The Dar Es Salaam Stock Exchange
The Dar Es Salaam Stock Exchange
The Dar Es Salaam Stock Exchange
1. What is DSE?
DSE is a short term for name The Dar es Salaam Stock Exchange – a secondary market
for financial products.
The Dar es Salaam Stock Exchange is a body corporate incorporated in 1996 under the
Companies Act, 2002 as a company limited by guarantee without a share capital. It
became operational in April, 1998.
2. A Market?
Yes a Market, very similar to Vingunguti, Kariakoo, Tandale, Buguruni, Moshi Coffee
Auction, Kibaigwa, and other similar markets in Tanzania.
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3. What makes the stock exchange market different from other markets?
The main thing that makes the Stock Exchange Market different from other markets is
the types of products traded, how they are traded, and how they are paid for and
transferred.
The products traded at the DSE are financial products. Currently the financial products
traded are Shares and Bonds; Shares are also known as Equities and Bonds are also
known as Debt instruments. Collectively, the products traded at the DSE are referred to
as Securities.
For an economy to grow, money needs to shift from less to more productive activities. In
other words; idle money and savings should be invested in productive activity for the
economy to grow. The Dar es Salaam Stock Exchange makes this possible by:
Enabling idle money and savings to become productive by bringing the borrowers
and lenders of money together at a low cost. The lenders (all savers) become the
investors. They lend/invest and expect a profit/financial reward. The borrowers
also known as issuers in the market, borrow and promise to pay the lenders (this is
in as far as issuers of bonds are concerned) a profit. DSE therefore, encourages
savings and investments.
Educating the public about higher profits in securities – shares and bonds, how to
buy and sell, when and why to buy and sell. DSE also educates the public on how
to invest together as a group.
Facilitating good management of companies by asking them to give periodic
reports of their financial performance.
Providing a daily market reports and price list to ensure that investors know the
worth of their assets at all times.
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Providing financial solution to common problems. Shares and bonds are accepted
guarantees for bank loans. Shares and bonds can also be planned with the help of
a fund manager, to pay for school fees, medical car and other insurance schemes,
pension or retirement plans etc.
Through shares and bonds; the Government, individuals, small and big companies,
cooperative societies and other organizations can raise money to expand their business
activities, make a profit, create employment and generally help the economy to grow.
Market days
The market is open Monday to Friday from 8.00 a.m. to 5.00 p.m. Trading activities start
at 10.30 a.m. and continue until 12.00 p.m. Members of the public can view the market
from the public gallery at any time while the market is open. The market is closed during
public holidays.
7. Display Board
Shares are displayed on an electronic board while bonds are displayed on white boards.
Shares of companies are displayed in groups according to sectors while bonds are
displayed according to issuers.
8. Display of Shares
Shares are grouped into 2 segments/sectors namely Banking & Investment and Industrial
& Allied Segments. Shares are displayed in alphabetical order in each group for easy
location by investors viewing trading from the public gallery. There are 17 company
shares in the market.
9. Display of Bonds
Bonds are grouped in two groups namely: Treasury Bonds (issued by the Government)
and Corporate Bonds (issued by companies).
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They are displayed as and when the Government or a company issues one. There are
over 100 treasury bonds and 5 corporate bonds in the market.
An investor can buy as little or as much as he or she can afford. It is also possible to
invest very little money in groups of small investors pooled together by fund managers in
the market.
Shares are bonded in minimum lots of 100 shares and above in the main market boards.
Fewer shares than 100 are available on the odd lots board.
Bonds are sold in minimum bundles of TShs. 5 million. Small investors can pool their
money together and buy a bond with the help of a fund manager.
The trading floor in the market place is a place where stock brokers meet everyday to buy
and sell shares and bonds through an auction system. Through the auction system, buyers
and sellers offering the best prices are enabled to trade.
A share is a piece of ownership of a company or enterprise. When you buy a share, you
become an investor and thereby an owner of a piece of the company’s profits or losses.
