SEM at a glance

The Stock Exchange of Mauritius Ltd (SEM) was incorporated in Mauritius on March 30, 1989 under the Stock Exchange Act 1988, as a private limited company responsible for the operation and promotion of an efficient and regulated securities market in Mauritius. Since October 6th, 2008, the SEM has become a public company, and over the years the Exchange has witnessed a significant overhaul of its operational, regulatory and technical framework to reflect the ever-changing standards of the stock market environment worldwide. SEM is today one of the leading Exchanges in Africa and a member of the World Federation of Exchanges (WFE).

The SEM operates two markets: the Official Market, the Development & Enterprise Market (DEM). The Official Market started its operations in 1989 with five listed companies and a market capitalisation of nearly USD 92 million. Currently, there are 38 companies listed on the Official Market representing a market capitalisation of nearly US$ 4,539.99 million as at 30 June 2010. The DEM has been launched on 4 August 2006 and there are presently 50 companies listed on this market with a market capitalisation of nearly US$ 1,557.88 million as at 30 June 2010.

The stock market was opened to foreign investors following the lifting of exchange control in 1994. Foreign investors do not need approval to trade shares, unless investment is for the purpose of legal or management control of a Mauritian company or for the holding of more than 15% in a sugar company. Foreign investors benefit from numerous incentives such as revenue on sale of shares can be freely repatriated and dividends and capital gains are tax free.

Over the years, our efforts have been be geared towards ensuring that the SEM remains at the forefront of institutional reform and development while offering quality services to its stakeholders and contributing to the deepening and broadening of the financial sector in Mauritius. Much of our focus has been geared towards updating the current operational and regulatory framework to reflect the ever-changing standards of the Stock Exchange environment worldwide and the requirements of the Securities Act 2005.

The successful implementation of the Central Depository System (CDS) in January 1997 has brought about prompt, efficient clearing and settlement of trades and at the same time reduced some of the inherent risks in the process. With the support of the Bank of Mauritius which acts as clearing bank, CDS ensures delivery versus payment (DVP) on a T+3 rolling basis. The CDS also provides for a Guarantee Fund Mechanism to guarantee settlement failures of participants.

SEM's Automated Trading System (SEMATS) was launched on 29th June 2001. It constitutes a state-of-the-art electronic trading system built on third generation technology. SEMATS puts an end to traditional trading patterns which have typified the Stock Exchange of Mauritius since its inception. Trading in securities is conducted through dedicated trading workstations located at intermediate dealers and linked by communication lines to the SEM trading engine.

Similarly, the trading of treasury bills on the market has been introduced by the SEM in December 2003, a first step of a process aimed at the setting up of an active secondary market for government instruments. New listing rules are underway in the setting up of an appropriate operational and regulatory framework to cater for the listing of offshore funds and international products.

The attainment of Membership status of the World Federation of Exchanges (WFE) in November 2005 also constituted an important milestone that has enabled the SEM to join the league of stock exchanges that are compliant with the stringent standards and market principles established by the WFE. The latter is a central reference point and standards setter for exchanges and the securities industry in the world. Membership identifies the SEM as having assumed the commitment to prescribed business standards, recognized as such by users of exchanges, as well as by regulators and supervisory bodies.

SEM set up in 2006 the Development & Enterprise Market (DEM), which is a market designed for Small and Medium-sized Enterprises (SME’s) and newly set-up companies which possess a sound business plan and demonstrate a good growth potential. It is meant for companies wishing to avail themselves of the advantages and facilities provided by an organised and regulated market to raise capital to fund their future growth, improve liquidity in their shares, obtain an objective market valuation of their shares and enhance their overall corporate image.

The SEM is presently going through a strategic reorientation of its activities and gradually moving away from an equity-based domestic Exchange to a multi-product internationally oriented Exchange. In early 2010, the SEM has brought some major changes to its Listing Rules to align them with the Collective Investment Schemes Regulations 2008 with a view to positioning the SEM as an attractive venue for the Listing of Global and Specialised Funds. The recent changes to our Listing Rules to attract the listing of Global and Specialised Funds on the Exchange fits very well with the strategic shift currently underway at the SEM. The Exchangehas made its Listing Rules more flexible to reflect the specific attributes and characteristics of the Specialised Funds it would like to list on the SEM. This initiative goes a long way in making the SEM a platform of choice for the listing of a wide variety of funds such as Specialised Collective Investment Schemes, Professional Collective Schemes Export Funds, Global Schemes, and the SEM is keen in diversifying its products offerings and gradually emerge as an international exchange. The SEM has also a commitment to aggressive timings on processing of listing applications and has adopted a listing fee structure which is very competitive.

From a foreign investment perspective, the Mauritius Bourse attracted strong foreign investor interest particularly over the last six years, generating positive investment inflows on many listed companies. Whilst 2007 was a record year, 2008 and 2009 have been resilient in terms of net foreign investment flows despite the global crisis, reaching a commendable positive level of net inflows. In 2010, we are already stepping up our efforts via international conferences and roadshows, to place the SEM on the radar screen of institutional investors who are keen on frontier emerging markets that are well regulated and adhere to international best practice.

The growing interest from international investors has prompted well-known index and data providers like Standard & Poors, Morgan Stanley, Dow Jones and FTSE to include our stock market in a number of new indexes they launched over the last couple of years to track the evolution of some key frontier emerging markets. SEM also went live on Bloomberg since 2009, and forms part of the only three stock markets in Africa to be included in the list of stock markets that Bloomberg is tracking live on a daily basis. This live coverage of the SEM on Bloomberg and global index providers constitutes a positive step that will enhance the SEM’s visibility at the international level and accelerate the Exchange’s integration within the international financial markets.

These achievements can only stimulate the Mauritius Bourse to mobilise its resources to focus on other ground-breaking initiatives that will fuel further growth of capital markets in Mauritius, and enable the Exchange to better serve the local and foreign investment community. We have been among the most innovative exchanges in Africa on the operational and regulatory fronts. We are now currently working on how to offer our investors a broader choice of investment products ranging from cash instruments (stocks, treasury bills, corporate and government bonds) to sophisticated derivatives instruments (futures contracts on SEM-7 Index).

The SEM has made some important strides in its development process since 1989 and looks well poised to undertake a number of reforms in order to contribute towards the enhancement of the operational and regulatory efficiency of the local market.In the forthcoming years, the SEM aims at consolidating its position with a view to further contributing to the development of the Mauritian economy and of capital market activities on the national and regional fronts.