ALTX Uganda, a new alternative stock exchange in the country, has announced its eight-member board to steer it when it officially starts trading on May 1.
ALTX will trade in equities, currencies, commodities, government and corporate bonds as well as derivatives. Edward Mugwanya, the new board chairman, told reporters last week that the exchange would “change stock trading in the country”.
“In my personal capacity, I am very excited. We are talking about something that will operate at the speed of a blink of an eye,” Mugwanya said.
He added that ALTX would operate at the speeds of T+1, which means that for most stock trades, settlement would occur one business day after buying. Today, the Uganda Securities Exchange takes five days for one to be confirmed a shareholder after buying into a firm. However, there remains a question of whether there are more traders who will embrace the ALTX.
Stephen Kaboyo, the managing director of Alpha Capital Partners, said: “Having an alternative exchange is a good thing. Perhaps a different approach from the usual norm of a physical exchange may create an impact. However, I have my own reservations with respect to the depth of the market, which essentially is a measure of the liquidity, which up to now remains a major challenge.” A stock is said to be liquid if it is traded frequently.
But according to Mugwanya, the ALTX will generate the money from the market. He said they would make sure that “if one owns shares and they want to sell them, there will be market-makers [buyers] to buy them.”
Joseph Kitamirike, the chief executive and co-founder of ALTX, told reporters that they were looking up to a couple firms to join the platform, although he never disclosed their names. Recently, he announced that Gmex Group had acquired 25 per cent in ALT X. Meanwhile, Kaboyo said while technology can drive change in the market place, this has to be supported by the mass, which again has not yet been achieved in the equity segment in Uganda.
But Kitamirike says: “There is behaviour that Ugandans don’t buy [equities or bonds]; we shall try and change it. We are developing a mobile phone app that can enable one to register and access the platform wherever they are. This should be able to attract more Ugandans,” said Kitamirike.
Trading in stocks remains one of the avenues the public can use to save money. The Capital Markets Authority is already undertaking a campaign to educate the public about the benefits of savings. The CMA has sent out resources persons to hold speaking engagements with different segments of the public to educate them on the opportunities and risks of trading in equities.
There are about 18 listed companies on the USE, with many of them from Kenya. Keith Kalyegira, the chief executive officer of the CMA, told a local daily last year: “We needed to grow the number of investors on the stock market from the current 40,000 to at least 400,000 and we had two options; either to wait for USE to grow the numbers over time or license another player to increase the numbers faster. That is why we settled for the second option.”
The future for trading in equities looks bright. Less than five years, the average size of volumes traded at the USE was less than Shs 50 million a day. Today, with companies such as Umeme, trading averages more than Shs 300 million a day.
According to a company press statement, ALTX Uganda is now in the User Acceptance Testing (UAT) phase as it prepares to launch on May 1, 2015. The company said it would focus on primary and secondary market cash equities and bonds.
ALTX, Kitamirike says, will court major banks to develop an Exchange Traded Funds (ETF) business in major commodity and equity offerings. He added that they were targeting both offshore investors and Ugandans.
“This is a chance for Ugandans who want to buy high value stocks in companies say listed in London or US,” Kitamirike said.
Kitamirike says they have fulfilled all requirements from the Capital Markets Authority. ALTX board members include, Hirander Misra, Edward Burbidge, who is also a stock broker, Rose Lubwama, Jatin Jivram, Joseph Kitamirike, Felix Okoboi, and Francis Fred Tusubira.
