New securities exchange gears up for trading

Matia Kasaija, the Minister of Finance, at the launch of ALTX East Africa. Photo: ALTX Africa Group
Matia Kasaija, the Minister of Finance, at the launch of ALTX East Africa. Photo: ALTX Africa Group

ALTX East Africa, a new securities exchange that launched on 13 July this year, has not yet started trading as it “finalises one or two things,” Joseph Kitamirike, the exchange’s Chief Executive Officer told Uganda Business News.

Kitamirike said the July launch was a “go-live launch,” as the exchange switched on its systems. In the subsequent period, it has been making sure that the automated system is working well for the type of trading it promised while it also works on measures to protect the integrity of its platform, he said.

Kitamirike did not tell us the exact date the exchange will start trading, only promising that it will happen in the near future.

ALTX East Africa says its exchange platform “has the capability to handle 150,000 transactions per second,” and will settle trades in fifteen seconds to fifteen minutes. This is a marked difference from Uganda’s established exchange, the Uganda Securities Exchange, which was founded in 1997. Trades on the Uganda Securities Exchange are settled in three days, following the installation of an automated trading system in 2015. Before, it took five days to complete a trade on the bourse.

ALTX East Africa was cleared to operate in Uganda by the Capital Markets Authority in 2014. According to its website, the exchange will start trading with depository receipts backed by government securities issued on the treasury secondary market, before adding global equities, access to global bond products and exchange traded funds.

In addition to a high tech approach, the exchange is also banking on a low thresholds model, setting minimum bids and offers at only Shs10,000 ($2.98). After buying government securities on the secondary market, it will offer them to its clients at prices as low as Shs10,000, Kitamirike said. Other investors who have bought government securities will also be able to sell them on the ALTX exchange.

Currently, the minimum bid amount for government securities is Shs100,000. Auctions are carried out at the Central Bank, and bids in the auctions submitted through commercial banks – which have to go through any of the six primary dealer commercial banks.

The largest proportion of government securities – 45% – was held by commercial banks as at June 2015, followed by pension and provident funds with 35% and offshore investors with 11%. Other investors held the remaining 10%.

ALTX has positioned itself to appeal to investors in the 10% bracket. In addition to its low starting amounts, the exchange says it plans to introduce a mobile app investors can use to access the platform and carry through trades.