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 version was launched in 1997 lasting until 2018 and enabling online tracking of listed instruments, trading prices and volumes for investors and market participants, as well as listing rules and obligations for issuers.
This same year, the Central Depository & Settlement Co. Ltd (CDS) was established as a subsidiary of the SEM. The CDS is regulated through the Securities Act 1996 and designed according to IOSCO standards. The fundamental concept of DvP is implemented on a rolling T+3 basis with the Bank of Mauritius (BOM) acting as the Clearing Bank. Once the BOM confirms that funds settlement has occurred, the CDS transfers the shares between the securities accounts of the respective clients.
SEM’s transformative momentum took a new turn in 2001 when its capital structure was demutualized in 2000.
SEM 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 market infrastructure. SEM's ATS, running on MIT Technology owned by LSE, is today a mainstream computer system designed to match buy/sell orders placed by licensed investment dealers. Each investment dealer has in its office a computer terminal connected with a server located at the SEM. The central system software consists of an electronic order book which enables members to post their buy and sell orders on behalf of their clients and to have their orders matched automatically. When an order is matched, the investment dealer receives immediately a confirmation of the execution of the trade.
In 2005, SEM became 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.
After further regulatory strides in 2009, SEM was designated in 2010, by the Cayman Islands Monetary Authority (CIMA), an Approved Stock Exchange. Accordingly, 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.
In 2010, the SEM embarked on a re-engineering of its strategic orientation to move away from its historical domestic equity-centric focus to embrace a multi-asset class international focus.
In line with this strategic shift, the SEM revised its listing framework nearly every year between 2010-2020 to offer modern-based streamlined but flexible listing rules catering for a variety of products issued and listed by domestic Issuers, International Issuers, Investment entities and Specialist companies, namely: 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. It's with the same philosophy that SEM later set-up of a dedicated Africa Board for Africa-centric issuers and products.
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 SEM in real-time, seize market opportunities and trade in real-time and altogether have 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/lows, best bids and 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 today look 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. In line with its transformational progress, SEM rolled out a fully-responsive website in 2019, running on emerging technologies, to improve access to Exchange information. In terms of content and design, SEM's website homepage features an entirely new dynamic look and feel, displaying a full suite of dynamic market information. Inside pages have been streamlined, grouping information on SEM's multi-asset classes efficiently and in an interactive fashion. This website embraces the wave of emerging technologies like AI, interactive charting & Tab/Graphic Displays, that improve investor experience. SEM website’s Data Centre also provides secure cloud services for market participants.
In 2020, the SEM added a new strategic dimension to its innovative thrust by amending its Trading Rules to create a conducive environment for the establishment of links with International Central Securities Depositories (ICSD's) like Euroclear and Clearstream.
This new enabling environment specifically applies to Debt Securities, Specialist Debt Securities, Eurobonds, ETF's, ETN's) and Structured Products listed on SEM and issued by foreign issuers to foreign investors or investment entities holding a Global Business Licence. In practice, this initiative allows foreign investors who own the above-named securities listed on the SEM and which have an ‘XS’ ISIN issued by an ICSD, to transfer these securities directly via the ICSD to other investors.
SEM's Market Data Policy and Data Product Agreements are aligned with global industry standards, based on ongoing market analysis with Exchanges, Distributors. Data business with Data Distributors (Vendors and Index Providers) and Data Aggregators, constitutes a powerful business development and international marketing medium for the SEM to be on the radar screen of institutional investors globally with a view to enhancing SEM's global reach and integration within international financial markets as well as attracting more foreign investor interest and capital-raising activities on SEM's multi-asset classes. SEM became connected to Bloomberg and Refinitiv back in 2006 and in the next decade to Iress, Factset and ICE. Between 2019 and 2021, SEM made aggressive strides by adding on its list of world-class Data Distributors SIX, S&P Dow, S&P Global and FTSE. Local investors account for about 60% of the daily trading on the SEM, and foreign investors account for remaining 40%.
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 and 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.