Crested Capital, a dominant stockbroker in Uganda’s retail investor market, has rolled out faster payment options in a bid to tackle pressure from cash-hungry clients and increase penetration in remote areas.

These solutions include fast-tracked settlement of clients’ equity trades within an hour after the sale of shares on the stockmarket. This is in contrast with the settlement cycle of seven to eight days operated by the Uganda Securities Exchange.

The traditional transaction flow pattern finalised transfer of money and shares to investors after a week in a business environment affected by routine delays in banking and brokerage systems.

Whereas the new option has modest user features, similar settlement avenues offered by rival stockbrokers remain informal but carry higher financial payout limits, estimated in hundreds of millions of shillings, industry sources say.

Deployment of the Crested Capital option is expected to consolidate loyalty among its huge retail client base which has grown to more than 10,000 individuals amid weak economic conditions, especially for low-income earners, analysts say.

However, financing costs pegged to creation of a standby cash float meant to clear client demands in real time could not be confirmed by press time.

“This new product will help clients to receive payment for shares sold within an hour after trading them on the stockmarket,” said Joseph Kibuuka, equity financing manager at Crested Capital. “We have mobilised a standby cash float drawn from our commission incomes and funds sourced from commercial banks at a minimal cost.”

Under the new option, equity trades with share volumes of 10,000-499,999 are exempt from gazetted settlement fees, according to Crested Capital executives.

Equity trades with share volumes of 500,000-1,999,999 are charged a settlement fee of Ush50,000 ($14.9) while those with shares numbering 2,000,000-9,999,999 are charged Ush100,000 ($29.8).

Trades in the range of 10,000,000-49,999,999 will be charged a settlement fee of two per cent, calculated against the market value of the transaction. Equity trades in excess of 50 million shares will be subject to management discretion. Transaction fees attached to this payment option exclude bank charges.

However, share transactions done at the Nairobi Securities Exchange will incur additional bank charges of Ksh1,000 ($9.9) in order to facilitate realtime settlement, Crested Capital said.

Besides, retail clients will be in a position to deposit cash for purchasing shares and also receive payments for shares sold through MTN Mobile Money, the largest mobile money transfer service in the local market.

The introduction of this transaction window is expected to minimise the burden of movement faced by upcountry-based small-scale retail investors who are frequently forced to travel long distances to the city to make deposits in the authorised settlement bank before purchasing shares.

The bourse’s settlement bank is Stanbic Uganda’s corporate branch at Crested Towers in uptown Kampala.

Consequently, more transactions are likely to be generated from remote but economically promising areas at a lower cost, thereby increasing market penetration rates.

The total number of investors recorded at the USE is estimated at 42,000 with less than half of them active, industry sources indicated.

“Use of mobile money-based payment options will enable us to penetrate remote upcountry areas that lie outside our service network but have exhibited strong growth potential,” said Mr Kibuuka.