Neo Mooki, BSE chair and Acting CEO Kopano Bolokwe
Says it will follow the JSE approach
Notes challenge of regulation lagging behind innovation
Open to adopt certain ETF regulations as a provisional measure
The Botswana Stock Exchange (BSE) has disclosed its willingness to permit the listing of Actively Managed Certificates (AMCs) even as regulatory frameworks for such instruments remain under development.
The exchange held a webinar to expand knowledge on Actively Managed ETFs and AMCs in March 2024 which has been succeeded by engagements with prospective issuers considering these for Botswana.
Kopano Bolokwe, Acting CEO of the BSE previously emphasised the perpetual challenge of regulation lagging behind innovation. He also indicated the exchange's openness to adopt certain Exchange-Traded Fund (ETF) regulations as a provisional measure.
“We are going to be in a similar situation where we use the regulation for ETFs to accommodate actively managed certificates and we gradually put in place a specific regulation for these instruments,” Bolokwe said.
AMCs are non-interest paying instruments that pay the investor the performance of a portfolio of securities that is actively managed according to a specific investment mandate. Though AMCs reference baskets or portfolios, AMCs are not funds but are rather viewed as debt instruments, or even as structured products or as derivatives in some global jurisdictions.
Source: JSE
The approach taken by the BSE mirrors that of the Johannesburg Stock Exchange (JSE). In the case of the JSE, these instruments were listed in 2018, with regulatory frameworks implemented later in 2021/22.
Bolokwe emphasised the symbiotic relationship between regional markets. Regarding harmonisation of listing requirements, he said they avoid steering away from listing rules that are in place at the JSE.
Source: JSE
“Safe to say that in some aspects we can domesticate or cater for the level of development of our market so that we don’t make them stringent or as difficult as they may be in more developed markets, including on the JSE.”
Bolokwe expressed the BSE's commitment to fostering market growth without hindrance, emphasising a proactive approach rather than delaying opportunities until comprehensive regulations are in place. However, he underscored the BSE's regulatory responsibility to safeguard investors and ensure market integrity. Balancing these priorities, Bolokwe indicated a careful consideration of the exchange's oversight duties alongside its role in facilitating market innovation and expansion.
Bolokwe clarified that although the BSE will initially accept AMCs under the regulation framework for ETFs, they will subsequently require additional disclosures. This proactive measure aims to ensure that the exchange can ascertain with confidence that the introduction of AMCs does not compromise the interests or investments of end investors.
“We are also protecting the end investor with those additional disclosures,” Bolokwe said adding “Where there are variations from the provisions of the laws on the BSE, we are going to demand that you explain extensively how that does not hurt the person investing in the instrument.”
Bolokwe expressed confidence in the BSE's ability to expedite the regulatory process. “We often look to the JSE as a benchmark in terms of the requirements they have in place," He said adding that the BSE has engaged in discussions with potential issuers.
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