E.A. investors to wait longer for shared trading platform

Investors who were waiting for the shared electronic platform that would have made it possible for seamless trading of cross-listed shares will have to wait longer.
The East African Securities Exchange Association (Easea), the umbrella body for regional stock exchanges and the Central Depository and Settlements Corporation (CDSC), had set July 29 (Monday) as the deadline for having the platform working, but this has now been postponed.

“It has not yet gone live because of a few hitches,” the CDSC corporate communications manager Irene Mutiso told the Business Daily.

The inter-depository share transfer system is expected to make it quicker to trade cross-listed shares by cutting paper requirements.

Stockbrokers, custodians and regulators in the region had planned to have a single platform by the launch of power company Umeme’s initial public offering (IPO) in November 2012.

Since the IPO which was cross-listed on the Nairobi Securities Exchange (NSE) in December 2012 no trade on the local bourse has taken place, solely attributed to the lack of a shared platform.

The absence of a shared trading platform that would allow investors in member countries (Kenya, Uganda, Tanzania and Rwanda) to buy and sell cross-listed shares the same way they would trade in domiciled shares has made cross-listing appear more of a symbolic effort rather than a policy to make share trading across the region easier.

“It is one thing to have cross-listed shares but it is another to have them trading,” said Willie Njoroge who doubles as the chief executive of the Kenya Association of Stockbrokers and Investment Banks (Kasib) and the East Africa Securities Brokers Association (in formation).

Kenya Airways, Equity Bank, KCB, Nation Media Group, Centum, East Africa Breweries Limited and Jubilee Holdings are some Kenyan firms that are cross-listed.

Stockbrokers in region say that an inter-depository system is top on their agenda.

“Based on the discussions that we have had so far this has been singled out as the most important issue,” said Mr Njoroge.

The region’s regulatory bodies have also been advocating for shared infrastructure meant to give investors options beyond their borders.

“Due to the lack of a common trading, clearing, settlement and depository infrastructure, there has been minimal trading in cross listed securities”, said the East African Securities Regulatory Authorities (Easra) chairman Japheth Katto in October 2012 at a consultative meeting held in Burundi.

“We need to address this matter urgently if investors have to benefit from a regional market,” he added, at the time.

Players have also pushed for the phasing out of all paper certificates in all exchanges which is expected to have an effect on liquidity of stocks. The CDSC has already said that it expects to have phased out all paper certificates by November.