BW TechZone spoke to Thapelo Tsheole, CEO of the Botswana Stock Exchange (BSE), about how the bourse is incorporating technology along its wide range of operations and how this has contributed to improving efficiencies in the exchange's operations.
In 2022, BSE introduced numerous technology systems to modernise the bourse. How have these impacted efficiencies?
Let me first start by stating what we introduced in terms of technologies. The first thing is the new settlement system, which has improved capabilities in terms of how we do business. Number one, the settlement system that we have now was replacing one from 2008 and the present one makes it possible for people who are our stakeholders to carry out certain tasks from their offices. Ordinarily, they would have to come to us to submit paperwork and seek approval. So, from last year, you can now do the work and submit from where you are and we authorise here on our side. It cuts the length of time that it takes for something to be processed, and it also eliminates a lot of paperwork.
Another technology that we have improved is our automated trading system. An automated trading system is a system that matches orders. We have had the system for a long time and we’ve had our upgrade since 2014. So, we are actually modernising it, in terms of more features and more latency in the speed at which orders are sent to the system. It makes for efficiency in terms of trading. You can see that on aggregate, generally, the time reduction in gaining approvals, and the efficiency in terms of getting orders to the market and matching those orders, is actually achieved.
Are there any plans to introduce more technologies to drive efficiency?
Tsheole: Yes. The new settlement system that we introduced has certain modules that are coming up. Number one, we used to send statements by post. That came to an end in 2021, and now what we’re introducing possibly next month is the ability for people to view their shareholding online, either through the app or the computer. Number two, we are also going to be introducing what is called a market simulator where people can actually practise trading shares before they come to the actual market.
We are also going to be introducing what we call security borrowing and lending. When you have shares, and people want to buy them, you can actually borrow the shares for them to own for a certain period, while they are paying you for the borrowing of shares.
There is still a significant lack of participation in the BSE by citizen retail investors. What role can technology play in plugging that gap?
I would say there is no gap. The number of citizens participating in the market is enough based on international standards and benchmarks. For developing countries like Botswana, it’s normally 5% of the population. We have about 7%-7.5% participating in the market, so the number is enough. But, there is a potential to increase that number if we use more digital and technology-based outreach initiatives in terms of making it easier for people to trade in the market. Especially with the younger population, we can increase that number tremendously. That is exactly what we intend to do this year and early next year.
And what about attracting foreign investors? Can technology help play a role?
It helps. Number one, it helps to disseminate information to reach those investors, and it helps to facilitate investing in the market because people have access to information. The stock market is not only about money, it’s also about access to information for you to make investment decisions. Therefore technology plays a very leading role, That’s why we constantly upgrade and upload on our social media platforms, our website and our mobile apps.
How is BSE looking to technology to also uptick the number of companies who lost on the exchange?
In terms of making profits, there’s nothing that we do, it’s up to the companies. In terms of company outreach, that’s what we do. Technology helps us spread the word and market the exchange, and to reach out to people to let them know of the stock exchange, and that you can raise capital and capital for expansion. It is the cornerstone of our outreach.
What role has technology played in getting the BSE to the position of one of the best-performing exchanges on the continent?
Last year we attracted a very big company from Zambia. We have got interest in companies from Namibia, and it’s simply because of the technological capabilities we have that we have been able to make an impression outside of the country that we are a stock exchange of value.
BSE was recently admitted as a full member of the World Federation of Exchanges. From a technology perspective, does BSE plan on benchmarking technology systems from fellow member countries?
We do. We have been doing that. The automated trading system that we are using we bought from the London Stock Exchange. It is owned by and the service level agreement is supplied by the London Stock Exchange. It is the same technology; state-of-the-art. The CSD system is supplied by a Swedish company. Some of the other software that we use to calculate indices and save data are supplied by other American companies. We are quite advanced in terms of technologies, and even in terms of publicity. The likes of Bloomberg and Reuters plug into our system to spread the message about the stock exchange.
AI is the most important emerging technology currently. How is the BSE thinking about incorporating it into its processes?
Yes, AI is very important, and we have plans around AI in the future. But, AI does need some basic infrastructure to plug in, and that basic foundation infrastructure is what we are working on before we move into full AI. It can be used for answering people, in the sense that, if someone wants to invest in the stock exchange, we can have an artificial intelligence programme which they can use to ask and it can give them answers.
What’s ahead for BSE in 2024 that you would like to share with our readers?
Number one, more listings, and exchange-traded funds, which are specialised instruments. We will be able to get more funds from outside to invest in our market. Number two is increasing the number of foreign investors. Number three, our value proposition to foreign investors to look at our market, and also our value proposition for local companies stock traded tap into our local market to increase their customer base and production status. And also just the general developments in technology which I mentioned earlier.
Any nuggets of wisdom for our readers?
Catch up with the technology that is becoming the modern thing. We can have all these technologies but if the users are not able to up their game they are going to be left behind. This is where the world is going, there’s no way we can turn back, otherwise, as a stock exchange, we would be very uncompetitive. The conventional methods of doing business like sending physical statements, which is what some people want, will have to stop and we will have to go technology-wise. They need to learn the technology and up their game and catch up because technology is ever-evolving and forever increasing.