By Manqoba Makhubu | 2017-11-14
THE Swaziland Stock Exchange (SSX) has embarked on a journey to move beyond equities and bonds to attract both foreign and local investors to list on the country’s stock exchange.
SSX Manager Joyce Dlamini said to increase their SSX width, so as to attract more companies to list; they seek to introduce several strategies to increase activity and liquidity of the stock exchange.
These include securities lending, buying on margin and short covering.
This is projected to be rolled out between at least three to six months.
“The rules pertaining to these trading strategies or mechanisms must be drafted. Thereafter we would await approval by the Financial Services Regulatory Authority (FSRA) and the ministry of finance,” she said. Dlamini said these changes stemmed from the fact that the key factors to attract both foreign and local investors to the markets are; products, ease of access, costs, liquidity and risk management.
She said they also seek to harmonise listing requirements to fast-track the launch of dual listing.
Dlamini said they also seek to roll out special purpose acquisition company (SPAC) listing requirements to attract cash shells and a venture capitalist board to help start-ups with seed capital and management grooming for a specified number of years before looking for an exit strategy amongst other strategies to increase their depth.
She said they also intend to set up currency hedging mechanisms, exchange traded funds (ETF), foreign exchange market, real estate investment trusts (REITs) and global depository receipts (GDRs) and derivative instruments.
Furthermore, she said the SSX plans to introduce the concept of market-making to the exchange.
She also said ETF listings requirements had been drafted to enable ETFs to be introduced and traded on the SSX, thereby expanding their portfolio.
“SSX is planning to introduce derivative instruments on the exchange – such as stock options, currency options and futures for starters, then gradually introduce more as the hype around these securities increases. We believe that ETFs will increase liquidity in our market and investors will have the chance to invest in a wide range of industries operating in many countries around the world,” she said.
ETFs are uniquely structured investment products or funds that track an index or baskets of assets, including stocks, bonds, currencies, real estate and commodities but trade like a single security or share on a stock exchange.
Dlamini said because ETFs covers a broad range of assets, they offer investors diversity from a single investment.
“When you purchase ETF shares, you are buying shares of a portfolio that tracks the yield and performance of its underlying asset(s),” she said.
Like stocks, she said ETFs could be purchased on margin and sold short, and prices fluctuate throughout each trading session as shares are bought and sold on various exchanges.
The SSX also seeks to initiate the introduction of the over-the-counter (OTC) board.
Dlamini said the objective of the OTC board is to provide an alternative to a listing for issuers that may not meet the relevant requirements at present but would desire to be listed at a future point in time.
Three types of securities are currently listed on the SXX namely; equity, corporate bonds and government bonds.
SSX current listed equities include; Nedbank, the Royal Swaziland Sugar Corporation (RSSC), Swaziland Empowerment Limited (SEL), Swaziland Property Investment Limited (Swaprop), Swazi Spa Holdings, Greystone Partners and SBC Limited.
Debt instruments on the exchange include bonds from Select Limited, government, Swaziland Development Finance Corporation (FINCORP) and Inyatsi Construction.
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