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NAIROBI STOCK EXCHANGE Presentation to Economic Students


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NAIROBI STOCK EXCHANGE Presentation to Economic Students

  1. 1. Presentation to Economic Students University of Nairobi By CHRIS MWEBESA CHIEF EXECUTIVE
  2. 2. TABLE OF CONTENTS <ul><li>What is a Stock Exchange </li></ul><ul><li>What are share and bonds </li></ul><ul><li>Market regulations </li></ul><ul><li>Listing in NSE </li></ul><ul><li>Eligibility Criteria for Listing </li></ul><ul><li>Why invest at NSE </li></ul><ul><li>Process for buying and selling shares </li></ul>
  3. 3. WHAT IS A STOCK EXCHANGE? <ul><li>A Stock Exchange is a market where:- </li></ul><ul><ul><ul><ul><li>Institutional and retail investors can buy and sell securities. The price of these securities varies according to supply and demand. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>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. </li></ul></ul></ul></ul>
  4. 4. <ul><li>Stock Exchanges Promote a culture of savings. </li></ul><ul><li>Stock Exchanges: </li></ul><ul><ul><li>Ensure the investment is liquid; </li></ul></ul><ul><ul><li>Facilitate transfer of savings to investment in the most productive sectors; </li></ul></ul><ul><ul><li>Promote higher standards of accounting, resource management and transparency in the management of business. </li></ul></ul>ROLES AND FUNCTIONS OF THE NAIROBI STOCK EXCHANGE
  5. 5. WHAT ARE SHARES AND BONDS <ul><li>A bond is a loan between a borrower and lender at a promise to pay interest. </li></ul><ul><li>A share is a unit of ownership </li></ul>
  6. 6. <ul><li>Regulatory Bodies </li></ul><ul><li>The Capital Markets Authority (CMA) </li></ul><ul><li>The Nairobi Stock Exchange (NSE) </li></ul><ul><li>Regulations </li></ul><ul><li>CMA (Securities), (Public Offers, Listing and Disclosure) Regulations, 2002; </li></ul><ul><li>NSE Listing Manual, 2002; </li></ul><ul><li>NSE Membership Rules, Trading Rules, Delivery and Settlement Rules; </li></ul><ul><li>Corporate Governance Guidelines, 2002. </li></ul>
  7. 7. Regulations <ul><li>CMA (Takeovers and Mergers), Regulations, 2002; </li></ul><ul><li>Collective Investment Schemes, Regulations 2001; </li></ul><ul><li>Central Depository Act 2000; </li></ul><ul><li>CMA Foreign Investor Regulations, 2002; </li></ul><ul><li>Rating Agency Guidelines, 2001 </li></ul>
  8. 8. LISTING IN NSE Why list? <ul><li>Institutions list Securities primarily: </li></ul><ul><li>To unlock value . Sponsors, Promoters and Venture Capitalists use the capital markets to exit their investments or share risk. </li></ul><ul><li>To raise funds for expansion and growth without the interest burden of funds borrowed from lending institutions. </li></ul><ul><li>To improve the liquidity of their securities. </li></ul><ul><li>To increase public awareness about the institution and its products. </li></ul>
  9. 9. The Market Segments <ul><li>The Main Board </li></ul><ul><li>The Main Investment Market Segment (MIMS); </li></ul><ul><li>The Alternative Investment Market Segment (AIMS); </li></ul><ul><li>The Fixed Income Securities Market Segment (FISMS); </li></ul><ul><li>Futures and Options (FOMS)- to be implemented </li></ul><ul><li>Soon to be introduced (Distinct from the Main Board): </li></ul><ul><li>Over the Counter (OTC) Market Segment </li></ul><ul><li>Commodity Exchange </li></ul>
  10. 10. METHODS OF LISTING <ul><li>Securities may be brought to listing by way of: </li></ul><ul><li>Initial public offering (IPO): where the public at large is invited to subscribe. </li></ul><ul><li>Introduction : to provide a market for existing shareholders. </li></ul><ul><li>Private placement : shares are placed for sale to already identified investors. </li></ul>
  11. 11. Eligibility Requirements for Listing Segment The issue of profitability are waivered for the Government of Kenya For Corporates: 5 years, with at least 3 with +ve profit 100 million 50 million FISMs At least 20% held by 100 shareholders 2 years 1 with profit 20 million 20 million AIMS At least 25% held by 1000 shareholders 5 years, with at least 3 with +ve profit 100 million 50 million Public Company, State Corporation, Other MIMS Share-holders Financial Record Net Assets Minimum share capital Incorporation
  12. 12. INVESTING AT THE NSE Why invest? <ul><li>To enhance incomes </li></ul><ul><ul><li>Dividends from shares. </li></ul></ul><ul><ul><li>Fixed coupon payment from treasury and corporate bonds </li></ul></ul><ul><ul><li>Capital Gains are tax exempt </li></ul></ul><ul><li>Guarantee for your future Retirement </li></ul><ul><li>Diversify asset holding </li></ul><ul><li>Collateral </li></ul><ul><li>Hedge against inflation . </li></ul>
  13. 13. Buying and selling of shares –Immobilizing shares <ul><li>Through a Stock Broker . </li></ul><ul><li>Broker opens CDA for you </li></ul><ul><li>Gives you a deposit form (slip) as evidence of ownership </li></ul><ul><li>Copy of a deposit form (slip) forwarded to CDSC by broker </li></ul><ul><li>CDSC then forwards the form to registrar of the company </li></ul><ul><li>Shares deposited in your account </li></ul><ul><li>Once shares are in your account, you can start trading </li></ul><ul><li>Trade in Minimum lots of 100 shares </li></ul>
  14. 14. <ul><li>THANK YOU </li></ul>