Mission

To provide a responsive securities market which mobilizes savings and channels them into productive sectors, encourages a savings culture that contributes to the country’s economic growth and facilitates wider access to resources.

Vision

To be a model Securities Exchange in the Region

1.0 Background

The Dar es Salaam Stock Exchange (DSE) was incorporated in 1996 as a company limited by guarantee without a share capital. It became operational in April, 1998. The DSE is a non-profit making body created to facilitate the Government implementation of the reforms and in the future to encourage wider share ownership of privatized and all the companies in Tanzania. The DSE is currently located at the fourth floor, Twiga Building, Samora Avenue, Dar es Salaam. The Exchange is open for 5 days in a week. The trading days are weekly from Monday to Friday starting from 10.00 am to 12.00 noon.

The securities currently being traded are Ordinary Shares of 14 listed companies, 5 corporate bonds and 8 Government of Tanzania bonds.

The DSE membership consists of Licensed Dealing Members (LDMs) and Associate Members. LDMs are allowed access to the trading floor. Associate members are institutions and companies which support the DSE.

2.0 Structure

The DSE is governed by a Governing Council, which consists of 10 members drawn from various interested groups in the society.

These are:
(i) Three Licensed Dealing Members;
(ii) Two Associate members representing listed companies;
(iii) One Associate member representing institutional investors;
(iv) Two associate members representing professions;
(v) One associate member representing the public; and
(vi) The Chief Executive Officer who is an ex-officio member.

3.0 Trading System

Trading is conducted at the DSE Trading Floor under an Automated Trading Electronic System (DATES). This is an electronic system which matches bids and offers using an electronic matching engine. Brokers converge at the trading room and post their orders in the ATS. Matched orders are displayed on the computer terminal in the trading room as well as being projected in the public gallery. Currently, the ATS operates on a local area network (LAN). Future plans include operation in a wide area network (WAN) which can be accessed by brokers even out of Dar es Salaam.

4.0 Clearing & Settlement

Clearing and settlement is conducted through an electronic Central Depository System (CDS) which has been operational from 1999. This is the share registration system which facilitates registration of changes of ownership of securities electronically. The CDS facilitates the delivery of securities in time for the settlement of trades to be implemented within five working days (T+5). The CDS has been upgraded in order to match with the ATS. It is expected that clearing and settlement cycle will soon move to T+3.

5.0 Market Surveillance

Both the Capital Markets and Securities Authority (CMSA) and DSE monitor the market trading activities to detect possible market malpractices such as false trading, market manipulation, insider dealing, short-selling, etc. DSE is responsible for on-line/on-site surveillance and the CMSA for on-line/off-site surveillance. The CEO of the DSE has the authority to suspend anytime offers and bids that are deemed to be suspicious.

6.0 Investor Protection

Pursuant to the provisions of the Capital Markets and Securities Act, 1994 the DSE has established a Fidelity Fund Account to be used to compensate investors who suffer financial loss arising from fraud and misappropriation of funds by Licensed Dealing Members (LDMs). The Fund is maintained by the DSE. The fund can also be used to compensate investors who suffer losses as a result of Licensed Dealing Members’ (LDMs) negligence.

7.0 Fiscal Incentives

The Government has deliberately provided several incentives in order to encourage active participation in capital markets by Issuers and investors. They cater universal to both foreign and domestic investors without any distinction.

(a) Incentives to Issuers:

(i) Reduced corporate tax from 30% to 25% for the period of three years where the Issuer has issued at least 35% of the issued shares held by the public. The reduced rate is applicable for five years starting from listing date.
(ii) Tax deductibility of all Initial Public Offering (IPO) costs for the purposes of income tax determination. All IPO costs are accepted by the Tanzania Revenue Authority (TRA) as acceptable expenses used in the generation of income and profits, and therefore are taken into consideration when determining profit for tax purposes; and
(iii) Withholding tax on investment income made by Collective Investment Schemes (CIS) is final tax. Investors in CIS are not charged with tax on the income distributed by CIS after the scheme’s income taxation.

(b) Incentives to Investors:

(i) Zero capital gain tax as opposed to 10% for unlisted companies;
(ii) Zero stamp duty on transactions executed at the DSE compared to 6% for unlisted companies;
(iii) Withholding tax of 5% on dividend income as opposed to 10% for unlisted companies;
(iv) Zero withholding tax on interest income from listed bonds whose maturities are three years and above;
(v) Exemption of withholding tax on income accruing to fidelity fund maintained by DSE for investor protection; and
(vi) Income received by the Collective Investment Scheme (CIS) investors is tax-exempt.

8.0 Products that are currently traded in the Tanzanian Capital Markets include:

(i) Equities, currently there are 14 listed companies;
(ii) Corporate Bonds, currently there are 5 listed Corporate Bonds traded;
(iii) Government Bonds, currently there are 8 Treasury Bonds; and
(iv) Units from 4 Unit Trust Schemes.

Plans are underway to introduce asset-backed securities, derivates and Exchange Traded Funds.

9.0 Foreign Investors Participation

Foreign investors are allowed to invest up to 60% in aggregate of the share capital of any listed company. Furthermore, once invested there is a lock-in period of six months before a foreign investor is allowed to exit. Foreigners are allowed to invest 100% in Corporate Bonds but are not allowed to invest in securities issued by the Government.

10.0 The DSE has two market segments

The first one is known as Main Investment Market Segment (MIMS) that cater for big companies and the second one is known as Enterprise Growth Market Segment (EGMS), which cater for medium growth oriented companies. The two segments differ slightly in entry requirements.