{"id":400770,"date":"2011-04-27T01:20:00","date_gmt":"2011-04-27T01:20:00","guid":{"rendered":"http:\/\/www.ghanamma.net\/2011\/04\/27\/brokers-soften-stand-on-bourse-ownership\/"},"modified":"2011-04-27T01:20:00","modified_gmt":"2011-04-27T01:20:00","slug":"brokers-soften-stand-on-bourse-ownership","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2011\/04\/27\/brokers-soften-stand-on-bourse-ownership\/","title":{"rendered":"Brokers Soften Stand on Bourse Ownership"},"content":{"rendered":"
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Business Daily<\/a> (Nairobi)<\/p>\n

David Mugwe<\/p>\n

26 April 2011<\/p>\n

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Stockbrokers will cede ownership of the Nairobi bourse by June, the chairman of the Nairobi Stock Exchange, Mr Eddy Njoroge, has said, indicating a change of stance by the intermediaries who threatened to derail the process.<\/p>\n

Mr Njoroge said demutualisation – which will see brokers cede majority ownership and management of the stock exchange – will boost investor confidence and is, therefore, in the market intermediaries’ long-term interest. “We hope to complete the demutualisation by the second half of this year,” said Mr Njoroge.<\/p>\n

Stockbrokers early this year demanded that the Capital Markets Authority (CMA) postpone by three years a rule requiring them to increase their minimum capital as a pre-condition for agreeing to demutualisation.<\/p>\n

The intermediaries, through their lobby Kenya Association of Stockbrokers and Investment Banks (Kasib), also demanded recognition of their seat at the NSE – valued at Sh251 million as per the last sale in 2007 – as part of their total assets.<\/p>\n

Mr Njoroge, however, said the brokers will co-operate with the CMA to conclude the restructuring process whose major sticking point has been getting a suitable formula for sharing out assets of the exchange between them and the government.<\/p>\n

Demutualisation is expected to attract more individual investors to the bourse by helping to enforce corporate governance among the players and position the country as the financial services hub of the East African region.<\/p>\n

“It will reduce the risk of trading in securities listed on the NSE and boost investor confidence while facilitating greater access to our stock market,” said Mr Njoroge.<\/p>\n

The new capital requirements are supposed to reduce the risk of failure by the market intermediaries.<\/p>\n

They were introduced after the collapse of three brokers sinking billions of investor funds.<\/p>\n

The market regulator is expected to publish the names of licensed stockbrokers and investment banks by the end of this month.<\/p>\n

Investment banks will be required to have minimum capital of Sh250 million from, the earlier threshold of Sh30 million while brokers will be required to have minimum capital of Sh50 million up from Sh5 million.<\/p>\n

The CMA has, however, has said it was also considering implementing risk-based capital requirements that will be based on the risk appetite of market intermediaries to improve supervision.<\/p>\n

Mr Njoroge was speaking during the listing of CfC Insurance Holdings where he also said that Sh100 million was being invested in the Broker Back Office Operations System (BBO) that is expected to improve supervision.<\/p>\n

More access<\/strong><\/p>\n

At the function, the NSE chief executive Peter Mwangi said the BBO will be linked with the automated trading system and central depository system and will be able to facilitate more access by investors by enabling internet trading.<\/p>\n

After a test phase and a parallel running to the current system in use for a month the BBO system – which is being implemented through India based software company Chella Soft – will then go live.<\/p>\n

It will cost the market intermediaries Sh8.5 million to install an in house system independent of the bourse and Sh2 million excluding monthly charges to install a system that is controlled by the NSE.<\/p>\n

Mr Mwangi said two additional companies had started applying to list their shares at the bourse.<\/p>\n

<\/p>\n

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View the original here:
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Business Daily (Nairobi) David Mugwe 26 April 2011 Stockbrokers will cede ownership of the Nairobi bourse by June, the chairman of the Nairobi Stock Exchange, Mr Eddy Njoroge, has said, indicating a change of stance by the intermediaries who threatened to derail the process. Mr Njoroge said demutualisation – which will see brokers cede majority ownership and management of the stock exchange – will boost investor confidence and is, therefore, in the market intermediaries’ long-term interest. <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-400770","post","type-post","status-publish","format-standard"],"yoast_head":"\nBrokers Soften Stand on Bourse Ownership - Ghanamma.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ghanamma.com\/2011\/04\/27\/brokers-soften-stand-on-bourse-ownership\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Brokers Soften Stand on Bourse Ownership - Ghanamma.com\" \/>\n<meta name=\"twitter:description\" content=\"Business Daily (Nairobi) David Mugwe 26 April 2011 Stockbrokers will cede ownership of the Nairobi bourse by June, the chairman of the Nairobi Stock Exchange, Mr Eddy Njoroge, has said, indicating a change of stance by the intermediaries who threatened to derail the process. 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