The Nairobi Securities Exchange Plc (NSE) #ticker:NSE is set to restructure its operations, transferring the business of trading bonds and stocks to a new subsidiary.
The bourse operator currently runs the securities business directly besides owning other units offering related services such as settlement of transactions.
To effect the changes aimed at improving corporate governance, operational efficiency and sharpening strategic direction, the company will transform into a non-operating holding company called NSE Group Plc.
It will create a new wholly-owned subsidiary called Nairobi Securities Exchange Limited which will run the securities business.
“The restructuring will effectively separate the securities business from other incidental business entities. This will result in operational efficiencies and better financial performance for the NSE,” the company said in a circular to shareholders.
“Additionally, the proposed NSE Group Plc, as a non-operating holding company, will be better placed to support the efficient operations of the group by setting up appropriate administrative, legal, risk management and governance systems, processes and practices to manage and shape the development of its subsidiaries operating under a common shared-services model.”
The Capital Markets Authority (CMA) will regulate NSE Group as a publicly-traded firm while the subsidiary running the securities business will be regulated as an exchange services provider.
“It is expected that majority of the staff will transition to the new company, since this entity will be carrying on the substantive exchange business,” the firm said.
“Some roles will, however be moved to the NSE Group Plc, as Group roles, especially in light of the envisaged shared-services model, and will be shared with the new company as well as the other subsidiaries.”
Investors’ shareholding in the self-listed firm and its subsidiaries will not change. NSE fully owns NSE Clear Limited, NSE LLP and Kenya Futures and Commodities Exchange Limited.
It also holds stakes in the Central Depository and Settlement Corporation (22.5 percent) and AKS Nominees (88.9 percent).
NSE is the latest to change into a non-operating holding company, a strategy that gives a company greater flexibility in terms of expansion into new areas, fundraising, capital allocation and supervision of existing core operations.