Zambia: LuSE launches bond trading tier
By Nawa Mutumweno – The Lusaka Stock Exchange (LuSE) has launched a bond trading tier which targets commercial banks in the country.
The Zambian bourse’s chairperson Friday Ndhlovu has disclosed that the newly-launched bond tier targeted commercial banks and other institutional investors wishing to trade in Government bonds on the secondary market.
The bond would contribute to the development of the market for Government bonds. LuSE would ensure that it establishes a transparent and orderly market for bonds trading to take effect and achieve price discovery.
“The process has not been easy, but it is worth noting that all parties involved were united in the ultimate goal to achieve the end, and upon becoming members, players will have access to the automated trading system via direct connectivity,” he pointed out.
The players would have visibility to the full order book on the bid in addition to being recipients of corporate actions and end-of-day information on prices.
Meanwhile, Bank of Zambia (BoZ) governor Michael Gondwe said the bond trading tier would facilitate the growth of trading and liquidity in the market as well as enhance transparency and price discovery.
The development of the operations of secondary markets of Government securities was one of the key drivers aimed at fostering the development of financial markets in Zambia.
Capital markets in the country are still at a lower level of development, generally characterised by a small investor base.
They lacked liquidity and depth in the full range of financial and investment products that would otherwise make them attractive to a wider investor base.
“It is gratifying to note that LuSE has taken the first step in developing the bond trading tier on its platform. BoZ welcomes such efforts and we are confident that this initiative will contribute to the development of a viable and deep domestic bond market,” he said.
Creating a bond market membership category on the LuSE trading platform would introduce active trading of bonds in the financial markets, with the bond tier allowing commercial banks to trade without going through a broker, thus reducing transaction costs.
