Membership

Financial Market

A financial market is a mechanism that allows people to buy and sell (trade) financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value. A financial market is generally comprised of the money market and the capital market. The money market is the market for short dated financial products whereas the capital market is meant for long-term securities.

The capital market

The capital market is further divided into primary and secondary market. The primary market is the market for securities sold for the first time. Primary Market Transaction Process:

The issuer decides to raise capital through the stock exchange
Issuer appoints advisors sponsors/co. registrar/fiscal agents/sponsoring brokers
Issuer prepares draft prospectus or information memorandum
Issuer discusses the offer document with RSE and finalises the prospectus or information memorandum
The issuer applies to RSE to list its securities on the market
The issuer states the offer period and offers securities to the public
Public investors subscribe to securities during the offer period
Offer closes and publication of allotment results
Issuer is admitted to list on RSE

The secondary market

The secondary market is the market where already existing securities are bought and sold through licensed brokers. Secondary market transaction process

Buying client or selling client approaches stockbroker, opens an A/C and pays for an order; either provides funds or gives securities to broker and broker acknowledges
If buying stockbroker has securities or sell order for securities sought or, required at ordered price, broker sells directly to the client
If buying broker has no selling orders for securities and or price given by sellers, the broker contacts the other brokers seeking securities required.
Buying stockbroker and selling stockbroker attends trading sessions at the trading floor. All stockbrokers attend the session and all report:
Traded securities prices, volumes and securities
Buying orders outstanding positions price, volumes and securities
Selling orders outstanding positions price, volumes and securities
RSE compiles market report and distributes to the market and Public through the media.
On settlement day, the CSD (Central Securities Depository) clears the trades for settlement of securities against funds between stockbrokers and the change of ownership takes place at T+2. The CSD is under the Central Bank of Rwanda.