The East African Securities Exchange Association (EASEA) has put forward a policy that will require Initial Public Offers (IPO) within the East African Community to be cross listed on all the regional stock exchanges.
EASEA—a body that puts together the stock exchanges of Kenya, Uganda, Tanzania and Rwanda—says that payment of shares during regional IPOs is a challenge, especially since it is bound to foreign exchange risks and transfer charges levied by banks during refunds to investors.
“Casting regional IPOs will not only address the challenges but give an opportunity to other investors in the region,” Joseph Kitamirike, the Chief Executive Officer of Uganda Securities Exchange during the 19th meeting of EASEA representatives from Uganda, Kenya, Tanzania and Rwanda.
Kitamirike, who is also the Chairman of EASEA, said the final decision on the proposal is due to be taken next year.
Peter K.Mwangi, the Chief Executive Officer of Nairobi Stock Exchange said potential issuers have expressed interest to have their IPOs across the region.
Kenya has the most cross listed companies in the region.
“Its upon us to come up with a facilitative framework to allow any company among partner states that wants to list to do so in all markets simultaneously,” Mwangi said.
Through interconnectedness and collaboration of the regional stock exchanges, EASEA hopes to increase efficiency and market liquidity in the region.
The body also plans to create guidelines on how stockbrokers can operate across the region as well as establishment of inter-depository transfers for cross listed securities.
“In every country, we have a depository for securities but if we are to have a (single) regional market operational, we find that we shall have to move securities from one country to another,” he observed
“We have to create a mechanism and procedures to enable that to happen and we anticipate by the end of the first quarter of 2012, we should have the mechanisms in place to enable shares to be traded across our borders.”
The body also plans to create single indices for regional equity and bond markets in an attempt to attract more foreign investors.