1. Pick a Broker
Brokers are the authorised intermediaries to trade financial assets on the Lusaka Securities Exchange. By May 2020, there were 6 Brokerage Firms approved to deal at the Exchange: Madison Assets Management, Securities Brokers Zambia, Pangaea Securities, Autus Securities, Equity Capital Resources, Finance Securities Zambia.
2. Open a Trading Account with one of these Brokers
The only requirement is to provide the following information: Proof of Residence, Proof of Identity, Completed Brokerage Account Opening Form and inform the Investment Amount (a fixed commission rate of 1.375% per transaction is charged). The broker will provide you with access to their investment platforms, allowing you to send purchase and sale orders to the Lusaka Securities Exchange’s central system.
3. Choose the Asset in which to invest
The investor has to decide whether to invest in shares, sovereign bonds or corporate bonds.
4. After making a decision, send a Buy order via the Broker
Submitting a purchase order for a financial asset. It is possible to set a limit price or a market price of the selected asset.
5. The transaction is completed once buying and selling prices match
When the bidding price of an asset equals the asking price, the trade is executed. The Brokers makes the transaction payment at the Securities Exchange in your name, and they deliver the transaction amount to the buyer/seller broker. You become the legal owner of the asset.
6. The Broker issues the transaction notification and charges their fees
There is a fixed fee of 1.375% per transaction.
Who is a Broker?
Transactions of financial assets can only be completed through a company that works as an intermediary between investors and sellers. These intermediaries are known as Brokers.
Through complex technological tools, brokers manage transactions between investors, ordering the purchase and sale orders of financial assets by price and by order of arrival. By performing this service, they obtain a fixed commission per transaction when they execute a share’s purchase.
Brokers are, then, market intermediaries, companies in which buyers and sellers interact and come together to buy securities or bonds at the negotiated price.
To invest in the Lusaka Securities Exchange, an investor needs to open an account with a local Broker.