CIRCULAR TO GFIM REGISTERED MEMBERS
Circular No. of 002 of 2015
The Ghana Fixed Income Market (GFIM) will commence trading in fixed income securities on Monday, August 17, 2015.
1. Key Stakeholders
The stakeholders involved in the setting up of the market are the Bank of Ghana, the Ghana Stock Exchange (GSE), the Central Securities Depository Ghana Ltd (CSD), the Ghana Association of Bankers (GAB), ACI Ghana, the Debt Management Division of the Ministry of Finance and Licensed Dealing Members (LDMs) of the GSE.
2. Manual
A manual embodying all information relating to the structure, type and characteristics of the market as well as rules on membership, trading, clearing & settlement, listing, fees & commissions, continuing obligations, sanctions and dispute resolution, has been issued. The manual, dated August 17, 2015 for identification purposes, is available on the websites of the Ghana Stock Exchange (www.gse.com.gh) and that of the Central Securities Depository Ghana Limited (www.csd.com.gh).
3. Governance
The GFIM is governed by an eleven-member governing committee. The governing committee has oversight responsibility over all aspects of the market including the following: dealer membership; admission (listing) of securities; trading and clearing & settlement; surveillance and compliance; training and public education; transition into corporate status; communication; market development; and advocacy.
The governing committee is composed as follows:-
(a) First Deputy Governor of Bank of Ghana [Mr. Millison K. Narh] - Chairperson
(b) Treasurer of Bank of Ghana [Mr. Yao Abalo]
(c) Debt Management Division of Ministry of Finance [Mr. Samuel Arkhurst, Ag. Director] (d) MD of GSE [Mr. Kofi S. Yamoah]
(e) CEO of Central Securities Depository Ghana Ltd [Mr. Stephen Tetteh]
(f) Ghana Association of Bankers [Mr. Kweku Bedu-Addo, MD of Standchart] – Vice Chairman
(g) Ghana Association of Bankers [Mr. Simon Dornoo, MD of GCB Bank Ltd]
(h) Ghana Securities Industry Association [Mr. Winston Nelson, CEOofAfrican Alliance]
(i) Ghana Securities Industry Association [Mr. Ekow Afedzie, DMD of GSE]
(j) ACI Ghana [Mr. Kofi Pianim, Dealer, Stanbic Bank Ltd]
(k) Head of GFIM Secretariat [Mr. Augustine Simons]
* The company secretary of the GSE is the secretary to the committee.
4. Regulatory Oversight
The main regulator for the market is the Securities and Exchange Commission. In addition, Bank of Ghana will determine the Primary Dealer (PD) status of members
and the type of money market and certain securities that will come to the market. GFIM itself will also have a self- regulatory responsibility over its members.
5. Securities
All Government of Ghana treasury bills, notes and bonds and Bank of Ghana money market instruments when issued will automatically be listed on the GFIM for secondary trading. In addition, quasi state institutions' money market instruments, notes and bonds; corporate notes and bonds; municipal and/or metropolitan bonds; supra-national bonds; repos; and other fixed income or money market securities may be admitted and traded on the GFIM.
6. Benchmarking of Securities
The Trading Rules requires that securities listed on GFIM be benchmarked from time to time. PDs are required to make market in such agreed benchmarked securities by providing two-way quotes for all agreed benchmarked securities. PDs are to perform this role by responding to request for quotes (RFQs) at least 75% of the time. For non-PD dealers of GFIM, providing two-way quotes is not mandatory.
Benchmarking of securities is to be done half yearly in June and December. The main criteria to be used will be the size and distribution of an issue. For the period July to December 2015, the following are the agreed benchmarked securities:
(i) Government of Ghana 3 Year Bonds; and
(ii) Government of Ghana 5 Year Bonds.
7. Market Infrastructure
Secondary trading of securities on the GFIM will be by way of an electronic trading and market surveillance system sourced from Bloomberg L.P. Cash settlement of trades will be done through the Bank of Ghana while securities settlement will be done at the CSD.
8. Dealers
Trading on the GFIM is limited to an entity that is licensed by the Securities and Exchange
Commission to deal in securities and in addition:
(i) authorised by the Bank of Ghana as a primary dealer (PD) bank; or
(ii) licensed by the Bank of Ghana as a non-PD bank; or
(iii) licensed by the Ghana Stock Exchange as an LDM.
The Bank of Ghana is permitted to deal in Government of Ghana and Bank of Ghana securities listed on the GFIM for monetary policy and other purposes.
9. Trading Hours & Methodology
Trading hours on the GFIM shall be from 0900GMT to 1600GMT daily and trading will be by: (a) Request for Quotes (RFQ); or (b) Firm Orders; or (c) Voice Calls.
10. Settlement of Securities
The settlement cycle for securities traded on the GFIM shall be T+2 (trading date plus 2 business days). Cash settlement shall use central bank funds. Therefore all GFIM dealers that are not banks must choose banks as settlement partners for the settlement of their trades.
11. Spreads
At the commencement of the secondary trading the maximum applicable spreads are: (a) 25 basis points for securities with tenure of up to 3 years: and (b) 50 basis points for securities that have tenures of more than 3 years.
12. Commission on Transactions
The rates of commission on all transactions are as follows:-
(a) Dealer's Commission – 0.15% of the nominal value of the trade; and
(b) Regulators' Commission – 0.05% of the nominal value of the trade.
The total commission is thus 0.20% of the nominal value of the transaction. The rates indicated are standard or fixed rates and any other charge will be contrary to the Rules.
13. Current Dealing Members
The up-to-date dealing members of GFIM are as follows:-
Registered Terminal in Place Agreements Signed
(a) Primary Dealers 12 11 9
(b) Non-Primary Dealer Banks 8 5 5
(c) Licensed Dealing Members of GSE 12 5 5
The nineteen (19) registered dealers who have signed the relevant agreements are as follows:-
(a) African Alliance Securities Ltd.
(b) Agricultural Development Bank Ltd.
(c)Barclays Bank of Ghana Ltd.
(d) CAL Bank Ltd.
(e) CAL Brokers Ltd.
(f) Databank Brokerage Ltd. (g) First Atlantic Bank Ltd.
(h) First Capital Plus Bank Ltd.
(i) GCB Bank Ltd.
(j) HFC Bank Ghana Ltd.
(k) IC Securities Ghana Ltd.
(l) National Investment Bank Ltd.
(m) Prudential Bank Ltd.
(n) Societe Generale Ghana Ltd. (o) Stanbic Bank Ltd.
(p) Standard Chartered Bank Ghana Ltd.
(q) Strategic African Securities Ltd.
(r) UBA Ghana Ltd
(s) Universal Merchant Bank Ltd.
Dealers that have registered but not yet signed the relevant agreements are urged do so in order to be able participate in secondary trading of securities listed on the GFIM.
END
Distribution:
All GFIM Registered Dealers
For enquiries, contact:
Head of GFIM on 0302 669908/14/35
Issued in Accra, this 13th day of August, 2015
