{"id":16510,"date":"2011-12-19T05:18:31","date_gmt":"2011-12-19T05:18:31","guid":{"rendered":"http:\/\/www.ghanamma.net\/2011\/12\/rwanda-rwanda-cma-halts-move-to-raise-stockbrokers-capital-base\/"},"modified":"2011-12-19T05:18:31","modified_gmt":"2011-12-19T05:18:31","slug":"rwanda-rwanda-cma-halts-move-to-raise-stockbrokers-capital-base","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2011\/12\/19\/rwanda-rwanda-cma-halts-move-to-raise-stockbrokers-capital-base\/","title":{"rendered":"Rwanda: Rwanda CMA Halts Move to Raise Stockbroker’s Capital Base"},"content":{"rendered":"
\n
\n

\"The<\/a><\/p>\n

Berna Namata<\/p>\n

18 December 2011<\/p>\n

\n

Rwanda’s Capital Market Authority (CMA) has shelved plans to increase minimum capital requirements for stockbrokers citing low volume of trade at the nascent Rwanda Stock Exchange (RSE).<\/p>\n

The low trading activity means stock brokerage firms face a difficult financial year — some might make losses, others might not break even and so raising their capital base this year will be a tough call.<\/p>\n

Raising stockbrokers’ minimum capital requirements ensures investors are well cushioned should the firms go under.<\/p>\n

This is why the stock market authorities and the CMA have backtracked on a proposed tenfold increase of the stockbrokers minimum capital requirement from the current $16,806 to $168,067.23 by June this year as part of the integration process to put them on equal footing with other stockbrokers in the region.<\/p>\n

Currently, Rwanda has nine licensed brokerage firms operating on the RSE.<\/p>\n

James Ndahiro, Chairman of the RSE, in an interview with The EastAfrican said that the business volume at the stock market was not yet substantial enough to raise the capital.<\/p>\n

While activity on the RSE has steadily increased with the listing of two Initial Public Offerings (IPOs), Mr Ndahiro argued that the volume of trade is still too low to necessitate capital increase.<\/p>\n

Launched in January this year, RSE has two local listings, which held an initial public offer – Bralirwa and Bank of Kigali and two Kenyan companies- Nation Media Group and Kenya Commercial Bank.<\/p>\n

CMA reconsiders move<\/strong><\/p>\n

Also, following consultations with industry players, CMA said it had reconsidered raising the fees until the volume of trade increased.<\/p>\n

“We will not raise the capital requirement because the target now is to attract and develop professional skills and promote entrepreneurship in the business sector,” said Robert Mathu CMA Executive Director.<\/p>\n

However, with plans to integrate licensing of stockbrokers within the East African Community, Mr Mathu did not completely rule out the possibility of raising the fees in the near future.He added that relevant bodies are looking at ways of establishing regional standards to enable stockbrokers provide their services to the whole region.<\/p>\n

The different countries are looking to integrate their capital markets operations with some introducing new regulations.<\/p>\n

Kenya raised the minimum capital requirements for stock brokers and investment banks to $561,798 and $2.8 million respectively in January 2011.<\/p>\n

The investment banks and stock brokers were forced to hold more capital after three stockbrokers — Francis Thuo, Nyaga and Discount Securities — went under because of misappropriating investor’s cash and then being unable to repay the money.<\/p>\n

“Stockbrokers are not supposed to hold their client’s cash but many of them do and even trade with it which causes a lot of problems,” said Samuel Mwangi General Manager of Francis Drummond, a Kenyan stockbrokerage firm.<\/p>\n

Mr Mwangi argues that if the brokers just played an intermediary role of buying and selling shares on behalf of their clients then their capital requirements would drop.<\/p>\n

Still, the stockbrokers would need adequate capital to meet their overheads especially during the lean times such as the one currently being experienced in Kenya, Uganda and Rwanda.<\/p>\n

First Renaissance, the Ugandan stockbroker, closed its shares trading division at the end of November.<\/p>\n

The firm said the closure was necessitated by slow business at the Uganda Securities Exchange, which has seen a dip in trading volumes as investors keep off due to high inflation and rising interest rates.<\/p>\n

AllAfrica – All the Time<\/p>\n

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\nMore News on allAfrica.com<\/strong><\/legend>\n<\/fieldset>\n

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\n","protected":false},"excerpt":{"rendered":"

Berna Namata 18 December 2011 Rwanda’s Capital Market Authority (CMA) has shelved plans to increase minimum capital requirements for stockbrokers citing low volume of trade at the nascent Rwanda Stock Exchange (RSE). The low trading activity means stock brokerage firms face a difficult financial year — some might make losses, others might not break even and so raising their capital base this year will be a tough call. Raising stockbrokers’ minimum capital requirements ensures investors are well cushioned should the firms go under. <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-16510","post","type-post","status-publish","format-standard"],"yoast_head":"\nRwanda: Rwanda CMA Halts Move to Raise Stockbroker's Capital Base - Ghanamma.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ghanamma.com\/2011\/12\/19\/rwanda-rwanda-cma-halts-move-to-raise-stockbrokers-capital-base\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Rwanda: Rwanda CMA Halts Move to Raise Stockbroker's Capital Base - Ghanamma.com\" \/>\n<meta name=\"twitter:description\" content=\"Berna Namata 18 December 2011 Rwanda's Capital Market Authority (CMA) has shelved plans to increase minimum capital requirements for stockbrokers citing low volume of trade at the nascent Rwanda Stock Exchange (RSE). 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