Delays in integrating the capital markets in the East African Community (EAC) caused by a row over contract to a Pakistani firm is hurting trade of cross-listed stocks.
The Capital Markets Authority (CMA) says the standoff is to blame for the continued high cost and long settlement time in transactions.

The Kenyan regulator says transactions in cross-listed stocks remain tedious due to delay in integrating Capital Markets Infrastructure (CMI) for Kenya, Tanzania, Uganda and Rwanda exchanges. The Nairobi Securities Exchange (NSE), the most developed bourse in the region, opted out of the CMI project in June 2015 until Kenya’s concerns on the system contract are addressed.
“Development of an integrated efficient and reliable EAC capital market infrastructure with the supporting policy and regulatory frameworks does not only improve capacity to complete transactions for issuers and investors, it also offers improved reliability and economies of scale and hence greater cost-efficiency,” CMA said.
“The resultant effect of wider, deeper, reliable and improved transaction efficiency will enable the EAC markets to attract a higher level of foreign portfolio investments.”

Awarding tender
Kenya raised eyebrows over the award of the tender for the $3.8 million (Shs13.7 billion) system to integrate the four exchanges to the Pakistan firm Infotech, arguing the platform may not have the capacity to integrate with the NSE and the Central Depository and Settlement Corporation’s clearing system.
“It’s an official concern taken by Kenya not to be part of the project based on certain concerns we raised and those concerns still remain,” NSE chief executive Geoffrey Odundo said on July 7. “At this time, we can’t divulge (the concerns)…it is an official government position.”
The Kenya Association of Stockbrokers and Investment Banks (Kasib) said closing a transaction in cross-listed securities takes longer than the three days taken domestically because the settlement systems are not interconnected.
“It (delay) is not the fault of the broker, it is the system that takes long to conclude the transaction,” said Kasib chief executive Willie Njoroge.

Postponing CMI
Tanzania, Uganda, and Rwanda stock Exchanges, which have been working on the CMI system, decided earlier this month to push back its rollout by another six months to end of the year.