- Fund is the answer to exposure of retail investors
- Investors will be girded against bankruptcy, fraud and other eventualities
- Participants to contribute P5K/year to the Fund
Working with the Ministry of Finance and the Non-Bank Financial Institutions Regulatory Authority (NBFIRA), the Botswana Stock Exchange Limited (BSEL) has launched a new product that is set to instill more confidence in the BSE and complement the investment market.
Valued at P28 million, the BSE Investor Compensation Fund was created as a means of mitigating financial loss due to fraud, dishonesty or liquidation by a participant handling investors’ securities trading.
Speaking at the BSEL May Opening Bell Ceremony, the Chairman of the BSEL, Tebogo Masire, explained that participants will contribute to the Fund in the future. “These contributions will be accommodative and it has been agreed that each party will contribute an annual amount of P5 000 to the Fund,” Masire said.
He noted that the robustness and attractiveness of any stock exchange is hinged on its capabilities to innovate and adopt international best practices to remain competitive in this fast-paced global environment. To ensure growth of the local market, Masire said since inception, the BSEL has undergone a number of transformational phases in which it evolved from being one of the smallest exchanges on the African continent in terms of market capital to being one of the most efficient among emerging markets in today’s world.
While the progress to a number of factors, throughout its 33 years of existence the foundation of the BSEL was laid through significant support from the government and relevant stakeholders. “From our diverse issuer and investor base to our state-of-the-art technological advancements in the form of the Automated Trading System and the Central Supplier Database (CSD) System, we have made important strides to position the BSEL as a key player in the global financial market space,” Masire said.
Introduction of another essential component that will complement the market and instil confidence for all participants, especially investors, should therefore not come as a surprise. Naturally, he said, if one has invested money with a regulated participant that has gone bankrupt, been involved in an unclear situation where a judicial authority has to intervene or for whatever reason does not give one what one is owed, one has the right to be compensated. The Investor Compensation Fund is therefore set to revolutionise the market as the BSEL joins an elite number of securities exchanges that have adopted the practice in promoting investor protection, Masire emphasised.
Speaking at the same event, the CEO of NBFIRA, Oduetse Motshidisi, described the commencement of the Investor Compensation Fund as a significant milestone in the maturity of the local capital market industry and a necessary measure to strengthen the protection availed to retail investors. “Entrenching positive stakeholder perceptions and confidence in the local capital market industry is of paramount importance,” he said.