The Ghana Stock Exchange has launched an official regulated over-the-counter (OTC) market where shareholders can trade in equities and other securities that are not listed on the official market. Rural and community banks which are not listed on the GSE could be the first users of the OTC market to offer their shareholders the opportunity to sell or buy their shares in a centralized marketplace.
The West African stock exchange launched the new market in June (see press release) and describes it as “a significant milestone aimed at broadening access to capital and enhancing market liquidity in unlisted securities”.
The OTC trading will be on the approved GSE trading infrastructure and facilitated by regulated dealers and brokers. If there is no centralized market for unlisted shares, buyers and sellers of securities often struggle to find each other or they may have to go to the issuing company in order to buy or sell. Prices of previous trades and bids and offers may not be transparent.
The OTC plans to offer trading in a wide variety of securities including: ordinary shares, preferred shares, derivatives, depositary receipts, and securities from collective investment schemes such as unit trusts, mutual funds, hedge funds, and Real Estate Investment Trusts (REITs).
Abena Amoah, Managing Director of the Ghana Stock Exchange, said: “We are excited to launch the OTC market as part of our ongoing efforts to deepen and broaden the financial markets in Ghana. This platform will provide significant opportunities for companies to access capital and grow while offering investors new avenues for diversification and investment.”
According to this news report in MyJoyOnline.com: “She called on small business owners to take advantage of the platform to seek affordable funding to expand their operations: ‘We believe that as a stock market, this platform is needed to encourage small businesses and the community banks to raise funds and also for shareholders to offload shares smoothly. This is a step in the right direction to support growth and expansion,’ she said.
Banks can raise patient capital
Alex Kwasi Awuah, MD of ARB Apex Bank Plc said: ‘’The GSE OTC Market will not only provide a regulated platform for the trading of unlisted securities to enhance transparency and liquidity, but also further strengthen the corporate governance of the participating rural and community banks to make them more attractive to investors.’’ ARB Apex Bank describes itself as “a ‘mini’ central bank for the Rural & Community Banks” and the banks are its shareholders.
MyJoyOnline.com reports “he described it as an opportune moment for rural banks to raise patient capital. ‘As community and rural banks, you know we are not listed on the stock market but we need investors to support our operations so we can serve our rural folks. This is a good opportunity for many of us. We believe this will help strengthen us.’”
Deborah Mawuse Agyemfra, Deputy Director-General Legal, of Ghana’s Securities and Exchange Commission (SEC), said: “The GSE OTC Market launch aligns with SEC’s 10-year Capital Market Masterplan to diversify the market to provide more investment options for investors and increase their participation to grow the capital market.” Ghana’s Capital Market Masterplan 2020-2029 can be found here.
The Securities and Exchange Commission published Securities Industry (Over-The-Counter Market) Guidelines 2022.
The GSE, established in 1990, has three key markets: the Main Market; Ghana Alternative Market (GAX) for SMEs and Ghana Fixed Income Market (GFIM) for trading of government and corporate bonds.
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Photo credit Ghana Stock Exchange.
