At the start of the 1990s, the increasingly liberalization of the economies of the West African monetary zone required an adaptation of the mechanisms of regulation of the economy, in particular the use of indirect instruments of money management and mobilization of the saving. The creation of a common financial space for all the countries of the WAMU sub-region appeared to be a means of strengthening regional integration for the development of trade between member countries. In addition, the establishment of a regional financial market in West Africa was already included in the treaty of November 14, 1973 constituting the West African Monetary Union (WAMU). In 1991, the monetary authorities of the sub-region began discussions with a view to the establishment of a single and efficient financial market for all the countries of the Union. This preparatory work for the creation of a regional financial market in West Africa was carried out at the initiative of the Central Bank of West African States (BCEAO) with the support of the World Bank, of the United States Agency for International Development (USAID) and the French Development Agency (AFD). This work was based on the Abidjan Stock Exchange (BVA) created in 1974 by Côte d’Ivoire.
On December 17, 1993, the Council of Ministers of the WAMU decided on the creation of a regional financial market and gave the (BCEAO) a mandate to lead the conceptual phase of the project. On December 18, 1996, that is to say 3 years later, the work led to the creation, in Cotonou, of the Regional Stock Exchange of Securities S.A. (BRVM) and the Central Depositary / Bank of Regulation S.A. (DC / BR). A few months earlier, on July 3, 1996, by decision of the Council of Ministers of UMOA, the Regional Council for Public Savings and Financial Markets (CREPMF) was created to ensure the regulation of the financial market.
These institutions did not actually start their activities until September 16, 1998, when the Regional Stock Exchange replaced the Abidjan Stock Exchange, already endowed with 35 companies whose quotation took off again on the basis of the last price.
Objective of the Regional Financial Market
The Regional Financial Market must constitute a powerful vector of economic development by its contribution to the financing of public and private investment.
The market organization choices favored, on the one hand, the simplicity of the organization, in particular by limiting the number of operators, operational security through compliance with international standards, and the scalability of the system put in place. . On the other hand, the organization is based on the concern of the UEMOA States to keep a right of control over the actors and the operations, in order to protect the savers, to direct the flow of capital and to protect the emerging market, with respect for the liberal economy. The functioning of the market is therefore shared between a public pole and a private pole.
Organizational options are found in the definition of two (2) categories of direct stakeholders: an institutional and a commercial one.
Institutional stakeholders include the Regional Council for Public Savings and Financial Markets (CREPMF), the BRVM and the Central Custodian – Settlement Bank (DC / BR).
The Regional Council for Public Savings and Financial Markets (CREPMF)
The CREPMF is an organ of the Union (UMOA) endowed with legal personality, and constituted by an agreement between the Member States. It is the higher authority of the Regional Financial Market (MFR) whose missions are: the organization and protection of the public offering, authorization, control of the management structures of the Market as well as stakeholders, monitoring the regulation of stock market transactions, defining and proposing an orientation to improve the functioning of the Market, and taking administrative, pecuniary, disciplinary or criminal sanctions against those who violate the regulatory provisions of the MFR. The financing of the CREPMF is provided by the States in its capacity as an organ of the Union and by invoicing of authorizations, visas, approvals, etc.
The Regional Stock Exchange (BRVM)
The BRVM is a financial institution constituted in the form of a Stock corporation with capital distributed among regional private shareholders, financial institutions and the States of the region. Management and Intermediation Companies (SGI) are required to subscribe and hold at least 4% of the capital of the Stock Exchange and the Central Custodian. No shareholder can hold more than 10% of the capital of the Regional Stock Exchange.
The headquarters of the BRVM which is located in Abidjan in Côte d’Ivoire is the only listing place for securities in the UEMOA zone. The BRVM performs several functions. It manages the market by centralizing orders, quoting securities, distributing market information, promoting the market and activating the guarantee fund. A National Antenna of the Stock Exchange is settled in each of the countries of the Union and its main functions are to represent the central structures, promote the market, prospect for new issuers, connect operators at a lower cost to the central system, ensure equality. Economic and functional stakeholders, forward the information to the central site.
The BRVM and its branches provide services on behalf of brokerage firms and issuers. These services are invoiced and the commissions deducted ensure the financing of the Stock Exchange.
The Central Custodian / Settlement Bank (DC / BR)
The Central Custodian / Settlement Bank is also a specialized financial institution, set up in the form of a Stock Corporation. Its capital is distributed identically to that of the BRVM.
Its headquarters are in Abidjan and are represented in the various States by the Antennas of the Stock Exchange. Its missions are: the dematerialized custody and scriptural circulation of securities, the function of a bank for the settlement of stock market transactions, the keeping and management of securities accounts of brokerage firms and the settlement and delivery of securities.
The financing of the DC / BR is ensured by the commissions on the services rendered to management and intermediation companies, issuers and other investors. Its fees are approved beforehand by the CREPMF.
