Bid for greater cooperation
HE stock exchanges of the Southern African Development Community (SADC) countries are taking steps towards integration and inter-connection to increase liquidity and competitiveness in the region and economic growth and productivity.
The CEOS of the stock exchanges of SADC countries and other African stock exchanges met this week at the JSE in Johannesburg for the quarterly meeting of the Committee of SADC Stock Exchanges (COSSE).
The COSSE’S mission is to improve the operational, regulatory and technical requirement underpinnings and capabilities of SADC exchanges to make them more attractive to regional and international investors.
Sunil Benimadhu, CEO of the Stock Exchange of Mauritius, said talks included increasing the visibility of African stock exchanges. This would entail or result in the creation of a pan-african index.
The talks also touched on the exchanges increasing their cooperation with the African Development Bank (AFDB) and the agenda for the next African Securities Exchanges Association (ASEA) meeting in Windhoek this year.
John Mandy, CEO of the Namibian Stock Exchange, said although the exchange was the second largest in sub-saharan Africa, it was facing problems owing to the change in the mandate of Namibia’s largest institutional investor from a balanced mandate to a socalled “silo” mandate with a much narrower focus. He said African stock exchanges had to play a complementary role to enhance their exchanges.
Hiran Mendis, CEO of the Botswana Stock Exchange, said cooperation in SADC could take one of two forms: there can be more integration through the centralisation of stock exchanges with one central platform, most likely the JSE, or there could be another form of integration that would see “cross-trading” among them. He said one dominant stock exchange was not tenable from a strategic point of view.
“This is a sensitive matter, and you cannot have a top-down approach of having one central stock exchange, ” he said. “We need to deepen cooperation.”
He said there were several things the exchanges could work on to increase efficiency without merging. “We need to gear up and make the exchanges more effective and competitive through implementing and improving infrastructure such as the trading system, as well as putting in a legislative framework to enable the regional stock exchanges to thrive.”
Benimadhu expanded on the concept of cooperation, using the example of the niches that small exchanges in the region can exploit, rather than go into competition with the JSE.
“Stock exchanges in the region should be focusing on driving change and making things happen. Historically the Mauritian stock exchange has been an equity-centric domestic exchange. However, since we are seeing a lot of foreign direct investment and a lot of companies being incorporated in Mauritius, we would like to internationalise the exchange and give a lot of those Mauritianbased companies a service platform to list and trade.”
Nicky Newton-king, the JSE’S CEO, said it was important to take small and sequential steps to effectively and meaningfully increase cooperation between stock exchanges.