The Managing Director of the Ghana Stock Exchange (GSE), Ekow Afedzie, says the exchange will soon properly regulate the Over-the-Counter (OTC) market, with the approval of the regulations and framework expected this year.
An Over-the-Counter (OTC) market is a decentralized market in which market participants trade stocks, commodities, currencies, or other instruments directly between them without a central exchange or broker.
In an interview with Business24 at the Money Summit in Accra, Mr. Afedzie said, “One of the key strategic initiatives is how do we create a platform for various types of securities for different targeted investors. OTC market is one of them. So we have developed the rules and framework, awaiting the approval from the regulator.”
He added: “The OTC market is targeted at companies, that is, public limited liability companies, that have floated shares on the GSE but are not listed.
So what the exchange is doing is to create the environment for public companies to trade their unlisted shares on the market.”
A market analyst with FINCAP, John Nani said, “The OTC market has been existent in Ghana but in a seemingly informal form without the supervision of any regulatory body. Investors already make bilateral trades and perform other transactions without the central exchange or any other third party. The GSE’s plan to develop an OTC market will meet investors ready to participate in it.”
Mr. Nani further explained that with the GSE’s involvement in the OTC market, there will be price discovery, transparency, and enhanced liquidity in the market.
“This would in turn boost investor interest and confidence. In terms of timing, the market is rapidly evolving, and the investor base’s hunger for assets to consume is high. A regulated OTC market is definitely a move in the right direction.”
The CEO of Republic Securities, Mr. Kow Sackey, said, “The OTC market has always existed. To bring it under the supervision of the exchange, for a developing bourse like ours, is integral to broaden the scope of our market and demystify the various misconceptions about investing on the stock market.”
He added, however, that “as a lower degree of standardization is expected for the OTC market, one cannot be entirely certain about whether liquidity would be improved when the OTC market is brought under the controlled supervision of the GSE.”
Nevertheless, more options would be made available in the market to foster diversification of investments, which to some degree can improve the liquidity of the market, he stated.
