Nairobi Securities Exchange (NSE) top boss Terrence Adembesa has exited to become chief executive of the new East African Bond Exchange (EABX), which is expected to compete with his old company for business.
Adembesa had been the chief officer in charge of the derivatives market at the bourse.
The officer had already started working at the newly-founded EABX, a registered over-the-counter trading house for fixed income instruments, The Companies Act of 2015, was used to incorporate it on March 4, 2019.
The NSE recently admitted that the EABX would present competition in the capital markets.
“We have fully automated this market. We have reduced the trading cycle from three days to a day. We have worked with our partners’ Refinitiv to provide a platform for negotiating and agreeing on transactions which makes it very easy for traders to be confirmed securely.
So, we have done everything right. We at the exchange did not see the merit in having a second exchange, especially in a market that is still this young,” NSE chief executive officer Geoffrey Odundo, told a local TV station, this year.
Fixed income activity accounts for around a percent of total revenue at the NSE, indicating how much revenue the exchange may lose if the fixed-income business was routed through EABX.
The NSE’s total revenue for the year ended December 2021 was Sh714.3 million.
The sweet spot has been a recent comeback in the corporate debt market, which has attracted four new listings, bringing the total number of outstanding corporate bonds to five.
Adembesa observed that the derivatives market’s activity expand from Sh20.5 million in 2019, when it was only open for six months, to Sh289 million in 2021, during his time at the NSE.
The average daily turnover in the derivatives market rose from Sh400,000 in December 2020 to Sh1.5 million in December 2021.
The total number of outstanding positions held by investors in the derivatives market at the close of 2021 was 939 contracts worth approximately Sh36 million.
