The Stock Exchange of Mauritius (SEM)'s 30 years of history since its humble beginning is one where the Exchange has constantly strived to break new grounds to overcome the structural constraints of an island economy where the universe of products, investors and market participants is relatively restricted. Since 1989, SEM has come a long way and its transformational journey and successful positioning as one of the leading Exchanges in Africa, is a quite enticing story.
SEM today has a state-of-the-art operating system, trading is effected daily for five-and-a-half hours, the settlement cycle is T+3, the total market capitalisation has crossed the USD 12 billion mark, and the internationalisation process is in full swing. We have set up a multi-currency listing, trading and capital-raising platform and modernised our listing framework to list a wide variety of multi-asset class products. Likewise, we have contributed to the democratisation of the economy by allowing 100,000+ Mauritians acquire shares in the flagship local companies, helped companies raise USD 6.5+ billion over time to fund their growth, and create value for the vast majority of issuers that have chosen to list on our platform.
SEM's transformative momentum took a new turn in 2010 when the Exchange undertook a fundamental shift of its strategic orientation, embarking with the internationalisation of its operational and regulatory framework. The outcome of this strategic shift has been quite compelling. 200+ securities are listed on SEM, cutting across different asset-classes and issued by a diverse group of local, African and international issuers. SEM's market capitalisation to GDP ratio is 90%+, which makes it the highest in Africa (excluding South Africa). SEM today boasts a streamlined listing regime catering for the specialist nature and requirements of a variety of asset classes. These cover equity products (ordinary/preference shares), debt products (fixed income/floating rate debt/specialist debt products and Eurobonds), ETFs, ETNs, DRs and Structured Products. The above products are issued and listed by domestic Issuers, International Issuers, Investment entities, Specialist companies (including GBCs), Mineral & Exploration Companies and Public sector issuers.
SEM started its operations in July 1989 with the Official Market with five listed companies (Mauritius Commercial Bank, Mauritius Development Investment Trust Ltd, United Basalt Products Ltd, Mauritius Stationery Manufacturers Ltd and Mon Tresor Mon Desert Ltd) and a market capitalisation of USD 70 million.
Ten stockbroking companies were registered to operate on the Exchange at inception in July 1989. At the start, trading took place once a week under the Box Method.
In a quest to increase transparency and make the market more dynamic, the Box Method was replaced in September 1991 by the order-driven single price auction Open Outcry System.
Foreign exchange controls were lifted in 1994 and the market was opened up to foreign investors. In its first year, net inflows by foreigners reached Rs38.9 million, representing 2.5% of the year’s turnover.
The first SEM website was launched in 1997, enabling online tracking of stocks, trading prices and volumes as well as listing rules.
This same year, the Central Depository & Settlement Co. Ltd (CDS) was established as a subsidiary of the SEM. CDS complies with the international standards on depository, clearing and settlement systems, namely the Principles for Financial Market Infrastructures (PFMIs) issued by the Committee on Payment and Market Infrastructure (CPMI) of the BIS and IOSCO, and the G30 Recommendations. CDS also qualifies as an Eligible Securities Depository under the US Investment Company Act Rule 17f-7 and is also covered by the Thomas Murray Capital Market Infrastructure Risk Ratings Service with a private rating of A+ (low overall risk) in January 2018.
SEM’s transformative momentum took a new turn in 2001 when its capital structure was demutualized in 2000. The Mauritius Bourse in fact became the first Exchange in Africa in June 2001, to move away from an open-outcry system in 1991 to a fully automated and electronic stock market infrastructure.
The SEM is since 2005, a full-fledged member of the World Federation of Exchanges (WFE), a central reference point and standards setter for exchanges and the securities industry in the world.
In March 2010, the SEM was designated by the Cayman Islands Monetary Authority (CIMA), an Approved Stock Exchange. Similarly, SEM became designated since 31 January 2011, by the United Kingdom’s Her Majesty’s Revenue and Customs (HMRC), as a “recognised Stock Exchange”, as a result of which, securities traded and listed on the Official Market of the SEM meet the HMRC interpretation of “listed” as set out in section 1005 (3) (a) and (3) (b) Income Tax Act 2007. SEM is also regarded as a ‘recognised Stock Exchange’ for Inheritance Tax purposes.
By 2006, SEM became connected live to a top bracket of global vendors in the likes of Bloomberg, Thomson Reuters, Factset, ICE, Financial Times etc., enabling both retail and institutional investors worldwide to follow our market on a real-time basis.
On average as of today, local investors account for about 55% of the daily trading activities, and foreign investors account for the 45% remaining. 75% of that local volume is generated by institutions like mutual funds, pension funds and insurance companies.
The growing interest from international investors prompted well-known Index Providers between 2006 and 2009 like S&P, Morgan Stanley, Dow Jones and FTSE to include the SEM in several new indices to track frontier emerging markets.
It should be noted that foreign investors trading on the SEM do not need approval to trade shares, except for the holding of more than 15% in a sugar company. Revenue on sale of shares by foreign investors can be freely repatriated and there is no withholding tax on dividends and no tax on capital gains.
