SA Gov’t inflation linked bond index listed on BSE

The prowess of the local bourse, the Botswana Stock Exchange (BSE) has once again come to the fore after Barclays Africa launched its Inflation Linked Bond Index exchange traded fund (ILBI ETF) in Botswana, the only other listing outside South Africa. The ILBI ETF is a total return index comprising bonds issued by the South African Government and are linked to the South African Consumer Price Index.

The South African market maker for the ILB EFT, Absa CIB, who is the originator of the instrument, is required by the BSE listing requirements to make a market and provide liquidity for the securities in Botswana, through its local executing broker, Motswedi Securities.

BSE Deputy CEO, Thapelo Tsheole said that Botswana’s lack of exchange controls makes it even more attractive for investment and as a gateway to the rest of the continent.

Tsheole said after enduring massive resistance to the introduction of ETFs in Botswana three years ago, the country is now home to more ETFs than any other on the African continent, excluding South Africa. IBL ETF is the fifth exchange traded fund made available on the BSE after the listing of the BettaBetta, in 2011, the NewGold and the NewPlat which was listed in August this year. Classified as a domestic investment, NewPlat Exchange Traded Fund (ETF) offered a simple and cost-effective method to invest in physical platinum bullion while NewGold did the same for the investor with the gold resource.
“Countries now come to us to benchmark when they want to list ETFs,” said Tsheole.
The BettaBetta allowed investment basket of 40 companies, bringing together a range of industries, geographies and currencies through the multitude of global companies listed on the Johannesburg Stock Exchange (JSE).

Meanwhile, the BSE has finalized the rules for market making in January and submitted and is waiting for approval from the regulator, Non Bank Financial Institutions Regulatory Authority (NBFIRA).

Market making is described as the act of simultaneously submitting bid and offer prices into the Automated Trading System (ATS) with the intention of infusing liquidity in securities that are not frequently traded on the stock exchange.
Tsheole said the implementation of market making on the local exchange should entail the appointment of institutions that would have applied to be registered as market makers. Tsheole, last week, said institutional investors are excited and waiting eagerly to take part in the market making activity.