By buying a share, money which could have been idle or otherwise held in low interest
earning savings, moves to a more productive economic activity. The profitability of
investing in shares however; depends on among other things, a good management of the
company, avoidance of wastage and, a Conducive business environment.
Companies sell shares to Raise (borrow) money from members of the public to expand
their business activities in order to make more profits.
They invite members of the public to buy shares and by so doing, have a say of running
the company as lenders of money and owners. Shareholders expect a profit as a reward
from lending their money to expand the business of the company.
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16. Who is a shareholder?
A source of profits;
A guarantor for borrowing loans from cooperative societies and banks;
A way of saving your money for the future;
An easy and quick asset to buy and/or sell;
A new business activity that is beneficial in many ways. An investor can trade in
shares the same way traders in other markets trade in maize, bananas, potatoes,
tomatoes, onions, mangos etc.;
Buying at low prices and selling at high prices to make profit;
A solution that increases financial activity and economic growth.
ABOUT BONDS
A bond is a loan between a borrower and a lender. The borrower promises to pay the
lender some interest (quarterly or semi-annually) on principal at some date in the future.
The borrower also promises to repay the initial money invested by the lender. The lender
lends and expects to make a profit.
The profit from a bond is gained in the form of an interest. At the moment some bonds in
the market have an interest rate of between 12% and 15% depending on the type of bond
it is, and when it was issued. At the Dar es Salaam Stock Exchange, the lender is called
an investor and the borrower the issuer.
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21. Can a Bond be sold before maturity?
Yes. In times of need or emergencies, an investor can sell his or her bond easily and
quickly in the market. The interest on a bond grows on a daily basis and so a bond has
new value and price every day. An investor can therefore buy or sell a bond on any day
of his or her choice. There are no penalties for selling a bond before the maturity date.
For example, an investor can buy a bond of 5 years and expect an interest of 12% per
annum. The interest is paid after every 6 months. Such an investor can sell the bond at
any time of his or her choice at the current market price. The market price of a bond will
depend on the number of other willing sellers and buyers in the market on that particular
day. When there are many sellers in any market, prices go down and vice versa.
Bonds are therefore a very easy, quick and transparent way of raising money. For
example, trusted and credit worthy municipal councils can borrow money from the public
with a promise to pay a responsible interest rate. The Council can use the money to build
roads, improve security, cleanliness, water supply and streetlights. A cooperative society
can do the same and build a milk-cooling and processing factory or a food-processing
factory. These and many more money solutions are available with the help of money
managers.
For example, an investor can buy a bond whose interest matches payment of school fees,
car or medical insurance, rent pension allowance and much more.
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24. What are the difference between a bondholder and a shareholder?
A bondholder:
A shareholder:
Yes. This gives an investor the opportunity to diversify and enjoy a balance between
reasonable and very high profits.
Website: www.dse.co.tz
DSE handbook
DSE Annual Report
DSE Brochures
Free Education Sessions
Newspapers, Television and Radio
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27. Information Center
Here investors and members of the public get answers to their questions about the stock
exchange. An individual or group can also register to attend a free educational session
organized by the Dar es Salaam Stock Exchange. The DSE also gives free lectures to
groups in their own premises through invitation. There are other operational structures in
the market which include Market Research and Development, Compliance, Legal,
Accounting and Administration.
This is a special place from where investors and members of the public view live trading
as it takes place. All members of the public are welcome.
Yes, DSE is supervised by the Capital Markets and Securities Authority (CMSA) –
commonly known as the capital markets Regulator. The CMSA is a Government Agency.
Yes, members are supervised by both the DSE (as a Self-Regulatory Organization) and
the CMSA.
31. Are there initial listing standards and ongoing supervision of securities traded on
the market?
Yes, there are initial listing standards and continuous listing obligations hence ongoing
supervision of securities traded at DSE.
32. Does these (initial listing standards and ongoing supervision) include the Publication
of a Prospectus and an Audited Annual Report?