In 2010, the SEM embarked upon a transformational reform involving an internationalisation strategy aiming at moving away from its historical equity-centric domestic Exchange focus to a multi-asset class international Securities Exchange status.
In line with this strategic shift, the SEM revised its listing framework nearly every year to offer a streamlined listing regime and cater for the specialist nature and requirements of a wide variety of asset classes which include equity products (ordinary and preference shares), debt products (fixed income products, floating rate debt products, specialist debt products and Eurobonds), Exchange Traded Funds, Exchange Traded Notes, Depositary Receipts and Structured Products. The above products can be issued and listed by domestic Issuers, International Issuers, Investment entities, Specialist companies (including Global Business Corporations), Mineral and Exploration Companies and Public sector issuers.
SEM became in 2011 the only Exchange in Africa and one of the rare Exchanges in the world to possess a multi-currency platform, open for dual-currency trading that can list, trade and settle equity and debt products in USD, EUR, GBP, ZAR besides MUR.
2011 saw the listing of the first international company listed, traded and settled in foreign currency, namely USD. Post-2011 in fact witnessed tangible results in terms of new products with an international flavour as well as enhanced trading and capital-raising activities.
In September 2015, the SEM launched its sustainability index (SEMSI), to provide a robust measure of listed companies against a set of internationally aligned and locally relevant environmental, social and governance (ESG) criteria. During the same year, the SEM also became a signatory and Partner Exchange of the United Nation’s Sustainable Stock Exchanges initiative.
In September 2016, the SEM added two new indices to its suite of indices, namely the SEM-All Share Index (SEM-ASI) and the SEM-VWAP Index. SEM-ASI is an index which tracks the price performance of all companies listed on the Official Market, including the foreign-currency denominated companies.
The creation of SEM-ASI was inspired by the listing on the SEM of a growing number of GBCs, Specialist Debt Instruments, ETFs, Structured Products and DRs. Similarly, the SEM also successfully attracted the listing of a growing number of debt instruments over the years and hence it became opportune in 2017 to create a Bond index (SEM-BI). In 2016, the SEM infact became the first African Exchange to list a Masala Bond.
SEM has developed in 2017 a fast-track-listing route whereby issuers having a primary listing on select Exchanges, can submit the same listing application documents approved by the Exchange of primary listing to the SEM. The fast-track listing process effectively eliminates time, cost and management constraints for the issuer with regard to the preparation of application documents. Further flexibility introduced in the Listing Rules for international issuers having a secondary listing on the SEM also include a reduced regulatory gap as the post-listing obligations of the Exchange where the international issuer has its primary listing take precedence over the post-listing obligations of the SEM. On top of optimal turnaround time in guiding issuers them throughout the admission process, compared to peer-Exchanges, SEM also ensures a highly cost-effective and competitive listing fee structure, providing affordable entry and continued listing.
In 2018, in line with its strategy to digitalise its investor services, SEM launched the mySEM mobile app. mySEM is available for free download on PlayStore for Android users and App Store for iOS users for mobile devices.
mySEM app enables investors, wherever they sit in the world, to follow the market in real-time, seize market opportunities and trade in real-time and online access to their CDS accounts. mySEM provides investors seamless access to a wide variety of key listed company data in real time, including company specific order books, highs and lows, five best bids and five best asks, and other relevant company-specific data.
2018 also saw SEM cross the mark of 100,000 retail shareholders; representing nearly 20% of the Mauritian working population, a figure comparing favourably with some large emerging and developed markets.
Investors are today looking for fully-integrated services with capabilities of doing everything from smart devices and want everything intuitive, instant and on-demand. Digital technology plays squarely into that space – provide fully-integrated instant, fast and on-demand investor services via APPs and fully-responsive portals. This is why in line with its digital transformation, SEM rolled out in 2019 a fully-responsive web-portal optimised for smart devices to cater for the increasing number of investors using SEM's website on mobile phones/tablets. With this new website, investors globally are able to read and navigate more efficiently with minimum resizing and scrolling. In terms of content, SEM's new web-portal contains several value-add features, with the core aim to create, educate and empower new retail investors. The homepage features a modern look and feel with a heavy weight of dynamic and interactive features for the benefit of both investors and issuers, and altogether inside-pages are streamlined, showcasing information on SEM's multi-asset classes more efficiently.
The last decade has been among the most enticing years for the SEM in terms of new breakthroughs and defining changes to strengthen its competitive position as a multi-asset class internationalized Exchange and create the enabling environment for the listing and trading of niche international products.
Looking forward, the split of listings on SEM is expected to overwhelmingly include equity products (ordinary and preference shares), debt products (fixed income products, floating rate debt products, specialist debt products, Eurobonds amd Sovereign Bonds), ETFs, ETNs, DRs and Structured Products. The above products can be issued and listed by domestic/International Issuers, Investment entities, Specialist companies (including GBCs), Mineral & Exploration Companies and Public sector issuers. Similarly the number of issuers, players and investors in our market will increase, increasing the breadth and depth of our market in Mauritius.