Capital Markets
Kenya
The Capital Markets Authority

Stockbrokers, investment advisers seek to exit NSE citing low returns

This is attributed to the declining performance of the 64-year-old bourse, which has failed to attract new companies, and whose products have failed to excite the public.

The Capital Markets Authority (CMA) has said that market intermediaries led by investment advisers have applied for cancellation of their operating permits, citing poor performance of the stockmarket, low uptake of new and existing products, the absence of new listings and low trading activity.

“Despite elaborate strategies to introduce new products and services in the Capital Markets, uptake has remained low, and a few existing market intermediaries have applied for cancellation of granted CMA licensees, with investment advisers bearing the bulk of the cancellations,” the regulator said.

Several stockbrokers have also divested from the struggling exchange, selling their shares to sustain their operations — which have been impacted by the low trading activity on the bourse.

According to the survey, which was released two weeks ago, Kenya’s stockmarket is also facing stiff competition from other investments that seem to promise better short-term returns such as real estate, mobile money products and sports gambling.

According to the report, the regulator is expected to review and abolish the requirements for minimum free float, profitability track records, paid up capital and number of investors as required from time as a prerequisite for listing approvals especially where they are unjustified.

The CMA will also review the cost of participation in the primary and secondary capital markets in terms of global competitiveness, in light of stakeholder perception, and continuously review, identify and amend restrictive provisions in the capital markets and laws that are unattractive to capital raising and listing.

According to the report, issuers of new products will be required to develop and submit elaborate product launch strategies to the regulator, with elements such as product sensitisation, customer experience and marketing strategy.

The stockbrokers had a three-year grace period from 2014 to surrender the control of the exchange to the Kenyan public as part of the conditions of the demutualisation process (separation of ownership of the exchange from the trading rights of the members).

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