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Sunday, April 05, 2009

Price-fixing & manipulation at the NSE - Idiots

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What idiocy by the NSE.

The NSE wants the stockbroker licenses valued at a minimum of Kes 251mn. This is silly at best & perhaps criminal.

The NSE (or any stock exchange) is founded on the basis of PRICE DISCOVERY. Willing buyer, willing seller. So doesn't this go against their own credo... So why not just 'fix' prices on the stock exchange as well? After all... who cares about the 'willing buyer, willing seller' concept?

The Kes 251mn is based on what Renaissance paid for the 'clean' thuo license. Well... this was in 2007, when NSE was booming. Not in 2009 when brokers are collapsing. Nyaga & Discount collapsed in 2008 & 2009. Bob Mathews survived coz of Co-op Bank.

(If I had Kes 251mn, I would rather put it in the Infrastructure Bond at 13.5% Nett (Kes 30mn or so). No management hassles, no fraud, no employees, no need for capex, no working capital.

14 comments:

The Black Mamba said...

Look at it this way. You buy a broker for 251 million, use the company to steal 1 billion for retail investors and you get 100 million bailout to see you through your troubles.

Unknown said...

They are reacting after the horse has already bolted i.e. their fear of banks entering the field.

coldtusker said...

Ssembonge: There is no more bailout money. Between thuo & nyaga, they cleaned up shop. And retail investors are also moving to custodians e.g. Equity Bank, I&M Bank, Co-op Bank, etc among others

MainaT: The banks are not stupid. There is something called ROI. At Kes 251mn (+ unknown liabilities), I think many brokers will go broke!!!

pink m said...

IMO stock brokerages should be owned by commercial banks. It creates some prudence in management of these firms, and will also sort out the working capital mess when the market isn't performing.

This idea of having stock brokerages run by cowboy businessmen is just wrong.

coldtusker said...

PinkM: Whoa... welcome!

True dat. There are some solid independent brokers but there are few & in-between.

ke said...

Isn't this just a way to block out the competition?

I wonder how much it cost to get a license in 1996 when many of the big players today were applying for them?

Maiko said...

There is much to say about who sits on the board of the NSE and the declarations emanating from there, this is another example.
However for banks to be our saviour still doesnt sit too well for me, especially with the mwananchis experience with banks in the 90s and early part of this decade.
I guess they represent the lesser of the evils on offer given the case for a meaningful CMA is still years to come.

coldtusker said...

ke: For free... political connections..

Kestrel: nick biwott's son-in-law
Town & Country: musalia mudavadi (until it was sold)
Reliable: jos konzolo (managing trustee of NSSF)

coldtusker said...

From the BDA http://www.bdafrica.com/index.php?option=com_content&task=view&id=13879&Itemid=5854

just what said...

pink m,
and so the banks are more stable than the cowboy-brokers, but why should we hand over more power (via concentration) to an already powerful group of interests? that never resulted in anything good and might be the seed the next generation of scandals.

just what? said...

pink m,
and so the banks are more stable than the cowboy-brokers, but why should we hand over more power (via concentration) to an already powerful group of interests? that never resulted in anything good and might be the seed the next generation of scandals.

just what? said...

i posted twice accidentally. sorry

Unknown said...

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the biz is called adopt-my-biz, the big idea is to link small and medium enterprises with investors to access adequate capital for financing. Given the current economic situation the banking sector has increased its interest rates on lending compounding the financing predicament for smes which lack adequate capital for expansion.

Adopt-my-biz proposes to link these smes to investors through a website platform kind of like www.myc4.com and www.kiva.org. The differentiation of my-biz with the other platforms will be that it will not be loans as such but it will be offering investors an ownership stake in the smes in the platform and also the target investors will be kenyans and africans in diaspora who live and work there but lack the correct avenues to invest in their home country as well as the stock markets in the areas they work offering low returns.

Their exit strategy will be a regular pay-off from the sme according to the convenience of both partners either quarterly of each financial year, half year or at the end of every year, this will leave the sme enough space to stick to their budgetary plans and free their cashflows.

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Thanx
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Unknown said...

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