The past decade has seen most SADC countries
adopting free market economies. The countries have embarked on structural adjustment
programs to rehabilitate their impoverished economies. A successful by-product of the
restructuring exercise has been the establishment of stock exchanges in the region. The
authorities in the region
are increasingly using the exchanges to privatise former parastatals.
Many of the stock exchanges are in their infancy having
only been established in the last decade. The exchanges are either corporate bodies or
quasi-parastatal. Both the Johannesburg Stock Exchange (JSE) and the Zimbabwe Stock
Exchange are more than a hundred years old. Most markets in the region are fairly illiquid
and lack depth and breadth, and have therefore not attracted the high levels of portfolio
inflow that some emerging markets have in other regions. In terms of technology and
adherence to international standards many of the exchanges are rather small and hence do
not have the finance to invest in the state of the art capital equipment.
Only the JSE has an electronic trading system, which it has
offered to the other exchanges at cost. The Namibia Stock Exchange was the first to take
up the offer and has been successfully linked to the J.E.T. (Johannesburg Equities
Trading) System. Clearance and settlement are mostly manual and hence in-efficient.
Mauritius was the first to install a central depository system and South Africa is
currently implementing its own project.
Most of the SADC countries have not completely liberalised
their economies except Botswana, Mauritius and Zambia. Exchange controls in some of the
countries do not allow the free outward movement of capital. In some cases there are
restrictions on foreign ownership.
The use of technology continues fun-damentally
to alter the entire capital and
financial markets landscape. Technology is a major tool for cross border exchange
alliances as exchanges with compatible trading systems will be able to begin joint
operations. For stock exchanges financial success of the enterprise is paramount.
Exchanges are businesses like
others, albeit sub-ject to regulations by authorities.
They should seek out economic roles in the market place,
form short term and permanent alliances and suffer from competition. Exchanges in the
region are seeking to be commercially accountable as well as regulated and thus exploring
their options including demutuali-sation.
The SADC Committee of Stock Exchanges has been meeting
since 1996 and became part of the formal SADC structure in July 1997 and reports through
the Committee of Central Bank Governors. Membership of the Commit-tee is open to all SADC
member coun-tries and the following countries have established exchanges; Botswana,
Malawi, Mauritius, Mozambique, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.
By the year 2006 the SADC Committee of Stock Exchanges will
be an integrated real time network of national securities markets in the region. Each
will offer automated trading for a wide range of financial
View on Stock Markerts
Emmanual H. Munyukwi
instruments (with trading systems accessible from a
single desktop workstation), and settlement and central depository facilities of
international quality and standards. There will be seamless clearing and settlement,
compatible with international systems, across the region. Harmonised, regulation,
surveillance, listing and other functions would remain the responsibil-ity of the
designated regional body. The network will be justified as a business case with associated
costs being a direct function of exchange size.
To achieve this vision the committee will increase
co-operation and links in operations, communications, regula-tions, technical skills
development and other areas between the stock exchanges of the SADC in order to:
- maintain and improve market integrity in order to have markets that are fair, efficient
and transparent with proper price discovery;
- increase the liquidity of trading in equities, bond, derivatives and other financial
- enforce legislation and rules and protect market participants and inves-tors;
- make the SADC securities markets more attractive to local and international investors;
- raise capital for regional economic development, including developing infrastructure and
human resources and raising living standards;
- improve the operational capacity of SADC stock exchanges;
- advocate and lobby for private sector led regional market integration;
- build co-operation between the SADC stock exchanges and their regu-lators;
- establish a forum through which
SADC policy makers can consult the regions
existing securities markets before planning further developments in this field.
Progress to date is satisfactory. The listing requirements
in the region have been harmonised, based on the require-ments of the JSE. The committee
is seeking donor funding to establish central depository systems in Botswana,
Malawi, Zambia and Zimbabwe. Both the JSE and Bond Exchange of South Africa provide
technical and operational advice to the other exchanges.
Efforts are underway to develop a regional stockbroker
curriculum that meets local needs whilst retaining the value of regional integration and
inter-national standards. Additionally, dual
listings are being encouraged to facili-tate cross border activities.
The committee successfully lobbied the South African
authorities to allow South Africans to invest in the regional exchanges. Member exchanges
are ex-ploring ways of adopting the J.E.T. system as their trading platform.
The author, Emmanual Munyukwi, is the Chief Executive of the Zimbabwe Stock
Exchange and a committee member of the SADC Com-mittee of Stock Exchanges.