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NSE players seek back office system

By | Jul 16th 2009 | 2 min read

By James Anyanzwa

Key stakeholders in the stock market have agreed to take concrete steps to restore investor confidence.

In a rare show of unity since the bear run hit the equity market last year, chief executives of the Capital Markets Authority (CMA), Nairobi Stock Exchange (NSE), Central Depository and Settlement Corporation (CDSC) Ltd and the Kenya Association of Stockbrokers and Investment Banks (Kasib) met in Nairobi to chart the way forward.

The stakeholders considered among other things modalities of implementing the Broker Back Office (BBO) system whose absence has largely been blamed on the rampant unauthorised sale of clients’ shares by brokers.BBO is used by brokers and investment bankers to accept the buy/sell orders from investors, executed electronically.

The system, which is often located in the brokers’ offices, accepts investors’ instructions and relays them to the Automated Trading System (ATS) at the NSE. The CMA chief executive Stella Kilonzo said in spite of various reforms which have resulted in improved market performance and development, abuses at the primary and secondary levels coupled with the need to apply ATS to increase efficiency have remained a big challenge.

Investors discouraged

" Capital Markets are yet to enjoy the full benefits of the ATS and CDS. There is need to synchronise these systems with brokers back offices system," said Kilonzo. "We are about 70 per cent down from our performance last year. This is due to waning investor confidence, reduced activity in the stock market, slowed economic growth, inflation, famine, water shortage, political uncertainty and collapse of some market intermediaries," said Rose Mambo, chief executive CDSC Ltd.

She said the key concern is safety of investors’ investments. Mambo said only 5,000 new CDS accounts have been opened in the past three months.

She said some investors have given up on putting their monies in the stock market owing to the agony they undergo when seeking compensation after the collapse of a broker.

Mambo said many investors also feel they were reaped off and ill advised to borrow from commercial banks to invest in Safaricom’s initial public offering.

"Our ailing economy has done little to improve the situation at the stock exchange. But we must act swiftly and forcefully to resuscitate the stock market," said Michael Gichohi, chairman Kasib.

The brokers and investment bankers however pointed accusing fingers at Citi Bank NA, saying the multinational still holds an approximated Sh250 million of outstanding claims.










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