NSE Opens Over-the-counter Platform for Unlisted Firms’ Shares

Foreign investors were bearish on Nairobi Securities Exchange (NSE) offloading their stakes on Safaricom and Equity Group, according to Genghis Capital.

Nairobi Securities Exchange

The Nairobi Securities Exchange (NSE)  launched Kenya’s first formal over-the-counter (OTC) market platform to facilitate the trading, clearing and settlement of securities of unquoted companies.

According to the Nairobi bourse, the OTC will enable unlisted commercial banks, cooperative societies and private companies access the benefits of an efficient OTC market anchored on leading technology capabilities and resources.

The launch follows the approval from the Capital Markets Authority (CMA) to set up the platform, formally known as the Unquoted Securities Platform (USP), which will also help unlisted firms raise capital through private placement.

It will also allow trading, clearing, and settlement of securities of unquoted companies.

“The USP will enable companies that are not quoted (listed) and have a register of shareholders to enjoy price discovery and increase the liquidity of their shares. Additionally, it will increase transparency as well as access to information for investors as prices will be published daily,” said NSE chief executive Geoffrey Odundo.

“Unlike (the informal) OTC where deals are negotiated privately, on USP all prices are publicly deliberated with a buyer offering and a seller accepting the price without the need to know one another.”

Currently, the Capital Markets Authority is reviewing the rules and frameworks on the trading of shares of private companies over the counter. 

CMA has procured consultants from the World Bank to develop rules to regulate the OTC market. 

“Currently, we don’t have control over the OTC market, but we are trying to come up with an approved regulatory framework for it,” an industry source privy to the matter said.