Nairobi Securities Exchange chief executive Geoffrey Odundo briefs the
media after the company’s annual general meeting in Nairobi on June 2,
2016. Looking on are outgoing chairman Eddy Njoroge (centre) and vice
chairman Bob Karina. PHOTO | SALATON NJAU |
By OTIATO GUGUYU, dotiato@ke.nationmedia.com
In Summary
- Nairobi Securities Exchange (NSE) shareholders Thursday approved the issuance of bonus shares that increased the paid-up capital to Sh1 billion, thereby meeting the regulator’s threshold to operate a derivatives market.
- NSE chief executive Geoffrey Odundo said the derivatives market, which would allow investors to hedge against price shocks, would go live before the end of the year.
- Mr Odundo said the move to approve the bonus share issue was meant to preempt the regulator which had set the deadline as January 2017.
Nairobi Securities Exchange (NSE)
shareholders Thursday approved the issuance of bonus shares that
increased the paid-up capital to Sh1 billion, thereby meeting the
regulator’s threshold to operate a derivatives market.
The NSE had a paid-up capital of Sh778
million which will be pushed to slightly more than Sh1 billion by the
bonus share issue valued at Sh259.5 billion that will now capitalise the
company’s reserves.
NSE chief executive Geoffrey
Odundo said the derivatives market, which would allow investors to hedge
against price shocks, would go live before the end of the year.
“When we approached the CMA
(Capital Markets Authority) in 2014 to express our interest to set up
the derivative market, they wanted us to raise Sh2 billion but we
applied for a waiver and they agreed that we could increase our paid-up
capital to Sh1 billion in three years,” he said.
Mr Odundo said the move to
approve the bonus share issue was meant to preempt the regulator which
had set the deadline as January 2017.
During the same annual general
meeting, the shareholders also approved the increase of authorised share
capital from Sh850 million to Sh1.5 billion by creating an extra
shares, but only Sh1.037 billion will be paid-up share capital after
shareholders approved the bonus issue.
This means only the issued shares will be listed on the NSE while the rest can be issued in future.
The market will enable dealers in
shares and currencies to enter into binding contracts for buying or
selling the units at a specified price and time in future, helping them
better manage risks, hedge, arbitrage and speculate over their future
value.
“For the first time Kenyans will
be able to protect the value of their exports by buying the instruments
to hedge against currency volatility or own assets that they cannot buy
because of huge costs,” Mr Odundo said.
The Nairobi bourse has appointed
Chella Software to implement the Broker Back Office for 14 brokerage
firms in the country in preparation for the launch.
The system will be implemented on a centrally hosted model for 10 firms and on an on-premise installation for four brokers.
Mr Odundo said Chella Software
has a one-year consulting contract because the bourse needs the
additional support to install the new product.
The NSE had planned to bring the
derivative trading online last year but was, however, hit by delays that
saw the bourse move it to March, this month and now later in the year.
NSE got a licence to operate the
segment in October last year as part of diversifying its products and Mr
Odundo says a lot of back office work has been going on to date.
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