A new dawn blows at GSE

new dawn

A new dawn is blowing through the Ghana Stock Exchange as a result of the introduction of information technology to transform the operations of the GSE. Boahene Asamoah reviews how the IT platform would transform trading on the floor of the Ghana Stock Exchange.



“A New dawn” is how the General Manager of the Ghana Stock Exchange, Mr Ekwow Afedzi described the automation of the Ghana Stock Exchange which is scheduled to begin by the end of next month.
The $2.1 million automation of the Ghana Stock Exchange has long been anticipated and has for years been on the drawing board of the GSE.
However, since January this year, through the influence of the late Finance Minister, Mr Kwadwo Baah-Wiredu, funds was released by the government to facilitate the process of automation and to bring the GSE close to international practise.
The full implementation of the electronic platform is expected to start after approval has been granted by the Securities and Exchange Commission (SEC).
This involves web base trading and settlement as pertains elsewhere such the one would find in New York Stock Exchange or the London Stock Exchange.
Among some of the what is expected to happen is to link the automated platform to major Licences Dealing Members of the Ghana Stock Exchange and other major clients.
This is to ensure online transactions and cut down the present manual transactions on the market.
A visit to the stock exchange showed that all equipment’s and gadgets have been installed, whiles brokers and dealers are going through training.
Some of the features of the automation platform is the electronic trading and settlement that would do away with the physical transactions between brokers and their clients.
According to the GSE, a settlement guarantee fund would be established to facilitate trade and settlements between brokers and their clients.
Brokers are also expected to come out with credit lines to cover short falls during the course of trading.
Analyst believe that with the electronic platform trading and settlement was expected to improve from the current T+3 to T+1.
Again, a central depository has been established as part of the transformation being witnessed in the industry where share certificates would be
Many market watchers believe that the capitalisation of Licence Dealing Members (LDMs), which currently stands at GH¢100,000 was too low and does not make LDMs competitive in the sub-region.
According to the Managing Director of the Ghana Stock Exchange, Mr K.S. Yamoah, the automation is achieve to three main objectives, to move from the manual automation that would ensure efficiency, ensure online settlement and to establish an electronic depository.
Mr Amoah was of the view that automation of the Ghana bourse would place the market in pole position as talks of common trading platform within the sub-region was on-going.
The BRVM of Cote d’Ivoire and the Nigeria Stock markets have all been automated.
“Our manual trading was a disincentive to especially foreign investments firms who were looking towards West African and Ghana for that matter”, Mr Yamoah stated.
Analysts also point to the intention of other neighbouring countries such as Gambia and Sierra Leone who are planning to established their own bourses.
As part of efforts to get investors involved in the process, the GSE has embarked on sensitisation process to ensure that its partners buy into the online transactions and do away with the paper transactions.
A depository has been established and investors would encourage to migrate from the paper certificates of shares to an electronic depository.
The electronic platform therefore offers a seamless transaction from trading, settlement and depository shares.
The idea is to get every investor to get involved in the depository, which would ensure an efficient trade execution.
Among some of the innovations would be quarterly issued of statements from the depository to shareholders as well as SMS alerts to all shareholders.
Again the GSE is looking to companies coming to the market to make provisions in their prospectus to shareholders informing that shares would issued in electronic form.
Again shareholders would encourage to make voluntary share migration where their paper share certificates would be transferred to the depository.
The seamless transactions stem from the fact, shares can only be traded and settled once there are locked in at the depository.
Many investors believe the automated platform would even place the stock market in better light as the bourse is set to achieve another record feat this year.