GSE eyes commencement of securities lending and borrowing this year
The Ghana Stock Exchange (GSE) as part of the provision of new products and services for 2024, will allow for the lending and borrowing of securities among traders/investors.
Securities lending involves the owner of shares or bonds transferring them temporarily to a borrower. In return, the borrower transfers other shares, bonds, or cash to the lender as collateral and pays a borrowing fee.
Securities lending can, therefore, be used to incrementally increase fund returns for investors.
The provision of this service is alongside the introduction of new products and services such as the OTC Market, Commercial Paper Market, Asset-backed securities (ETFs), Margin Trading, Market Making, and Underwriting and Issuing House Rules.
Making the disclosure during a Breakfast Meeting with Business Journalists on Monday, March 25, 2024, the Managing Director of the GSE, Abena Amoah, quipped the main objective of the GSE for 2024 is to diversify its products to build portfolios that will enable investors to reach their wealth goals.
Touching on the upcoming launch of the commercial paper market, Ms Amoah averred the GSE is hoping to be able to grow the corporate debt market with the introduction of the commercial paper market.
“The GSE is looking at growth in the corporate sector, but we want to avoid defaults by businesses. And so we are working very closely with a lot of banks and businesses to list commercial papers this year,” she remarked.
The envisaged Commercial Paper Market seeks to augment the depth and liquidity of Ghana’s securities landscape, ultimately propelling the nation’s economic development.
Ms Amoah underscored the paramount significance of the Commercial Paper Market, not only for its potential to invigorate market dynamics but also to enhance the much-desired diversification of investment options.
The advent of this new market offers an avenue for private pension funds, keen to explore investment diversification, and companies seeking alternative sources of short-term finance beyond conventional banking channels.
By bridging the gap between investors and companies in need of such financing, the Commercial Paper Market endeavors to usher in a new era of financial flexibility and risk reduction.
