Nairobi Securities Exchange
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| Type | |
|---|---|
| Location |
Nairobi, Nairobi County, Kenya
|
| Founded | 1954 |
| Key people | Edward Njoroge - Chairman Geoffrey Odundo - CEO |
| Currency | Kenya Shilling |
| No. of listings | 64 |
| Market cap | Ksh 2.248 trillion 24 October 2014 |
| Indices | NSE All Share Index NSE 20 Share Index FTSE NSE Indices FTSE NSE Kenya 15 Index FTSE NSE Kenya 25 Index FTSE NSE Kenya Govt. Bond Index FTSE ASEA Pan African Index |
| Website | NSE |
The Nairobi Securities Exchange (NSE) was constituted as Nairobi Stock Exchange in 1954 as a voluntary association of stockbrokers in the European community registered under the Societies Act.
In Kenya, dealing in shares and stocks started in the 1920s when the country was still a British colony.
A stock exchange was first floated in 1922 at the Exchange Bar in the Stanley Hotel in Nairobi. However, the market was not formal as there did not exist any rules and regulations to govern stock broking activities. Trading took place on a ‘gentleman's agreement.’ Standard commissions were charged with clients being obligated to honour their contractual commitments of making good delivery and settling relevant costs. At that time, stock broking was a sideline business conducted by accountants, auctioneers, estate agents and lawyers who met to exchange prices over a cup of coffee. Because these firms were engaged in other areas of specialisation, the need for association did not arise.
In 1951, an estate agent named of Francis Drummond established the first professional stock broking firm. He also approached the finance minister of Kenya, Sir Ernest Vasey, and impressed upon him the idea of setting up a stock exchange in East Africa. The two approached officials in July 1953 and the London officials accepted to recognise the setting up of the Nairobi Stock Exchange as an overseas stock exchange.
In 1954 the Nairobi Stock Exchange was then constituted as a voluntary association of stockbrokers registered under the Societies Act. Since Africans and Asians were not permitted to trade in securities, until after the attainment of independence in 1963, the business of dealing in shares was confined to the resident European community. At the dawn of independence, stock market activity slumped, due to uncertainty about the future of independent Kenya.
1988 saw the first privatisation through the NSE, of the successful sale of a 20% government stake in Kenya Commercial Bank. The sale left the Government of Kenya and affiliated institutions retaining 80% ownership of the bank.
Notably, on 18 February 1994 the NSE 20-Share Index recorded an all-record high of 5030 points. The NSE was rated by the International Finance Corporation (IFC) as the best performing market in the world with a return of 179% in dollar terms. The NSE also moved to more spacious premises at the Nation Centre in July 1994, setting up a computerised delivery and settlement system (DASS). For the first time since the formation of the Nairobi Stock Exchange, the number of stockbrokers increased with the licensing of eight new brokers.
In 1996, the largest share issue in the history of NSE, the privatisation of Kenya Airways, came to the market. Having sold a 26% stake to KLM, the Government of Kenya proceeded to offer 235,423,896 shares (51% of the fully paid and issued shares of Kshs. 5.00 each) to the public at Kshs. 11.25 per share. More than 110,000 shareholders acquired a stake in the airline and the Government of Kenya reduced its stake from 74% to 23%. The Kenya Airways Privatization team was awarded the World Bank Award for Excellence for 1996 for being a model success story in the divestiture of state-owned enterprises. In 1998 the government expands the scope for foreign investment by introducing incentives for capital markets growth including the setting up of tax‐free Venture Capital Funds, removal of Capital Gains Tax on insurance companies' investments, allowance of beneficial ownership by foreigners in local stockbrokers and fund managers and the envisaged licensing of Dealing Firms to improve market liquidity.
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Wikipedia