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34. Is there protection in place against loss in the event of insolvency of a member?
Yes, first client funds are kept in trust account separate from member account and second
client securities are kept separately from member’s assets. Client funds and securities are
protected against member creditors’ claim.
In case clients are not happy with members acts or omission they can appeal in the
following manner:
Yes, foreign investors are allowed to hold securities of any listed company.
37. Are there any limitations to the amount of securities that can be held by overseas
investors? If so, what are they?
Yes, foreign investors are allowed to invest up to 60% in aggregate of the share capital of
any listed company, 1 % for individuals and 5% for corporate.
These are the traders in the market. They represent the licensed members from the DSE.
Investors must trade through an authorized securities trader or authorized money
manager. These stockbrokers are licensed to buy and sell shares and bonds on behalf of
investors.
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LICENSED DEALING MEMBERS
P.O. Box 76800, Fourth Floor – Elite 4th Floor, PSPF Golden Jubilee Towers, 3rd Floor, Consolidated Holdings
City Building, Samora Avenue Ohio Street, Dar es Salaam Building
Fax: +255 22 2122562 Fax: +255 22 211 3067 Tel: +255 22 211 1711
Tanzania Securities Ltd Vertex International Securities Ltd Solomon Stockbrokers Co. Ltd
7th Floor, IPS Building Annex Building-Zambia High Commission Ground Floor, PPF House
Samora Avenue/ Azikiwe Street, Dar Sokine/Ohio Street, Dar es Salaam Samora Avenue/ Morogoro Road, Dar
es Salaam es Salaam
ZANSecurities Ltd
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GLOSSARY OF STOCK MARKET CONCEPTS
1. Broker
A member of the exchange who facilitates the buying and selling of shares and bonds on
behalf of investors
2. Blue Chip Company (Share)
This is a well established company with considerable assets whose share investors regard
as low risk investment.
3. Bear
A short-term speculator who would sell shares on account in the hope that they would fall
in value so that they could be bought at the end of the account more cheaply – leaving the
investor with a profit at the end of settlement day.
4. Bull
This means a short-term speculator in the market. A bull buys particular shares in the
hope that their price will rise and so they could be sold before the end of the period’s
account so as to earn a profit.
5. Bonds
This is a financial security issued by a company or financial institution or by the
government as a means borrowing mid-term to long-term funds. Bonds are normally
issued for a fixed number of periods and are repayable on maturity.
6. Bonus Issue
Also known as scrip issues or capitalization issue, these are additional shares issued to
existing shareholders without further payment on their part. It involves capitalization of
reserves i.e. turning the reserves into fully paid new share capital.
7. Cash Account
This is an account maintained by investors with a brokerage firm in which deposits (cash
and proceeds from security sales) must fully cover withdrawals (cash and the loss of
security purchase).
8. Capital Gain (Or Loss)
This is the difference between the current market value of an asset and the original cost of
the asset.
9. Commission
This is the fee an investor pays to a broker for services rendered in the trading of
securities.
10. Coupon Payment
This refers to periodic payments of interest on bonds.
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11. De-Listing
This means a removal of a security or a company from the Official List of the Exchange.
12. Enterprise Growth Market
This refers to a special segment of the market which caters for the small and medium
growth oriented companies.
Buyers want to receive ownership of securities safely and sellers wish to receive their money
timely. Neither wants to part with the funds or securities only to find the counterparty default on
the corresponding obligation.
Delivery versus payment refers to the act of transferring funds and ownership simultaneously so
that neither a buyer part with funds nor a seller part with securities without safely receiving the
funds or securities respectively.
Dematerialization
Traditionally, securities have been issued in paper form. The physical movement of paper is
expensive, time consuming and difficult to coordinate with the transfer of funds so as to achieve
a simultaneous delivery versus payment.
Immobilization of securities occurs when paper securities still exist but are stored (immobilized)
so that they cannot be used as the basis of selling securities such sales being achieved entirely
electronically.
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