NSE to finalise demutualisation plans by end of this month

What you need to know:

NSE chief executive officer Peter Mwangi says the exchange had met all the requirements laid out by the Capital Markets Authority, and made a final application for approval.

The Nairobi Securities Exchange (NSE) will complete its drawn-out demutualisation by the end of this month, paving the way for self-listing in June.

NSE chief executive officer Peter Mwangi said on Tuesday the exchange had met all the requirements laid out by the Capital Markets Authority, and made a final application for approval.

“There was a checklist of items that we needed to address, which we have done and are in agreement with the regulator on all issues that had been outstanding. We expect that they will come back to us with a final approval,” said Mr Mwangi.

Speaking last week, the NSE chairman Eddy Njoroge said that following long negotiations with the existing shareholders, it was agreed that 10 per cent of the shares of the demutualised exchange be allocated to the government through the Treasury and the Investor Compensation Fund.

Treasury had earlier insisted on holding a 20 per cent ownership of the bourse, delaying the separation of ownership from management.

Fees

CMA chairman Kung’u Gatabaki said enhancing corporate governance at the bourse was one of the key market reforms included in the CMA 10-year master plan due to be launched soon.

“We wish to commit to provide all the facilitation needed on our side to ensure demutualisation is effectively done this year, and are working with Treasury on this,” said Mr Gatabaki.

READ: NSE looks to self-regulation rules for high efficiency

The NSE board has already appointed transaction advisers for the self-listing led by Standard Investment Bank and Renaissance Capital.

The master plan proposes to give a fully demutualised NSE authority to set its own fees as part of a wider self regulation mandate.

The NSE plans to introduce Exchange Traded Funds (ETFs) by the end of June, with Reits and derivatives trading to come before the end of the year. ETFs are securities that track an index, a commodity or a basket of assets, but trades like a stock on an exchange.

In the derivatives market, the NSE plans to start with financial futures and options, which will be on indices, interest rates, currencies and single stock futures.

Mr Mwangi said that commodities futures, whose introduction is keenly waited for by the agriculture and mining sectors, will be introduced further down the road.

He added that the exchange planned to invest Sh250 million in new systems to handle the derivatives and ETFs.