THE Bond and Derivatives Exchange (BaDEX) Zambia, the second stock exchange in the country, is expected to be operational by June 2013.Deputy chief executive officer Peter Sitamulaho confirmed the development at a recent Securities Exchange Commission (SEC) media sensitisation workshop in Lusaka.
He said the second exchange would start trading once a clearing member signs an agreement with one of the local commercial banks between May and June 2013.
The instrument would deepen the capital markets by introducing new products and liquidity and that it would make Zambia become more visible to the international markets, which already have similar products in countries like South Africa, Unites States of America and the United Kingdom.
Mr Sitamulaho said this would complete the already existing forward contracts offered by commercial banks in the cash market.
The Kwacha-dollar currency future will be a capital market instrument which will be used by business to hedge their foreign exchange transactions.
In light of the introduction of the Statutory Instrument number 33, Mr Sitamulaho said this future would be offered by BaDEX as a positive initiative and would assist many importers and exporters who have exposure to foreign exchange risk.
"With this instrument in place companies will be able to protect their cash flows and better plan knowing that their foreign exchange exposure is protected," Mr Sitamulaho said.
He said the instrument would further reduce transaction costs for importers and exporters who at present have to place collateral with commercial banks or were required to take out credit lines with banks to ensure that they enter forward contracts.
Mr Sitamulaho explained that because the contracts were offered on the BaDEX exchange, credit risk was removed.
Currently, Zambia only has one bourse, the Lusaka Stock Exchange.Times of Zambia
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