ALL IS SET: The hard and soft ware for automated trading are being tested

By David Mugabe

Ugandans who have invested on the stock market will hand in their paper share certificates starting next month as the stock exchange prepares to start electronic trading.

This will be the first step as the Uganda Stock Exchange moves away from manual clearance and settlement of transactions to electronic settlements. Investors will then be issued with statements.

The chief executive of Uganda Securities Exchange, Simon Rutega, explained to Business Vision that the bourse is only awaiting clearance of the rules, procedure from the Capital Markets Authority (CMA).

“By end of June, we will have automated clearing and settlement,” said Rutega.

Rutega said once the regulator provides a license for its operation, the application will be launched.

Sources say President Yoweri Museveni assented to the central depository systems bill on January 9, 2009. The CDS bill provides the legal guidelines for operations of electronic clearance and trading.

Rutega explained that there are two phases. The exchange will spend sometime on the clearing and settlement process. After this period, the public will not be allowed to trade with certificates.

Rutega said brokerage firms will be licensed as agents to demobilise the certificates from investors and then issue investors with statements, just like bank statements that spell out the customers’ bank transactions.

After the dismantling of paper certificates, the bourse will then prepare to launch automated trading later in the year.

Rutega also disclosed that the hardware and software for automated trading have been undergoing tests.

“We are really in the last phase,” said Rutega.

The USE chief believes that the impending listing of National Insurance Corporation (NIC) is a small issue that will not be interrupted by the current global economic downturn. “NIC is a small issue, it should be absorbed,” said Rutega.

In June 2005, government sold 60% of its shares in NIC to Industrial and General Insurance Company Limited (lGI) of Nigeria. The divestiture agreements had spelt that NIC was supposed to offer some of its shares to the public within two years.

This has never taken place with the last postponement blamed on the global economic meltdown.