
SATRIX INDI
Satrix Indi tracks the performance of the INDI25 index.
Satrix Indi was listed on 15 February 2002.
Satrix Indi is the most convenient way to invest in a composite of the top 25 shares in the JSE Industrial sector.
Total return to investors for the year to February 2003.
Return to investors since inception to 31 March 2004 - 13.3%
SATRIX RESI 20
This ETF tracks the performance of the FTSE/JSE Resources 20 index
It was listed on 10 April 2006
This is an index that allows you to have exposure to only resources stocks.
SATRIX SWIX TOP 40
This ETF tracks the performance of the FTSE/JSE Shareholder Weighted index
It was listed on 10 April 2006
The Swix index down weights a share's weight in the index by the proportion held offshore and is thus less exposed to
resources stocks.
SCHOOLS CHALLENGE
In its thirtieth year running, the JSE Schools Challenge coaches Grade 10 and 11 learners in its fundamentals of investment strategy and encourages them to research and strategies around the trading of JSE listed shares.
Participating school teams test their share trading skills through an ongoing annual simulated "ghost trading" pro gramme in which their performance is tracked and measured in a race against other teams.
For the first time in its history, a third party commercial sponsor, Liberty Life, will participate to enhance the profile and educational scope of the Challenge. This year the "kick off" date of the brand new JSE/Liberty Schools Challenge is 18 March 2002.
Since 2002 the Challenge had been significantly enhanced to offer additional prizes, an Internet based trading platform and increased informational assistance to teams
In 2005 certain universities took place in a pilot University Challenge. Because of its great success the JSE/Liberty Life University Challenge opened its doors to all universities in South Africa in 2006.
WORLD FEDERATION OF EXCHANGES (FORMERLY FIBV)
The JSE is a member of the World Federation of Exchanges and plays an active role in this regard.
The World Federation of Exchanges is the global trade association for the exchange industry.
The membership comprises 55 regulated exchanges from all regions of the world. Together, these exchanges account for over 97% of world stock market capitalization, and most of its exchange-traded futures, options, listed investment funds, and bonds.
Today, the activities of members of the World Federation of Exchanges go far beyond the business of traditional stock markets and encompass a wide range of products and services in the financial arena, including derivative markets, clearing houses, settlement institutions, central depositories, information technology providers and Internet businesses. Within the Federation's membership, there are institutions which are also regulated as banks or brokers.
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