BSE switches to electronic trading

Brian Benza
Staff Writer | Thursday August 23, 2012 00:00

 

Trading of shares at the Botswana Stock Exchange (BSE) is suspended today ahead of tomorrow's crossover to a new high tech electronic trading platform that will discard the inefficiency of the current manual trading of securities on the bourse.In an interview with Mmegi, BSE CEO Hiran Mendis said the new platform known as Automated Trading System (ATS) will not only increase the effectiveness and price discovery efficiency of the market but will  take the market to investors, both domestic and foreign.'When you do shares trading manually, you are limited by space and time.

The efficiency of the brokers will increase, as they will no longer need to come to the BSE to trade shares. They can now trade from their offices while communicating with their clients (investors) at the same time,' said Mendis.Before the implementation of the new system, the BSE conducted a single thirty-minute trading session per day.With the ATS, trading will be possible throughout the day between domestic and foreign investors alike.Also, among the biggest attractions of automation is that it can take some of the emotion out of trading since trades are automatically placed once certain criteria such as price and brokers' capacity are met.The technology was acquired from MillenniumIT Solution, a subsidiary of the London Stock Exchange, at a cost of P9 million ($1.2 million).Government fully funded the automation project.

With the snapping up of the ATS, the local bourse joins seven other African countries that are using the state of the art technology to deepen capital markets.Currently only South Africa, Ghana, Nigeria, Egypt, Kenya, Zambia and Mauritius have upgraded from floor trading to the electronic trading of shares.'Although other countries such as Kenya and Zambia acquired this technology before us, we are proud to have the newest version of this technology from MillenniumIT Solution,' said Mendis. Apart from trading of shares, the ATS will also be used to trade bonds on the bourse, a development BSE product development manager Thapelo Tsheole said would be a boon for investors, as it will bring price discovery efficiency.

'Apart from the efficiency, the ATS will also improve surveillance as we can monitor the transactions as and when they take place rather than manually.  It will also bring diversity in terms of investor base as some foreign investors may have been shunning our market because it was not automated. The BSE visibility internationally is going to improve,' said Tsheole.The acquisition of the ATS will complement the Central Securities Depository (CSD), which was also acquired by government at a cost of P5 million in 2008. The CSD established a central share register and keeps an up-to-date list of shareholders and the share trades transacted. Among other functions of the CSD include the processing of share certificates, conduct deposits and withdrawals, and transfer securities between accounts and record trades.

In an interview, BSE IT manager Kopano Mogorosi said the bourse has also upgraded its CSD system so that it can be compatible with the ATS.The upgraded CSD also allows borrowing and lending of securities instead of direct sales, boosting liquidity in the process.'With the ATS, we will be able to update the stock prices in real time as the market moves so that investors can log into our website and be able to make decisions as trades are happening,' said Mogorosi.