The ATLX East Africa Exchange went live in Kampala last week, amid hopes of improved access to attractive but elusive overseas financial securities and diversified revenue streams for local stockbrokers.
The digital trading platform provides a transaction window for foreign equities, bonds and Exchange Traded Funds(ETFs).
The official launch marked an end to more than a year’s delay in entering into the local capital market.
The delay was attributed to slow approvals by the industry regulator, difficulties faced by ALTX’s founders in raising additional funds for installation of extra digital tools, and prolonged negotiations with issuing agents of financial instruments, particularly debt securities.
Set-up costs are estimated at more than $1 million after almost three years of project implementation work.
ALTX is owned by ALTEX Africa Group (AAG), a Mauritius-based firm founded by Joseph Kitamirike and Jatin Jivram in 2013.
Prominent shareholders include GMEX Technologies, a global provider of trading technology solutions for equities, derivatives, currencies and commodities, which holds a 25 per cent stake. GMEX Technologies is fully controlled by GMEX Group LLP, which is partly owned by Deutsche Boerse of Germany.
The ATLX digital platform offers turnaround times of less than five seconds for each transaction, while settlement times — the average amount of time taken to transfer securities from a seller to a buyer and disbursement of money from a buyer to the seller — is estimated at less than an hour.
NC Bank Uganda Ltd, a subsidiary of NIC Bank of Kenya is ALTX’s settlement bank.
Registration of electronic investor trading accounts takes less than 30 minutes on the exchange’s website, while the trading platform can accommodate a maximum of 150,000 transactions per second, according to ALTX sources. The exchange’s minimum transaction amount of Ush10,000 ($2.9) is to entice retail investors in its quest for a 10 million client database over a five year period.
So far, only 120 debt securities in form of government Treasury bills and bonds are traded on the ALTX platform, with more debt instruments being processed in the pipeline.
“We promise to provide a variety of financial products such as ETFs, Asset Backed Securities (ABS) and debt instruments. On equities, we need a lot of regulatory approvals but we are already working on some products. We cannot confirm the total cost of setting up our trading and settlement platforms because our audited results have not yet been released,” said Joseph Kitamirike, CEO of ALTX East Africa Exchange.
In comparison, the USE automated trading system offers turnaround times of less than five minutes for trade on its platform. Settlement times have averaged three days since last year, a consequence of traditional clearing system constraints experienced between the bourse, stockbrokers’ settlement desks, and commercial bank payment platforms.
Registration of electronic investor trading accounts takes an average of three days, while the USE’s minimum transaction amount stands at Ush5,000 ($1.5), according to official data.
Stanbic Bank Uganda is the USE’s settlement bank.