In the build to 2019, several strategic initiatives geared at demystifying the capital markets to attract companies to list, were successfully achieved by the Botswana Stock Exchange (BSE), KEABETSWE NEWEL reports.
In an interview with Chief Executive Officer (CEO) Thapelo Tsheole, he said at the beginning of 2019 the BSE implemented the new BSE Equity Listings Requirements aimed at providing a comprehensive and refined process of listing of equity securities on the BSE. The new requirements include improved disclosure requirements across the different boards, provide rules for the listing of investment entities and Special Acquisition Companies (SACs), among others.
Also added to the new Equity Listings Requirements are the requirements for issuances on the Tshipidi SME Board. These requirements are designed to be more accommodative than those of the Main and Venture Capital Boards and they further cement the BSEL’s commitment of developing Small-Medium Enterprises.
In the same fashion, Tsheole said the Rules for Regulating Market-Makers were introduced at the beginning of the first quarter of 2019. “These Rules have been framed in order to regulate Market-Makers whose purpose on the Exchange is to provide liquidity in listed securities by submitting both bids and offers for a designated financial security during the designated Market-Making session,” he said, adding that these Rules apply to all entities conducting market-making activities on the Exchange currently and in future and will further assist develop market liquidity of listed securities. Further, the BSE and the Central Securities Depository Botswana (CSDB) have commenced the implementation of a new CSD system that comes with new functionalities such as Securities Borrowing and Lending (SBL), management of the Settlement Guarantee Fund, Initial Public Offering (IPO) processing, E-Voting for listed entities, repo management and online investor access, among others. The project commenced in the first quarter of 2019.
According to Tsheole, the system is an integral element of the ongoing Single CSD project pioneered by the Ministry of Finance & Economic Development, Non-Bank Financial Institutions Regulatory Authority (NBFIRA) and BSE. With its ability to connect real time to the Botswana Interbank Settlement System (BISS), Tsheole further said the new system will ensure settlement in central bank money and reduce counterparty risk, in the process helping improve settlement efficiency and compliance with the International Organization of Securities Commissions IOSCO Principles for Financial Markets Infrastructures (PFMIs).
“This will also help increase the CSD system ratings by Thomas Murray, an assessment of which will be conducted once the system has been commissioned. The project is progressing very well and the system is set to ‘Go-live’ during the second quarter of 2020,” he revealed.
In January 2019, the BSE published its inaugural Guidance for Listed Companies on Reporting Environmental, Social, and Governance (ESG) Information to Investors.
Tsheole said this was as a result of the BSE’s commitment to promote long-term sustainable investment and improved environmental, social and corporate governance disclosure and performance among listed companies. Further, the BSE is a Partner Exchange of the United Nations Sustainable Stock Exchange (SSE) initiative. The SSE initiative is a peer-to-peer learning platform for exploring how exchanges, enhance corporate transparency and performance on ESG (Environmental, Social and Governance) issues and encourage sustainable investment.
The Guidance is an assimilation of the SSE initiative’s Model Guidance on Reporting ESG Information to Investors and is not part of the BSE Listing Requirements. Tsheole said it serves as a voluntary tool for listed companies to adopt as part of their own, and the many, ESG disclosure frameworks and, by extension, helps listed companies comply with the King requirements which are embedded in the BSE Equity Listings Requirements. Towards the second half of the year we introduced the BSE Tshipidi Mentorship Program to compliment the Tshipidi SME Board introduced with the new BSE Equity Listing requirements. The BSE boss said the program was meant to prepare local SMEs to transition into capable corporations that can potentially access long-term equity capital through a listing on the BSE and grow beyond the borders of Botswana. The program ran for three months (June to August 2019), with two-day workshops for each month.
“We designed this program to blend theoretical learnings with practical applications that are deemed appropriate for SME business prosperity.
For this year twenty companies from various sectors such as Transport, Manufacturing, Banking, and Agriculture were selected to participate with all managing to graduate from the program,” he said.
Modules that were part of the program included corporate finance, corporate governance, and financial reporting. Furthermore, the participation of BSE registered advisors which voluntarily delivered these modules as well as directors of some BSE listed companies which gave testimonials of their ‘journey’ to listing not only motivated the participating companies, but showed the commitment of the whole capital market ecosystem with regards to the development of the local SMEs.