The commercial facilitators are the Management and Intermediation Companies (SGI), the Estate Companies (SP), the Collective Investment Organizations in Transferable Values (UCITS), the Stock Investment Advisers (CIB) and the Business Providers (AA).
Management and Intermediation Companies (SGI)
The Management and Intermediation Companies, set up as Public Limited Companies, primarily carry out the trading of securities on the stock market and the custody of securities on behalf of clients. On an ancillary basis, they carry out management under mandate as well as financial advice.
Asset management companies (SGP)
Wealth Management Companies are considered to be legal persons who, through investments and stock market negotiations carried out by SGIs, intervene at their discretion in the management of the securities entrusted to them on the basis of a management mandate established with their clients. These companies must not hold the securities and / or funds of their clients.
Undertakings for Collective Investment in Transferable Securities (UCITS)
A UCITS is a financial body which collects savings from economic agents by issuing shares or units. The savings thus collected are used to constitute a portfolio of transferable securities. The UCITS thus channels these savings into the financing of companies, thereby participating in the development of national economies. Two categories of UCITS have been approved on the Regional Financial Market: Investment Companies with Variable Capital (SICAV) and Common Placement Funds (FCP). UCITS are managed by SGOs (UCITS management company).
To improve market liquidity, the BRVM has moved to continuous listing since September 16, 2013. This listing method offers many opportunities to buy and sell a security during a trading day and provides real-time information. , the state of the market or of a value by establishing several courses. It enables rapid order execution and increases liquidity in the stock market. Unlike the fixing which establishes a single equilibrium price per day.
The continuous trading session has 4 phases (pre-opening, continuous trading, pre-closing and last price trading), the sequences of which are as follows (in local time, GMT):
9:00 a.m. – 9:45 a.m.: Pre-opening phase: Accumulation of orders
During the pre-opening phase, orders entered by management and intermediation companies (SGI) in the BRVM quotation system are recorded in the central order book without giving rise to transactions.
The Central Order Book, the theoretical opening price and the volumes likely to be traded at this price are updated each time an order is entered into the system and are broadcast in real time.
9.45 a.m .: Opening fix
On opening, the quotation system compares the orders for each security with a view to their matching. They thus proceed to the opening auction. At the start of the price determination phase, the Central Order Book is momentarily frozen while the matching algorithm is running. At this time, it is no longer possible to enter orders in the quotation system and orders already entered cannot be modified or canceled.
If the match is made within the dynamic authorized reservation thresholds, an opening price is established and disseminated to the market. On the other hand, if the pairing is made outside the dynamic reservation thresholds, the value concerned is reserved for a period, the duration of which is set by instruction from the BRVM. An opening price is determined at the end of the reservation period if the requirements are met.
The opening price is the last theoretical price before the match. In the absence of an opening fixing price, the opening price is the reference price.The reference price is the closing price of the last trading session adjusted in the case of a Corporate Action (for example, in the event of payment of dividends, capital transactions, etc.).
Orders are executed in the Central Order Book in application of the principle of execution priority defined by instruction from the BRVM.
9:45 a.m. – 2:00 p.m .: Continuous negotiation
Once the opening auction has been completed, the continuous trading phase begins until the pre-close.
All orders not executed or remaining after the opening auction are transferred to the continuous trading phase.
During this phase, it is possible to register, modify or cancel the orders. Each new order recorded is immediately compared to the orders available in the opposite direction in the Central Order Book, in order to check whether its execution is possible. Orders already in the order book determine the execution price. Transactions are carried out as and when the counterparties allow it.
Orders are executed in the Central Order Book in application of the principle of execution priority defined by the BRVM Instruction.
2 p.m. – 2:30 p.m .: Pre-closing
The pre-close phase occurs after the continuous negotiation phase. The orders entered are automatically recorded in the Central Order Book without giving rise to transactions. The Central Order Book, the theoretical closing price and the volumes likely to be traded at this price are updated each time an order is entered into the system and are broadcast in real time.
2:30 p.m .: Closing fix
The closing auction process is identical to that described for the opening auction.
The closing price is the price resulting from the closing auction. If a closing auction price could not be determined, the closing price is the price of the last transaction carried out during the continuous trading phase. The closing price is the opening auction price or the reference price, in the absence of transactions during the continuous trading phase.
The orders of the central Order Book are executed in application of the principle of execution priority defined by Instruction of the BRVM.
2:30 p.m. – 3 p.m .: Negotiation at the last price
The last price negotiation phase takes place after the closing auction. During this phase, it is possible to enter only orders against existing orders for the residual quantity. Orders are executed only at the closing price.
3 p.m. -15.15 p.m .: Market surveillance
3.15 p.m .: Market closes
After the negotiation phase at the last
At this price, the BRVM will close the market and adjust it, especially in the event of cancellation of transactions. IMS can no longer enter, modify or cancel orders. After the adjustment, the market is made official. No modification can be made.