03.31.2014

Pan-African Exchange to Launch in Uganda

03.31.2014
Terry Flanagan

ALTX Africa Group, which aims to set up a pan-African trading network, has received its first trading license and is slated to launch in Uganda this year.

ALTX Uganda, a wholly owned subsidiary of Mauritius-based ALTX Africa Group Ltd, said in a statement it had received a licence from the Capital Markets Authority of Uganda and it is set to start an exchange in the country in the fourth quarter of this year to cover East Africa.

The new exchange has agreed to use GMEX Technologies’ ForumMatch exchange trading platform, ForumDetect market surveillance system and ForumTrader workstation.

Hirander Misra, chief executive and co-founder of GMEX Group, told Markets Media: “There are currently 14 stocks listed in Uganda, which is not electronic, but growth prospects are massive as brokers want cross-border trading with Tanzania and Kenya. The region has natural resources and oil which leads to the need for financial and commodity derivatives.”

Misra said the the ALTX primary trading platform will be hosted alongside GMEX in the Equinix data centre in Slough in England. This allows foreign trading firms to easily connect and also lets East African brokers to connect via the trading hub to be set up from Uganda. Local African brokers can also use GMEX trading screens to get access to the market.

“Uganda is due to launch in the fourth quarter and once momentum builds it will open the floodgate to other markets from 2015 onwards,” Misra added. “Like GMEX, ALTX has a five-year plan to launch a number of exchanges across Africa facilitated by a CCP.”

ALTX was founded by entrepreneur Jatin Jivram and Joseph Kitamirike, an ex-chief executive of the Uganda Securities Exchange.

“The biggest impediment is the lack of a pan-African clearing house,” said Misra. “Institutional investors want to lodge their collateral and margin in a credible CCP and ALTX is looking closely at potential partners and shareholders.”

The IMF said in its Global Financial Stability Report this week that emerging markets have strengthened and deepened their financial systems over the past 15 years. The size of the domestic institutional investor base has increased and more emerging markets can now sell local currency-denominated bonds to foreigners.

The report said: “Local financial systems with more domestic services, products, and liquid markets help reduce the sensitivity of emerging economies’ stock returns and bond yields to the changes in global financial conditions.”

Michael Hasenstab, executive vice president and chief investment officer, global bonds at Franklin Templeton Fixed Income Group said in a note that the fund manager has become interested in Africa.

Hasenstab said: “During our time visiting and conducting research there we have seen a degree of political stability developing in many African countries that we haven’t seen in decades, and that has unleashed positive change and development that we think has allowed the private sector to blossom.”

Franklin Templeton is particularly excited about economies in sub-Saharan Africa, the region south of the Sahara Desert, as many of these countries are rich in natural resources and human capital.

“In my view, countries with better governance can tap into that wealth potential and really can improve the lives of the people—and be important contributors to broader global growth,” added Hasenstab. “We should also learn the lessons of places that don’t have a steady state or good governance. It can create consequences.”

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