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