Uganda is set to join Kenya and Nigeria in developing derivatives trading as the nation’s markets regulator approved plans for another bourse in East Africa’s third-biggest economy.

ALTX Africa Group Ltd., based in Port Louis, Mauritius, may open the exchange in the fourth quarter, Keith Kalyegira, chief executive officer for the Kampala-based Capital Markets Authority, said by e-mail. Trading will include equities, currencies, commodities, government and corporate bonds as well as derivatives, he said.

ALT Xchange Ltd. will compete with the Uganda Securities Exchange, which has 16 listings with trading done by hand, and “drive improvements in the market overall,” Kalyegira said. The USE’s main index dropped 1.1 percent this year, compared with a 5.2 percent gain in the Nairobi Securities Exchange’s 62-member all-share gauge in neighboring Kenya.

Uganda, Africa’s biggest coffee exporter with a $20 billion economy, is joining exchanges that are set to offer more ways for investors to buy into sub-Saharan Africa, the world’s fastest-growing region after developing Asia, according to the International Monetary Fund. Expansion may reach 6.1 percent this year from 5.1 percent in 2013, the IMF said in January.

Kenya’s bourse plans to start trading derivatives and real-estate investment funds this year, Head of Market and Product Development Donald Ouma said in an interview on Feb. 19. Nigeria’s Nasdaq trading platform, which started in September, is set to include derivatives this year, according to the country’s exchange.

‘Diversify’ Markets

Uganda’s second exchange will create a platform for cross-listings of debt and equities from other African markets, Kalyegira said in the e-mail March 31. About half of the bourse’s revenue is expected to be raised from listing fees, he said. ALTX still has to meet regulatory conditions including having membership of three brokers independent of each other, according to Kalyegira.

“There’s definitely a need to diversify the capital markets in the East African region,” Julians Amboko, a research analyst at Nairobi-based StratLink Africa Ltd., said by phone today.

The ALTX will give competition to the Uganda market, which uses a trading system in which representatives of brokers give orders to a person who writes them on a board, according to the USE’s website. Innocent Dankaine, chief executive officer of the USE, is out of the country until April 4, according to a person who answered the phone at his office.

“Definitely there will be competition for listings” from the new exchange, Stephen Kaboyo, managing director of Alpha Capital Partners, a financial services company based in Kampala. “If they leverage on technology, then they will attract small, medium and start-up enterprises.”

Source: Bloomberg (by Fred Ojambo)