Zambia’s Bond and Derivatives Exchange plans to open a second debt-trading platform in Africa’s biggest copper producer by February to rival the Lusaka Stock Exchange, a market official said.
The exchange, known as the Badex, may open trading of its first product in about two weeks after simulated buying and selling started on June 13, Deputy Chief Executive Officer Peter Sitamulaho said yesterday by phone from Lusaka, the capital. Kwacha-dollar currency futures will offer an exchange-risk hedge after a law requiring companies exporting goods or services to trade in kwacha came into effect in May 2012, he said.
“We are seriously entering the bond space very soon,” Sitamulaho said. “We’ve already started negotiating with the government and the central bank to see if we can start operating in the secondary bond market.”
The Badex will compete with the Lusaka exchange, which has 11 bonds listed according to its website, as the second market for debt in Zambia, where the International Monetary Fund forecasts economic growth of 7.8 percent this year. The new bourse will offer a trading platform for both government and corporate bonds, Sitamulaho said. A Badex team will study markets in countries including South Africa and Australia before opening its own, he said.
The kwacha retreated 2.3 percent against the dollar this month, the second-worst performer among 24 African currencies tracked by Bloomberg. It traded 0.7 percent weaker at 5.46 per dollar by 6:54 p.m. yesterday in Lusaka.
Following the introduction of the kwacha-dollar futures contract, the bourse may start similar products to hedge against the pound, euro and South African rand, Sitamulaho said. The currency choices are based on regions that Zambia trades with, he said.
The Badex is also planning a futures contract based on the performance of some Lusaka-listed shares, Sitamulaho said. The bourse’s main index advanced 22 percent this year.
Lusaka-based lenders Zambia National Commercial Bank Plc and Finance Bank Zambia Ltd. have expressed interest in becoming clearing banks for the Badex, Sitamulaho said.
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