Capital Markets

Ugandan stockbroker transfers Kenyans’ share accounts

First Renaissance has immobilised 300 Kenya investor accounts since the Uganda Securities Exchangemoved to the electronic security system in April 2010.
First Renaissance has immobilised 300 Kenya investor accounts since the Uganda Securities Exchangemoved to the electronic security system in April 2010.  

About 950 Kenyan investors who bought shares through Ugandan stockbroker First Renaissance Securities will be transferred to another intermediary after the firm decided to discontinue its brokerage services.

First Renaissance Securities (FRSL) sent an e-mail to its clients on Monday stating that it will no longer provide stock brokerage services to institutional and individual clients with effect from the 30th of this month. The firm also said it will stop accepting any new trade orders with effect from Monday next week.

“The current economic conditions have seen a slowdown in the volume, value and frequency of equities traded on the Uganda Stock Exchange, which has affected the economics of this business line,” Keith Kalyegira, executive director of FRSL told Business Daily. He estimated that Kenyan investors who had bought shares through the firm had a portfolio of about Sh21 million. He termed the move a strategic business decision that will be followed by a shift to offering investment advisory services. Mr Kalyegira said the company will now be targeting capital raising, corporate finance —mergers and acquisitions, pensions consulting, private equity, equity research and real estate investment advisory deals.

First Renaissance has immobilised about 300 Kenya investor accounts since the Uganda Securities Exchange (USE) moved to the electronic security system in April 2010, out of a total of about 950 Kenyan clients.

This means the other 650 Kenyan investors who have not immobilised their shares by opening a securities central depository (SCD) account will be required to collect their share certificated from the broker. On Monday, the firm said that all SCD accounts that had not been not transferred to another broker by the end of last month and share certificates that will have not been collected by the end of this month will automatically be transferred to an alternative broker, to be determined in consultation with the USE and the Capital Markets Authority (CMA) of Uganda.

“We are in advanced stages of identifying a broker who will handle the clients we have been transacting for,” said Mr Kalyegira, who added that the firm had transacted for over 4,000 local and regional clients since inception in 2005. The move comes after the CMA of Uganda suspended the investment advisor, broker and dealer license of another broker, MBEA Brokerage Services, in May this year.
Crested Stocks and Securities later took over MBEA’s clients after its license was later revoked due to failure to meet the minimum capital requirements.

“The CMA conduct of business regulations requires that if a licensee decides to withdraw from a business he shall immediately inform the Authority and their clients. The notice is in line with the law,” said Peace Piwang, human resource and administration manager CMA Uganda.

She said that CMA Uganda was aware that FRCL had decided to refocus their business and concentrate on the investment advisory services business.

Ms Piwang said that the law requires that the clients transfer their accounts to other licensees and the procedure is as elaborated in the letter to their  clients adding that there is currently no other stockbroker in the same position as FRCL.

“There is no cause for concern. The Authority is working closely with the licensee to ensure that client assets are protected and that the process goes on smoothly,” she said.

The move will leave the stockbrokerage business in the hands of eight other brokers which include UAP Financial Services, African Alliance Uganda, Baroda Capital Markets, Crane Financial Services, Crested Stocks and Securities, Dyer and Blair Uganda, Equity Stock Brokers and CFC Stanbic Financial Services.

The USE has seven listed firms which are Uganda Clays, BAT Uganda, Bank of Baroda Uganda, DFCU, New Vision Printing, Stanbic Bank Uganda and National Insurance Corporation.

EABL, Kenya Airways, Jubilee Holdings, Equity, KCB Group, Nation Media and Centum are cross-listed at the exchange.