NAIROBI, Sept. 22 (Xinhua) -- The Nairobi Security Exchange (NSE) said Wednesday that it plans to introduce a securities lending and borrowing framework in order to boost liquidity in the capital markets.
Geoffrey Odundo, CEO of the NSE, told Xinhua in Nairobi that the framework is currently at the Capital Markets Authority regulatory sandbox under the supervision of the Central Depository and Settlement Corporation.
"This is a new innovative product that we will soon roll out in order to boost market liquidity," Odundo said.
The securities lending and borrowing framework allows owners of shares in the stock market to lend their securities after receiving collateral to borrowers who can trade them and then return them after expiry of the contract.
Odundo observed that the securities lending will help the NSE to unlock the level of liquidity in the capital markets.
"Liquidity is currently concentrated on a few big companies," he added.
According to the NSE, securities lending will also allow long term investors in equities to earn additional revenues besides dividends.