More analysts want bourse in many hands

• Nairobi Stock Exchange chief says process should be complete next June

Capital markets players are keen to have the process of wrestling the control of the bourse from brokers completed quickly to restore confidence in the fallen market.

The stock market has sunk over 50 per cent from its historic high of 6161 points on January 12, 2007 due to a number of concerns ranging from poor corporate governance among some stockbrokers and poor economy to oversupply of shares.

Nairobi Stock Exchange CEO Peter Mwangi said on Tuesday that the process should be completed by the end of the first half of next year.

By this time, the economy is also expected to have recovered thereby uplifting the fortunes of listed firms, a development that would impact positively on the exchange.

It is after this process that listing of the bourse would then be considered, he said during a meeting called at the a Nairobi hotel.

However, it is subject to the parliamentary calendar, namely, the priorities of the House Business Committee and the MPs.

Due to this constraint, key industry actors have invited the MPs to debate the demutualisation Bill in a bid to sensitise them on the need for an early completion of the process.

Although many brokers want the process quickened — to restore market confidence — they are also keen to hold onto a controlling stake of no less than 51 per cent.

The Capital Markets Authority had expected that the process would be complete by the end of this year but this has become impossible given that Parliament is only a few weeks away from taking a break.

Mr John Carson, a consultant on demutualisation with Compliax Consulting Inc of Canada, said that because the NSE and the CMA would need to share information and their roles may overlap, it was important for both to sign a memorandum of understanding after demutualisation.

The NSE would continue acting as a self-regulating organisation (SRO) but a Chinese Wall — a segregation of roles — would be created to ensure that this is completely separate from the functions of the stock exchange.

“The SRO function hasn’t been clear and it has not had any legal basis,” said Mr Carson.

He said only after the process is complete can the exchange then contemplate listing or integrating with others in the region and beyond.

This is because the motive of merging or acquisition would be business as opposed to political or quasi-political.

Speaking at the same meeting, Mr Peterson Mwangi, CEO of Afrika Investment Bank, said that the process of delinking the bourse from broker influence and that of public listing should be separate as one can take place without the other.