The Nairobi Securities Exchange (NSE) has achieved a significant milestone in its push to deepen liquidity and enhance regional market participation after confirming the successful execution of trades through a sponsored access arrangement involving Absa Securities Limited and Absa Bank South Africa. The achievement marks the first time an external regional institution has accessed the Kenyan market using the NSE’s sponsored access model, a mechanism intended to widen participation while maintaining regulatory oversight.
The announcement follows months of technical preparation between the two Absa entities and the NSE. Sponsored access allows a qualified participant, in this case Absa Bank South Africa, to connect directly to the exchange’s trading infrastructure through a sponsoring firm. Under the arrangement, Absa Securities Limited serves as the licensed trading participant responsible for oversight, compliance and risk management.
The initiative is anchored in Guideline 4.8 of the NSE Direct Market Access Guidelines of 2019. It is one of the key reforms the exchange has been promoting as part of its broader plan to modernize trading infrastructure, improve efficiency and attract new classes of investors.
NSE CEO Geoffrey Odundo hailed the development as a breakthrough for market access across the continent. He said the transaction signals that the exchange is increasingly ready to support sophisticated electronic trading workflows that are now standard across global capital markets.
“This is not only a win for the NSE, but for the broader region. The successful deployment of sponsored access by Absa is a powerful signal of investor confidence and technological readiness. It speaks directly to our strategic agenda to revitalize the market and leverage technology to attract a broader range of participants, including regional and global investors,” Odundo said.
A Boost for Market Modernization and Liquidity
The sponsored access model is expected to accelerate the flow of regional and international orders into the Kenyan market, a key objective for the NSE as it works to boost daily turnover levels and strengthen the exchange’s competitiveness. By enabling direct electronic order submission, sponsored access reduces latency, increases execution speed and improves the overall quality of trade flows.
Market analysts say the move enhances Kenya’s appeal as a destination for cross-border investment by reducing the operational barriers that previously limited foreign institutional participation. The approach is widely used in advanced markets where high-frequency traders, large institutional investors and regional financial institutions require fast, secure and compliant access to trading platforms.
Absa’s involvement reflects what stakeholders describe as renewed private-sector interest in deepening connectivity within African capital markets. The bank operates one of the region’s most sophisticated electronic trading desks and has been instrumental in connecting African exchanges with international investors.
Merlin Rajah, Head of Electronic Sales at Absa Corporate and Investment Banking (CIB), said the deployment represents a strong commitment to modernizing Africa’s trading environment.
“This milestone reflects Absa’s commitment to advancing market connectivity and innovation across the continent. Through our sponsored access arrangement, we are helping to create more efficient and transparent pathways for investors to participate in African capital markets. It is a tangible example of how regional collaboration and technology can deepen liquidity and unlock new opportunities for growth,” Rajah said.
How Sponsored Access Works
Under the framework, a sponsoring broker is responsible for monitoring and controlling trading activity by the participant accessing the exchange. While the participant gains direct connectivity to the exchange’s systems, all trades remain subject to the risk controls, regulatory obligations and compliance monitoring of the sponsoring broker.
This blended model allows institutions with advanced trading capabilities to participate directly while preserving market integrity. The NSE has emphasized that the system incorporates pre-trade risk controls, position limits and real-time monitoring mechanisms to comply with Kenya’s regulatory standards.
The framework is designed to support growth in algorithmic trading, institutional order flow and cross-border participation, which the exchange sees as essential to revitalizing the market following several years of subdued activity and declining foreign investor inflows.
Strengthening the East African Capital Markets Landscape
The development is expected to bolster Kenya’s position within the East African capital markets ecosystem, where exchanges have been pursuing various forms of integration and interoperability. While full regional exchange integration remains a longer-term ambition, targeted steps such as cross-border sponsored access provide immediate benefits by enabling direct institutional participation.
Industry experts note that these incremental reforms are crucial for building a larger and more competitive regional market capable of supporting major listings, deeper liquidity pools and diversified investment products.
The NSE continues to explore additional infrastructure enhancements, including upgraded order-handling systems, expanded data services, and collaborations with regional and international brokers. Sponsored access is a key component of this modernization agenda.
Supporting the Exchange’s Strategic Vision
The initiative aligns with the NSE’s long-term strategy to create a more dynamic, technology-driven marketplace that supports sustainable investment and economic growth. The exchange has been vocal about the need to stimulate new investor segments, improve market efficiency and restore foreign investor confidence.
In its public statement, the NSE said it will continue to champion innovation and strengthen infrastructure to attract a diverse mix of participants. These efforts complement ongoing regulatory reforms and market development initiatives, including expanded derivatives trading, new product launches and efforts to increase local institutional participation.
Outlook
Stakeholders expect the new model to encourage more regional banks, asset managers and financial institutions to explore similar arrangements. Market observers argue that as sponsored access becomes more widely adopted, Kenyan equities could see an uptick in liquidity, improved price discovery and more stable daily turnover.
The NSE looks to build on this momentum as it rolls out additional technology upgrades and partnerships aimed at boosting participation from across Africa and beyond.
