By Macharia Kamau
A change in the capital markets regulatory regime saw eight firms that had been trading as investment bankers downgrade their licences to operating as stock brokerage firms.
This reducing the number of investment bankers from 19 to eleven in the course of last year, according to the Economic Survey 2012.
The Capital Markets Authority (CMA) revised minimum capital limit for market players after four stockbrokers collapsed in quick succession due to financial difficulties. It raised the minimum capital requirement from Sh5 million to Sh50 million for stockbrokers and Sh250 million from Sh30 million for investment banks.
Francis Thuo, Nyaga, Discount Securities and Ngenye Kariuki were the brokers whose collapse prompting CMA to revise the rules to protect the interest of investors.
realignment
This resulted in a realignment in the stock broking fraternity where some of the struggling firms were bought out by commercial banks.
The survey also shows that last year was a bad one for investors in the capital markets with both the stock and the bond markets registering declines on their primary and secondary markets.
Investments at the bourse were eroded, with the market capitalisation registering a declining 25.6 per cent to Sh868 billion. This means investors at the stock market lost 25 per cent of the value of their investments.
Prices of shares tumbled and this in turn saw investors shying away from the Nairobi Securities Exchange.
The year saw only one firm, British American Insurance Company, listing through an Initial Public Offer, which registered a 60 per cent subscription.
“The Nairobi Securities Exchange 12-month market turnover decreased 28.2 per cent to Sh79 billion in 2011 from Sh110 billion in 2010 while the NSE 20 share index dropped 27.7 per cent to 3 205 points in December 2011,” says the survey.
