The Ghana Stock Exchange (GSE) is looking to introduce derivatives and green bonds trading on the local bourse.
Aside the trading in green bonds and derivatives, the exchange is also looking to commence trading activities in the Over-The-Counter (OTC) market.
In a media interaction, Managing Director of the GSE, Ekow Afadzie averred the introduction of the aforementioned securities – green bonds and derivatives – as well as the OTC market could be before the end of this year but will be subject to regulatory approval from the Securities and Exchange Commission (SEC).
Derivatives are financial instruments traded either on a stock exchange or in the OTC market whose price are based on underlying assets which could be bonds, equities, currencies, commodities among others.
They are used to speculate and hedge against fluctuations in prices of underlying financial instruments. The OTC market is the market where parties – buyers and sellers – negotiate and trade in financial instruments. Transactions in the OTC market occurs off the official stock exchange market.
The introduction of green bonds on the stock market follows the partnership between the World Bank’s International Finance Corporation (IFC) and the Securities and Exchange Commission (SEC).
Trading of green bonds on the stock market as well as the OTC market, will give investors opportunities to finance green buildings, clean transportation, renewable energy, sustainable water management, and other climate-friendly projects.
Meanwhile, the MD for the GSE, has the two key challenges facing the local bourse is how to get more Ghanaian companies listed on the market to raise capital as well as how to improve liquidity on the market.
“The two key challenges facing the market now is how to get more companies listed on the stock market to raise capital on the market so as to have an impact on the development of the economy. The second is how to improve liquidity on the market, that is, how do we make it easier for those who have shares to be able to trade and get their monies back,” he stated.
He however, opined that the exchange has come up with some strategies to deal with the challenges which will be rolled out over the course of the year.
“These are the challenges we need to work on and so we have come up with some strategies to address them and impact the economy in the long run,” he added.
