CMA to license investment banks

By Samuel Sanya

The Capital Markets Authority (CMA) has embarked on a process to amend the CMA Act to enable it license investment banks as a means of enlarging the scope of products on Uganda’s capital markets and increasing the level of activity in the Ugandan economy.

Investment banking will fill a void for advisory services in the Ugandan economy. This will be especially with the impending liberalisation of the pension sector and the growth of investment clubs, which will create large pools of funds that need to be profitably invested.

Charles Nsamba, the acting CMA communication and investor education manager, says the word ‘bank’ shall be replaced with ‘house’.

“As it is, we are in the final stages of drafting the amendments. We are working closely with First Parliamentary Council to ensure that we get it through the process as soon as possible for Parliament and the President’s approval,” he told New Vision.

“Ideally, we are looking at attaining efficiency and generally attracting more players within this business,” Nsamba explains.

He pointed out that the CMA has involved the Bank of Uganda (BoU) in discussions to amend the CMA Act so as not to infringe on BoU’s territory.

Brokerage companies such as Crested Stocks Securities have already expressed delight at the development and have included attaining investment banking licences in their 2015 business plans.

Arthur Nsiko of African Alliance Securities says granting CMA the rights to license investment banks will enable specialised regulation of investment banking in Uganda and this will benefit Ugandans.

“Demand for advisory services is on the rise in Uganda and the amendment of the CMA Act is a good thing. This is good for clients as specialised regulation will protect client interests,” Nsiko explained.

On Tuesday, Umeme dominated proceedings with trades for 2.97m shares worth sh1.5b, Stanbic moved 1.9m shares at sh34 per share, and Uganda Clays moved 1.6m shares at sh20 per share.

Bank of Baroda traded 24,402 shares at sh118 per share, dfcu traded a paltry 200 shares at sh705 per share, while cross-listed Centum traded 128 shares at sh1,650 per share.

The all share index fell to sh1895.93 from 1918.89, while the local share index fell slightly to 318.8 from 318.63.