Botswana Stock Exchange Limited (BSEL) has announced intentions to revise the local bourse’s equity brokerage commission, following its seemingly biased increase in April 2016.
Indication are that BSE’s equity brokerage commission ceiling of 1.85 percent is one of the highest compared to markets such as Dar Es Salaam Stock Exchange, Stock Exchange of Mauritius and Nairobi Stock Exchange, among others.Thapelo Tsheole, BSEL Chief Executive Officer said the stability of turnover has weakened since the brokerage commission was increased.
He said the development has hindered unlocking value from the investment and the initiatives of the Exchange with respect to the development of the market. “The BSE is not entirely against increasing fees, but is of the view that these increments have to be substantiated by considerable value add from the service providers and should follow an objective and consultative framework that eliminates any perception of conflict of interest particularly as that was the perception at the time the BSE was a mutual entity,” said Tsheole. Sharing BSEL’s concerns on a position paper dubbed: ‘Paper on Revision of the Equity Brokerage Commission’, Tsheole said the benchmarking exercise which was undertaken to review the brokerage commission in 2016 relied on information provided by an interested party - a broker.
He added that the exercise could not have provided an independent and objective analysis for the BSE to make a well informed decision. “The information presented by the broker was not complete and comprehensive and from that end, it selected higher ends (ceilings) of the brokerage commissions to give an impression that brokerage commission in Botswana is very low compared to the chosen markets to support the introduction of the floor.”
The position paper further notes that in most markets, brokerage commission is on a sliding scale, therefore the scales are such that brokerage declines as the value of the transaction increases. “In a few markets, brokerage is negotiable within certain ranges and in some market it is flat,” said Tsheole. BSEL is soliciting for views from brokers, asset managers and all stakeholders, ahead of revising the brokerage commission.
After successfully listing in the Botswana Stock Exchange Limited (BSEL), the directors of the Botswana Building Society remain optimistic to be granted a commercial banking licence by the Bank of Botswana.
BBS board Chairman,Taolelo Mosetlhi said they are targeting the second half of 2019 to start operating as a commercial bank. “We are hopeful that our application to the Bank of Botswana for a banking licence will be successful,” said Mosetlhi. BBS was incorporated as a company (BBS Limited) in April and was the first to list on BSE’s over the counter platform called Serala last week. This enables the company to trade their shares at any given time.
Commenting on BBS financial results for the year ended March 2018, Mosetlhi said until they are issued with a commercial banking licence by the Bank of Botswana, it will continue to conduct the business of a building society. Currently, ordinary shares of existing holders of relevant accounts such as the paid up, indefinite period and Subscription are now listed on Serala.
BBS recorded an increase in profit to P49.9 million compared to P47.8 million in 2017. “It increased by four percent compared to the prior year which affirms the resilience of our business. However, we can only build on this success if we can transform BBS quickly into a commercial bank,” said Mosetlhi.The board recommended lower dividend of P57, 8 million to its shareholders this year compared to P59. 3 million last year.
The chairman indicated that the decline is mainly due to the reduction of the interest rate by 50 basis points by the Bank of Botswana in October 2017.
Botswana Stock Exchange Limited (BSEL) has submitted names of its new board of directors to Non Banking Financial Institutions Regulatory Authority (NBFIRA) for vetting.
BSEL Chief Executive Officer, Thapelo Tsheole without divulging the names of the incoming board, said the regulator is set to conclude the process by end of September. BSEL is regulated under NBFIRA “Eight are independent and two are non-independent,” said Tsheole highlighting that the development is part of reengineering BSEL, now a public company.
Tsheole is one of the non-independent directors by virtue of being the exchange’s CEO and the other non-independent director is a broker.He said once the new board is approved by the regulator, BSEL will revisit its strategy to incorporate the aspect of corporatization.“Our target is to move fast past the strategy post demutualization,” said Tsheole who is upbeat of the recent demutualization.
“The good thing is that it (demutualization) opens up to a lot of opportunities of companies that want to list on demutualised bourse,” said Tsheole at the sidelines of the 4th opening bell ceremony at BSEL headquarters in Gaborone.BSEL joins 28 other stock exchanges across the globe that has undergone the process.On operations, Tsheole said the exchange continues with a lean workforce and more efforts will be on business development initiatives, to improve both equity on the bourse and profits for BSEL.
Tsheole also highlighted that two or more listings should be expected on the bourse before the year end, while Botswana Building Society (BBS) has started trading this week, registered on the Serala over the counter (OTC) board, where its stock is currently traded amongst limited