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NAIROBI STOCK EXCHANGE Presentation to Economic Students

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1 NAIROBI STOCK EXCHANGE Presentation to Economic Students University of Nairobi By CHRIS MWEBESA CHIEF EXECUTIVE
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Page 1: NAIROBI STOCK EXCHANGE Presentation to Economic Students

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NAIROBI STOCK EXCHANGE

Presentation to Economic Students

University of NairobiBy

CHRIS MWEBESACHIEF EXECUTIVE

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TABLE OF CONTENTS

What is a Stock Exchange What are share and bonds Market regulations Listing in NSE Eligibility Criteria for Listing Why invest at NSE Process for buying and selling shares

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WHAT IS A STOCK EXCHANGE?

A Stock Exchange is a market where:-

i. Institutional and retail investors can buy and

sell securities. The price of these securities

varies according to supply and demand.

ii. Through which companies, multilaterals,

parastatals, SPV’s, government and local

authorities can raise funds for expansion and

development by issuing equity and debt

securities to the public.

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Stock Exchanges Promote a culture of savings.

Stock Exchanges:

– Ensure the investment is liquid;

– Facilitate transfer of savings to investment in the most productive sectors;

– Promote higher standards of accounting, resource management and transparency in the management of business.

ROLES AND FUNCTIONS OF THE NAIROBI STOCK EXCHANGE

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WHAT ARE SHARES AND BONDS A bond is a loan between a borrower and

lender at a promise to pay interest.

A share is a unit of ownership

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Regulatory Bodies The Capital Markets Authority (CMA)

The Nairobi Stock Exchange (NSE)

Regulations CMA (Securities), (Public Offers, Listing and

Disclosure) Regulations, 2002;

NSE Listing Manual, 2002;

NSE Membership Rules, Trading Rules, Delivery and Settlement Rules;

Corporate Governance Guidelines, 2002.

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Regulations

CMA (Takeovers and Mergers), Regulations, 2002;

Collective Investment Schemes, Regulations 2001;

Central Depository Act 2000;

CMA Foreign Investor Regulations, 2002;

Rating Agency Guidelines, 2001

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LISTING IN NSEWhy list?

Institutions list Securities primarily: To unlock value. Sponsors, Promoters and Venture

Capitalists use the capital markets to exit their investments or share risk.

To raise funds for expansion and growth without the interest burden of funds borrowed from lending institutions.

To improve the liquidity of their securities.

To increase public awareness about the institution and its products.

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The Market SegmentsThe Main Board

The Main Investment Market Segment (MIMS);

The Alternative Investment Market Segment (AIMS);

The Fixed Income Securities Market Segment (FISMS);

Futures and Options (FOMS)- to be implemented

Soon to be introduced (Distinct from the Main Board):

Over the Counter (OTC) Market Segment

Commodity Exchange

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METHODS OF LISTING

Securities may be brought to listing by way of:

Initial public offering (IPO): where the public at large is invited to subscribe.

Introduction: to provide a market for existing shareholders.

Private placement: shares are placed for sale to already identified investors.

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Eligibility Requirements for ListingSegment

Incorporation Minimum share capital

Net Assets

Financial Record

Share-holders

MIMS

Public Company,State Corporation,Other

50 million

100 million

5 years, with at least3 with +ve profit

At least 25% held by 1000 shareholders

AIMS20 million

20 million

2 years1 with profit

At least 20% held by 100 shareholders

FISMs

50 million

100 million

For Corporates:5 years, with at least3 with +ve profit

The issue of profitability are waivered for the Government of Kenya

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INVESTING AT THE NSEWhy invest?

1. To enhance incomes– Dividends from shares.– Fixed coupon payment from

treasury and corporate bonds– Capital Gains are tax exempt

2. Guarantee for your future Retirement

3. Diversify asset holding

4. Collateral

5. Hedge against inflation.

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Buying and selling of shares –Immobilizing shares

Through a Stock Broker . Broker opens CDA for you Gives you a deposit form (slip) as

evidence of ownership Copy of a deposit form (slip)

forwarded to CDSC by broker CDSC then forwards the form to

registrar of the company Shares deposited in your account Once shares are in your account,

you can start trading Trade in Minimum lots of 100 shares

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THANK YOU


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