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| DSE broker |
The Capital Markets and Securities Authority (CMSA) has blamed
stockbrokers for creating an artificial liquidity problem by posting shares on
the “All or None” board thus preventing locals from buying even a fraction of
such stocks.
The authority said this is against the Dar es Salaam Stock Exchange
(DSE) rules that require shares to be posted three days to enable locals to buy
before selling to non-residents.
CMSA Principal Public Relation Officer Charles Shirima said brokers are
“circumventing the requirements” by creating hurdles to prevent Tanzanians from
buying by posting on the AON board.
“This creates artificial liquidity problems relating to the securities
in question as potential buyers are driven out of the market,” Mr Shirima told
the ‘Daily News’ over the weekend.
The CMSA made the clarification following complaints by some brokers who
argue that the 40 per cent reserved of equity stake in listed companies to
Tanzanians and allowed 60 per cent as free float for all hinders the bourse to
function at full potential.
Brokers want the law to be reviewed especially for TBL share, which foreign
ownership is 66.2 per cent, as many investors who participated in last year’s
mini-initial public offer (IPO) are expected to capitalize on secondary
trading.
They argue that since TBL’s mini-primary offer was open to foreigners,
the authority should waive capital account restrictions to enable them to sell
to overseas investors.
However, CMSA revealed that some brokers have been withholding sell
orders from their clients instead of posting the same on the DSE Trading Board
by suggesting to their clients that the authority will eventually grant
approval and obtain hefty gains.
“This problem was lamented (during a meeting called by CMSA) upon by
brokers who are not pleased with what is happening in the market,” Mr Shirima
said without going into further details.
Responding to the CMSA directives, the Tanzania Stock Exchange Brokers
Association (TSEBA) called a meeting on April 13 to deliberate on the TBL
shares trading at the DSE.
The members agreed during the meeting that the reported four million
TBL shares that are being held by local investors and whose brokers were
requesting for CMSA dispensation to be sold to foreigners are a breach of the
regulations.
In a joint statement, TSEBA resolutions include selling TBL share at
around 2,800/- so that it can be disposed off at market price to the local
investors. Further, they agreed that shares should be posted on AON board and
brokers request the authority to initiate moves to increase or waive the 60 per
cent cap for foreigners.
Uganda and Rwanda markets are 100 per cent opened up, while Kenya is 25
per cent. However, governments under the East African Community (EAC) bloc have
agreed to reserve 40 per cent for the East Africans.
Meanwhile, DSE Chief
Executive Officer Gabriel Kitua told the ‘Daily News’ that the bourse should
trade vibrantly using same laws until they are amended.
Source: The Daily News, http://dailynews.co.tz, reported by Abduel
Elinaza
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