INSTITUTIONALIZATION OF NAIROBI SECURITIES EXCHANGE
The Nairobi Securities Exchange (NSE) was established in 1954 as Nairobi Stock Exchange. It is
the leading stock exchange in East Africa offering a world class trading facility for both its local
and foreign investors looking to gain exposure in the Country’s rising economy1. The NSE is
located in Nairobi, Kenya. In March 2015, the NSE officially joined the United Nations
Sustainable Stock Exchanges (SSE) initiative whereby they made a voluntary pledge to inform
their stakeholders of the importance of integrating sustainability in their capital markets2.
The NSE is licensed under the Capital Markets Act, Laws of Kenya. Section 2 of the Capital
Markets Act, number 17 of 1989 defines securities exchange to mean a market, derivatives
exchange, securities organization or other place at which securities are offered for sale, purchase
or exchange, including any clearing or settlement, with or without novation, or transfer services
connected therewith.
The NSE is one of the active capital markets in Africa, sub-Saharan Africa's fourth largest bourse
with listed companies and brokerage firms3. Some of the Member firms of the Nairobi Securities
Exchange include; Drummond Investment Bank, Dyer & Blair Investment Bank Ltd, Francis
Thuo & Partners Ltd, Nyaga Stockbrokers Ltd, Ngenye Kariuki & Co. Ltd, Afrika Investment
Bank Ltd amongst many others4.
NSE reclassified the industry sectors under which listed companies are placed. This
reclassification brings NSE closer to international best practice and will enable domestic and
international investors to more easily compare company and sector performance. NSE’s Vision
is “To be the leading Exchange and the investment partner of choice through providing effecient
investments and capital raising services in Africa and globally.” NSE's mission is linking capital
to opportunity to enhance stakeholder value.
1
https://afx.kwayisi.org/nse/
"Nairobi Securities Exchange Joins United Nations Sustainable Stock Exchanges Initiative"
3
Ruth Mumbi Mburu, “Relevance of Progressive Technology at the Securities Exchange: Case Study of the Nairobi
Securities Exchange.”
4
https://www.centralbank.go.ke/member-firms-of-the-nse/
2
The shares of the Nairobi Securities Exchange are listed and traded on its own main board, under
the symbol NSE. Other than stock and bond trading as the main business of the NSE, the
exchange has the following investments;
a) NSE Clear Limited - 100% Shareholding - Nairobi, Kenya - Provision of clearing house
services for the derivatives/futures exchange.
b) Central Depository and Settlement Corporation Limited - 22.5% Shareholding - Nairobi,
Kenya - Provision of clearing, settlement and depository services.
NSE plays a vital role in the growth of Kenya’s economy by encouraging savings and
investment, as well as helping local and international companies’ access cost-effective capital.
NSE operates under the jurisdiction of the Capital Markets Authority of Kenya. It is a full
member of the World Federation of Exchange, a founder member of the African Securities
Exchanges Association (ASEA) and the East African Securities Exchanges Association
(EASEA). The NSE is a member of the Association of Futures Market and is a partner exchange
in the United Nations-led SSE initiative.
The NSE is a Limited Liability Partnership (NSE LLP), the owner of the USP, whose Partners
are the Nairobi Securities Exchange Plc and the Chief Executive Officer of the Nairobi Securities
Exchange Plc. NSE is governed by an eleven- person board of directors with Kiprono Kittony
serving as the chairman of the group, Geoffrey Odundo as the CEO and Mr. Terry Adembesa as
the Chief officer-derivatives markets.
On 29 April 2020, the High Court of Kenya in Miscellaneous Application No. E680 of 2020,
issued an order permitting any company listed on the Nairobi Securities Exchange to convene
and conduct a virtual general meeting subject to receipt of a ‘No Objection’ from the Capital
Markets Authority (‘CMA’).
The NSE Derivatives Exchange (NEXT) is a subsidiary of the Nairobi Securities Exchange
Limited governed by the NSE Derivatives Rules, the Capital Markets (Derivatives Markets)
Regulations 2016, and the Capital Markets Act, while being under the supervision of the Capital
Markets Authority. This is the first derivatives exchange in Kenya, and second in the African
Continent.
The NSE Derivatives Exchange will offer futures contracts in equity products, at the initial
phase, before expanding into other asset classes such as fixed income, currencies and agricultural
commodities once the market gains full traction. The market is awaiting formal launch
envisioned during the year 20175.
The NSE has derivatives rules, the purpose of these derivatives rules and directives is to achieve
the objects of the NSE as set out in its Memorandum and Articles of Association by providing
the procedures necessary to establish and regulate a fair and efficient derivatives market and to
ensure that the business of the NSE is carried out in an orderly manner and with due regard to the
objects of the Capital Markets Act6.
Finally, it is important to note that among other things the Capital Markets Authority is charged
with the role of protecting investor interests. Any investor with any complaint is advised to
contact the Capital Markets Authority7.
5
https://www.afmorg.net/members/directory/Nairobi_Securities_Exchange
6
NSE derivatives rules, 2017. https://www.nse.co.ke/derivatives/wp-content/uploads/sites/6/2021/11/nsederivatives-rules-1.pdf
7
https://www.cmarcp.or.ke/index.php/how-does-the-stock-market-work-read-more