ALTX East Africa Ltd, the operator of Uganda’s first privately owned securities exchange, is seeking an investigation of the Capital Markets Authority (CMA) by the Inspectorate of Government over claims of abuse of office dating back to 2017.

The dispute was triggered by disagreements over ALTX’s trading fees and penalties structure, and compliance queries raised against the private securities exchange.

The petition follows a previous investigation request filed by ALTX against the CMA in 2018 over allegations of abuse of office. The Inspectorate of Government (IGG) declined to investigate the regulator citing legal hurdles.

“We have spent four years trying to pursue approval for our trading fees and penalties structure, but we have been frustrated by unethical behaviour among CMA staff. The regulator’s misapplication of market rules forced it to defend itself in an appeal case against one of our sister companies that it lost in the High Court last year, and carried a financial award of Ush100 million ($27,653) issued against CMA,” said Joseph Kitamirike, the chief executive officer of ALTX.

The IGG’s office cited Section 46 of the CMA Act as amended in 2016, which requires such requests to be submitted to a disputes tribunal supervised by the CMA, and any appeals forwarded to the line ministry for resolution.

However, the CMA disputes tribunal did not exist at the time, compelling ALTX to petition the Finance minister in 2018.

The CMA lost a case last year filed by ALTX in the High Court over a closure notice against its operations that was published in 2019.

The authority also lost a case filed by Tolea Securities Ltd, a business associate of ALTX, over failure to approve applications for Exchange Traded Fund products.

Nothing to resolve

“As far as we are concerned, there is nothing left to resolve between us and ALTX East Africa. We are not at loggerheads with anyone in the market. But we had some procedural issues regarding ALTX’s fees and penalties structure,” said Keith Kalyegira, CMA Uganda’s chief executive officer.

According to ALTX’s structure, an investor would be charged a basic trading fee of 37 per cent of the value of their transaction, and a trade valued at up to Ush10 million ($2,765) would be charged a fee of 0.74 per cent.

From Ush10 million ($2,765) to Ush50 million ($13,826), it would carry a fee of 0.555 per cent while a trade valued at Ush50 million ($13,826) to Ush500 million ($138,264) would be charged 0.296 per cent. Fees on trade of more than Ush500 million ($138,264) would be agreed upon between ALTX and the investor.

CMA’s fixed tariff structure offers a basic transaction fee of 37 per cent for trades done on the ALTX platform, and a fixed charge of 0.185 per cent for trades valued at up to Ush10 million and above.