By allowing Kenyan investment banks and stockbrokers to participate on its market platform, the Stock Exchange of Mauritius (SEM) may be able to attract more foreign investors to the island nation in the Indian Ocean. Sunil Benimadhu, the chief executive of SEM, stated in the exchange’s 2022 annual report that the integration of international intermediaries will be possible thanks to a new automated trading system (ATS) put in place last year.
The SEM will be able to access a larger pool of investors by allowing foreign members on its ATS. This move coincides with African exchanges’ efforts to increase cross-border trading in order to increase liquidity and trade activity in their markets. The Nairobi Securities Exchange (NSE) and SEM were among the seven African exchanges that established the African Exchanges Linkage Project (AELP) in November of last year with the goal of promoting cross-border trading of securities in Africa.
A flagship initiative of both the African Development Bank (AfDB) and the African Securities Exchanges Association (ASEA), the AELP.
“The SEM’s new ATS has made it easier to integrate distant members onto our platform. Therefore, despite the challenging economic climate, the SEM would seek to draw remote members during the fiscal year 2022–2023, starting with those from South Africa and Kenya, said Mr. Benimadhu.
The goal of this project is to broaden our market’s investor base and draw additional international order flows to our platform. In order to compete with European exchanges as a host for African capital-raising initiatives, such as the issue of sovereign bonds, the Mauritian exchange has been working hard.
Currently, the exchange provides a multi-currency platform via which it intends to draw in overseas stockbrokers.
Investors can also take advantage of a variety of tax breaks available on the market, such as double taxation avoidance agreements, no capital gains taxes, no withholding taxes on dividends, and free repatriation of earnings, capital, and interest. The incentives are intended to expand the pool of investors in the island nation’s financial markets beyond its relatively small population.
There are around 100,000 account holders on the Mauritius exchange, and they collectively control 17.2 billion shares with a market value of Sh1.09 trillion. Following an increase in bilateral investment flows between the two nations following the signing of a double-taxation agreement in 2012, Mauritian financial sector companies have established a presence in Kenya over the previous ten years.
The financial services company SBM Holdings, which is listed on the SEM, acquired Fidelity Bank and the assets of the defunct Chase Bank, and in the capital markets, investment manager Axys acquired stockbroker Apex Africa Capital. A handful of Kenyan businesses have also made the opposite step, opening offices there to benefit from more benevolent tax regulations.
