THE Bond and Derivatives Exchange of Zambia is harnessing the expertise of South African-based financial services company Dreadnought Capital, which is run by former JSE executive Allan Thomson, to strengthen and develop its debt and derivative market, and capitalise on the growing international interest in the country.
Zambia had hoped to tap international capital markets for $500m last year, but the bond was greatly oversubscribed, with $12bn offered. The Zambian government ended up using only $750m.
“There is appetite out there for Zambia,” said Justin Chinyanta, vice-chairman of the Bond and Derivatives Exchange of Zambia, the newly licensed derivatives exchange in Zambia.
Zambia’s economy grew 7.3% last year and was expected to grow 7.6% this year, but Mr Chinyanta said the likely outcome could be 8% or more.
Dreadnought Capital would provide the Zambian exchange with the management and technical skills necessary to run a derivatives exchange. The Lusaka Stock Exchange has dual functionality across equities and bonds at the moment, but there are only seven listed bonds, which are not highly traded.
Mr Chinyanta said the new platform would offer bond trading and also structure derivatives. A foreign currency note is to be launched in the next few months as there is virtually no forward exchange market in Zambia.
The Bond and Derivatives exchange has purchased software from the South African-based software company Securities and Trading Technology (STT) to operate the exchange.
“We recognised a niche right there. But want to run it in terms of global standards and want to see Zambia on the map punching quite heavily,” said Mr Chinyanta. “We are hoping to mine more deeply the positive sentiment Zambia has garnered in the international market and offer an alternative mechanism.”
Mr Thomson said growth on the African continent was going to outpace that of the rest of the globe in the next decade. “Africa needs sophisticated financial markets and exchanges to facilitate this growth.
“The combination of STT and Dreadnought provides African Exchanges with affordable world-class systems designed for the African environment; coupled with .… Read more from … http://www.bdlive.co.za/business/financial/2013/02/27/south-african-firm-to-train-zambia-exchange