Joseph Kitamirike, the Chief Executive Officer of the troubled securities trading firm, ALTX East Africa Limited has contested his firm closure by Capital Markets Authority (CMA), saying that the regulator did not follow the law.
The regulator, in a 19th November, 2019 media notice announced that “pursuant to Section 24 (7) of the Capital Markets Authority Act, the Board of Capital Markets Authority had cancelled the approval of ALTX East Africa Limited to operate a securities exchange In Uganda.”
“The cancellation shall take effect upon the expiry of three months from the date of publication of this notice in the Gazette and in one daily newspaper. With effect from the date of publication of this notice in the Gazette, the council of ALTX East Africa Limited shall ensure that trading on the securities exchange ceases,” read the media notice signed by Jacqueline Kobusingye Opondo and Keith Kalyegira the CMA Chairperson and Chief Executive Officer respectively.
Without giving reasons for the closure, the duo further said that: “During the three months between publication of this notice and the effective date of cancellation, the council of ALTX East Africa Limited shall take steps to wind up the business of the securities exchange. “
However, in a communication to CEO East Africa Magazine, Charles Nsamba, the CMA Spokesperson clarified that ALTX East Africa Limited’s “approval was cancelled because of failure to comply with the regulatory framework.”
“The exchange faced several challenges including governance issues, issues with their financial position, etc.,” he said in a WhatsApp message to this reporter.
However Kitamirike, also in a WhatsApp conversation with this reporter said that both the basis of closure and the manner in which it is being done are contestable.
“The action CMA took was under section 24 after they accused us of noncompliance under section 28. If you review both sections of the CMA Act, you will appreciate that the cancellation by CMA is contestable, he said.
He further said that “CMA did not disclose to us the reasons for the cancellation, although they seem to have disclosed to you. On everything they are required by law to pay attention to in their regulatory work, we are fully compliant.”
Letters to My Younger Self: What Uganda’s CEOs and Professionals Wish They Knew at the StartAsked if they were considering seeking court redress, Kitamirike said: “By the way, we have never received a single complaint about our governance from CMA! We are discussing our options.”
Kitamirike who is a former Chief Executive Officer of Uganda Securities Exchange (August 2010-AUgust 2013) founded ALTX in 2014. ALTX applied and obtained its first exchange and depository licenses in Uganda in partnership with GMEX group in 2014 and 2015 respectively. GMEX Group is a UK company dealing in a range of digital technologies for securities trading.
At its launch, it was hoped, ALTX would ease trading on the exchange for especially the individual investors, who now didn’t need to go through stock brokers but the internet and mobile phones.
On 25 February 2019, ALTX announced that it had pioneered mobile money payments for the purchase of securities, allowing investors to invest for as little as UGX10,000 a week.
The closure of ALTX is another setback for Uganda’s stock market. Investment services firm African Alliance in April this year closed its stock broking arm over low market activity. The company had operated in Uganda for over 15 years.
According to a Uganda Securities Exchange (USE) report seen by this reporter, there was a 12.6% decline in the volume of shares traded- from 674,594,177 shares in 2017 compared to 589,579,887 shares in 2018. Turnover too reduced by 53.24% from UGX95.6 billion to UGX44.7bn while the number of trade deals also went down by 52% from 12,652 to 6,072
2019 doesn’t look significantly better either- although it is set to be better than 2018. Turnover, as of September 2019 stood at UGX40.9bn- 5.1% above the UGX38.9bn in the same period in 2018. The number of deals however went down by 18.3%- from 4,791 deals to 3914.
The highest turnover recorded at USE in the last seven years was UGX466.4bn in 2014.
