Nairobi Securities Exchange switches its trading infrastructure to Safaricom

KENYANairobi Securities Exchange (NSE) has shifted from the South Africa’s MTN trading platform to a new one powered by mobile telecommunication giant Safaricom.

Safaricom’s bet on trading infrastructure for the Nairobi Securities Exchange (NSE) has now opened a new business frontier which analysts reckon could create more opportunities in the region.

The successful transitioning to a new state -of-the-art broker connectivity solution powered by Safaricom as the technology partner will provide higher trading platform availability, ensure higher uptime and performance and increase network security,” the bourse said in its latest market report.

Analysts say the telco is angling for the larger regional markets, especially the planned East African Security Exchange, at a time most exchanges are at the development stage and this could tap technology that cuts costs for brokers.

“They may not get significant income from NSE, but I see this as an entry into a market that could attract other clients such as the expected launch of the East African Securities Exchanges,” said Michael Wakio of Suntra Investment Bank.

Managers of African securities exchanges are in the process of procuring software that will link seven stock markets electronically with a combined market capitalisation of US$1.25 trillion as part of the initial phase of the African Exchanges Linkage Project.

Investment Advisor Ally – Khan Satchu said that a lot will depend on geographical expansion and if they enter Ethiopia this might present high level infrastructure connectivity opportunities.

“Not unless they have a physical presence in other markets. I think it’s a progressive development but not necessarily a knockout earnings punch,” he added.

“The network interconnects the NSE, the Central Depository and Settlement Corporation and all the trading participants in the market to offer higher trading platform availability”

Geoffrey Odundo, CEO Nairobi Securities Exchange

The stock exchange entity said Safaricom’s internet plan will save stockbrokers up to a third of their costs and offer a secure network for traders with trading platform providing a virtual network software that links traders to the Central Depository and Settlement Corporation (CDSC).

This means that the Multi-Protocol Label Switching network will be replaced with the Software-defined Wide Area Network (SD-WAN) supported by Safaricom.

“The network interconnects the NSE, the Central Depository and Settlement Corporation and all the trading participants in the market to offer higher trading platform availability,” NSE CEO Geoffrey Odundo said.

This means brokers could save about 30 per cent in connectivity costs with higher latency and network security according to the NSE.

The exchange is also working to increase the role of retail investors using decentralised technologies and reduce exposure of foreign risks which is currently over 60 per cent.

Last year perhaps saw the worst for stockbrokers whose revenues have been on the decline over the years hence the need to cut their cost of operations.

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