BSEL battles to reverse revenue slowdown
Mbongeni Mguni | Friday May 31, 2019 20:49
According to the exchange’s figures, revenues have slowed from P34 million in 2015 to last year’s P32.6 million, while commission incomes have fallen even faster from P14.3 million to P9.4 million over the same period.
The fall in the commission income is partly to do with static fee structures and declining levels of equity trades at the BSE in the last several years.
The Exchange last year conducted extensive consultation on the review of its equity brokerage commission structure.
“The need to diversify our revenue cannot be overemphasised particularly as trading activity on account of equities has been on a remarkable decline since 2016,” BSEL CEO, Thapelo Tsheole said in the latest Annual Report.
“Our diagnosis tells us that a lot of factors are at play to dwindle the trading activity, however, we have taken remedial action to address those within our control.”
One of these remedial actions involves the equity brokerage commission review, which Tsheole said was set to be taken before the BSEL board and the Non-Bank Financial Institutions Regulatory Authority (NBFIRA). “Towards the end of the year, we undertook a benchmark study to reassess our equity brokerage commission relative to other markets and concluded that ours was not competitive.
“In addition, we deduced that these uncompetitive costs, amongst other factors, could be attributable to the year-on-year slowdown in turnover since the introduction of the minimum brokerage commission of 60 basis points in April 2016. “In 2019, we will be submitting our recommendations for board approval and subsequent NBFIRA approval, the main content of which is to introduce a sliding scale fee structure for equity trading.
“Our hope is that this will help to bring the trading activity to the optimum levels,” he said.
The Exchange also plans to install stock market tickers or data display screens at its headquarters, which will incorporate advertisements from external customers, helping BSEL revenues.
Tsheole added that the upgrading of the Central Securities Depository (CSD) would help efforts to central bond trading in the local market, giving the BSEL access to the highly traded government bonds. At present, government bonds are listed and traded at the Bank of Botswana. A move to the CSD would not only boost the BSEL’s revenues from trade, but also help market participants better determine trends within the bond market.