Second stock exchange in the offing
Namibia will soon have a second stock exchange if an application before the Registrar of Stock Exchanges is approved.
According to Namfisa spokesperson Isack Hamata, Namfisa CEO Phillip Shiimi, who is also the Registrar of Stock Exchanges, is currently reviewing an application and considering objections to the establishment of the new stock exchange to be known as the Namibia Financial Exchange (NAMFIN-X).
In line with the Stock Exchanges Control, Act 1 of 1985, the registrar has already issued a notice in the local media inviting members of the public to lodge any objections to the issuance of a stock exchange licence to NAMFIN-X.
If the application by NAMFIN-X is approved, Namibia will have two stock exchanges for the first time since the Namibia Stock Exchange (NSX) was established in September 1992. The NSX is currently Africa’s second biggest stock exchange after the JSE in South Africa in terms of market capitalisation courtesy of the dual listed firms.
Hamata told the Economist upon inquiry that the process to grant NAMFIN-X a licence to operate a second stock exchange is ongoing. He said: “The current status is that the Registrar of Stock Exchanges will consider the objections and review the application based on the provisions of the Act as well as the rules and principles of administrative justice.
“The applicable provisions of the Stock Exchanges Control Act 1 of 1985 (Section 8) reads as follows: On the expiry of the period contemplated in section 7(5)(c) (that was the period for objections to be lodged, (in this case 28 June 2013) the Registrar may, after consideration of any objection lodged under that section, issue to the applicant a license to carry on the business of a stock exchange, if (a) the interests of the public would be served by the issue of the license; (b) at least two members of the applicant will carry on the business as buyers and sellers of listed securities independently of and in competition with one another; (c) the applicant has sufficient financial resources for the proper exercise or carrying out the powers and duties conferred upon or assigned to a stock exchange by or under this Act; and (d) the proposed rules of the applicant comply with the requirements of this Act.”
Despite being the second biggest exchange in Africa, the NSX suffers from liquidity challenges, and the country’s capital markets are still developing, raising concerns about the wisdom to have a second stock exchange in the country.
But Hamata said he was not in a position to comment on whether or not it was prudent for the country to have a second stock market.
He added: “The Authority [Namfisa] as an administrative body is only empowered to administer the provisions of the applicable laws of the Republic of Namibia. In this regard, the onus is on the prospective applicant to show cause that the provisions of the laws are satisfied. As to the business case of establishing a second exchange, it is a right of any citizen to make a judgement call whether there is merit in engaging in such a business venture if it is within the ambit of the legislative framework of the Republic of Namibia.”
Efforts to get a comment from NAMFIN-X Director Bonita Rene De Silva, who is an attorney with the Supreme Court, were unsuccessful as her contact number listed with the Registrar of companies went unanswered for days.