Its setting-up is being overseen by the Seychelles International Business Authority (Siba) and it is expected to be up and running this year under the Securities Act.

A stock exchange, or stock market, is by definition an organisation providing the marketplace or facility to buy and sell stocks and shares.

Siba has already granted a licence to the South Africa-based Anglorand company to set up the Seychelles stock exchange, and the authority believes the exchange will revolutionise the way funds are raised for business in Seychelles – moving away from debt finance (loan finance) to an equity (share) finance jurisdiction.

A stock market is basically a public market or organisation providing the facility to trade, buy and sell stocks and shares at an agreed price; these are securities listed on a stock exchange as well as those traded only privately.

Many African countries and small island states have stock exchanges – such as South Africa, Botswana, Barbados, Bermuda and our more immediate neighbour Mauritius.

Siba chief executive Steve Fanny said the stock exchange is one of the few remaining components missing from the Seychelles economy, and it is about time this move was made.

A few decades ago, worldwide buyers and sellers were individual investors, but over time markets have become more “institutionalised” and are now largely institutions such as pension funds, insurance companies, mutual funds, index funds, exchange-traded funds, hedge funds, investor groups, banks and various other financial institutions.

Importance of a stock market

The importance of having a stock market is well documented, covering areas such as raising money, establishing the right share value, minimising counter-party risk, as well as economic growth.

The benefits it brings include market exposure, advertising via market listings, improved brand equity through listing, the potential for increased capitalisation, as well as lower reliance on venture capital firms and debt financing.

A document prepared by Siba on the stock exchange project said the Seychelles financial services industry is becoming more complex, with the government realising the danger that lurks in compound interests and playing a significant role to reduce banks’ interest rates.

“Institutions such as the Development Bank of Seychelles are raising capital by issuing bonds. The stock exchange would have provided the perfect platform for that process to be more efficient,” it said.

A number of companies have shown an interest in taking part in the stock exchange, and all steps taken will be with the utmost transparency. Mr Fanny said some examples of companies that qualify for listing on the stock exchange include the State Assurance Company Limited, which is already selling shares to its clients, Seychelles Breweries, and possibly hotels.

Mr Fanny said they are working hard with a number of partners including the Central Bank of Seychelles (CBS) to have the Seychelles stock exchange operational this year.

“When it’s time to consider applications for the setting-up of the trade platform, we will have our partners on board such as the CBS and Ministry of Finance to help choose the best option,” he said.

By Ivan Hollanda